Issuance of building permit by Minneapolis planner a discretionary function

by Melanie Thwing

Harmsen v. City of Minneapolis
(Minnesota Court of Appeals, Aug 24, 2010)

The Harmsens own numerous rental properties near the University of Minnesota campus in Minneapolis. Wishing to build more rentals, they purchased a single family home and filed for a demolition permit as well as a building permit for a new duplex to be built in its place.

City planners in Minneapolis approve 1-4 unit dwellings, which for building permits requires the planners to complete a checklist. Required criteria include the site plan, zoning classification and interior/exterior plans. The Harmsen’s plans met the checklist, and McCartney, who is a senior city planner approved both permits; however, according to the Minneapolis zoning ordinance duplexes must be constructed on a lot with at least 10,000 square feet, unless an existing duplex is being replaced.  The lot that was purchased did not meet this requirement, but McCartney did not check into the existing structure before issuing the permits.  The existing structure was demolished and a foundation for the duplex was poured.  Soon after, neighborhood groups contacted the city with concerns. On May 29th the city revoked the permit via letter (the letter was dated May 8th ) and on May 30th a stop-work order was posted.

After the Harmsen’s request for a variance was denied, they filed suit in district court. Summary judgment was granted for the city on the grounds of the doctrine of discretionary immunity.  The district court determined there was a lack of evidence sufficient to support Harmsen’s claim of equitable estoppel. The Harmsens then appealed to the Court of Appeals, arguing that the district court erred in granting summary judgment.

Discretionary immunity is given for discretionary functions, which typically include planning-level decisions involving weighing social, political, and economic factors. This however, does not include day-to-day ministerial functions of the government. Previous Minnesota caselaw has affirmed that the issuance of a building permit is a discretionary function because an employee must “make a judgment as to whether plans submitted in support of the application for the permit constitutes a permissible use of the property in the area involved.”  The Harmsen’s argue that use of a checklist does not constitute the use of discretion. After reviewing the checklist the Court concluded that city planners are trusted to make a number of discretionary decisions in the permit granting process. 

The Harmsens pointed out that a narrow exception to the rule was articulated by the Minnesota Supreme Court in Snyder v. City Minneapolis.  Under Snyder, “ city employees do not have the discretion to approve permits in clear violation of the law, and an applicant cannot reasonably be charged with knowledge of violation if the city maintains an unwritten policy contrary to published law.” The Harmsen’s first argue under Snyder that the city was negligent when it issued the permits and that thus this was not a discretionary function. Further the Harmsen’s argue that there are unwritten guidelines when approving certain permits that allow a little bit of latitude on lot sizes. The Court of Appeals found that the Harmsens did not present any evidence to to substantiate this clam. Further § 546.410 had been in place since 1995, and the Harmsen’s own many properties in the area. Again, the court rejects the precedent from Snyder and the city maintains its discretionary immunity.

Finally the Harmsen’s argue that the city should be equitably estopped from denying the permit because they relied in good faith on the city. An equitable estoppel may be given when the owners “(1) rely in good faith (2) upon some act or omission of the government, (3) and have made such a substantial change in position or incurred such extensive obligations and expenses that it would be highly inequitable and unjust to destroy the rights which he ostensibly had acquired.”  For this claim, the Harmsen’s sole claim of municipal misconduct was that the city held the revocation letter from May 8th when it was dated, to May 29th when it was sent.  McCartney testified, however, that she did not learn of the problem until shortly before the letter was sent. Electronic evidence also proved this. The Court of Appeals found that this alone was not a sufficient showing of malfeasance to warrant equitable estoppel. The Court of Appeals affirmed the judgment of the district court.

Property tax equalization provision does not apply to agricultural property

by Gary Taylor

Naumann v. Iowa Property Assessment Appeal Board
(Iowa Supreme Court, December 3, 2010)

James Naumann owns approximately nine hundred acres of agricultural property spanning the Adair-Madison County line. After receiving 2007 property assessments from both counties, Naumann filed a petition to the Adair County Board of Review for each of his thirteen parcels of land located in Adair County, asserting his property was assessed for more than was authorized by law. The board of review denied each of his petitions, concluding Naumann had not provided sufficient evidence to prove the assessment was excessive.  Naumann appealed to the Iowa Property Assessment Appeal Board (IPAAB), contending his Adair County property was assessed at a value more than five percent higher than his adjacent Madison County property in violation of Iowa Code 441.21(1)(d). After an evidentiary hearing, the IPAAB concluded the Adair County Assessor properly assessed the value of Naumann‘s land and the assessments were neither excessive nor done in error. Naumann then petitioned for judicial review of the IPAAB‘s decision, but the district court affirmed the IPAAB‘s decision.  Naumann then brought the case to the Iowa Supreme Court.

The case centered on a dispute over the interpretation of subsections of Iowa Code 441.21(1) (follow this link and enter “441.21′).  Naumann asserted that because the plain language of section 441.21(1)(d) applies a five percent variance limitation to property without excluding agricultural property, the valuation of his agricultural property in Adair County must be adjusted so it does not exceed by more than five percent the valuation of his adjacent property in Madison County. (Neuman claimed the variance between the Adair and Madison County valuations was thirty-six percent.).  The IPAAB contended that the five percent variance limitation in paragraph (d) is inapplicable to agricultural land valuations. The IPAAB pointed to paragraph (g) providing agricultural property shall be valued exclusively as provided in paragraph (e) on the basis of productivity and net-earning capacity.

In reviewing the statute and applying customary rules of statutory construction, the Iowa Supreme Court concluded that section 441.21(1)(d) does not apply to agricultural property. While the actual value of other property classifications is generally its fair and reasonable market value, agricultural land is valued differently. Under Iowa Code 441.21(1)(e) the actual value of agricultural land is determined on the basis of productivity and net earning capacity capitalized at seven percent and applied uniformly among counties and classes of property. Paragraph (g) provides that paragraph (e) is the exclusive method of valuation for agricultural property.

The Supreme Court determined that the harm intended to be addressed by section 441.21(1)(d) is the potential that two similar non-agricultural properties lying on different sides of a jurisdictional boundary will be valued substantially differently, and that this is likely to happen when the properties are being valued based on fair and reasonable market value. Methods for determining fair and reasonable market value, such as market comparables, necessarily involve some degree of subjectivity. In contrast, the objective criteria for assessing the value of agricultural property mandated by section 441.21(1)(e) and implemented through the Iowa Administrative Code leave no room for subjective assessment of a property‘s value. Instead, the actual value of agricultural property is determined by using an average of five years of actual county productivity data for various crops to determine an aggregate land value for each assessing jurisdiction. Iowa Admin. Code r. 701—71.12(1)(a). This aggregate land value is spread among individual parcels in a jurisdiction utilizing corn suitability ratings (CSRs) derived from the modern soil survey, as required by section 441.21(1)(f). The use of this formula which takes into account the property‘s specific CSR removes the need for subjective determinations by the assessor, and thus the purpose of paragraph (d) is not served by applying it to agricultural land.  The Supreme Court affirmed the district court’s ruling.

Failure to provide written reasons for rezoning denial within statutory deadline does not invalidate denial

by Melanie Thwing

Johnson v. Cook County
(Minnesota Supreme Court, July 29 2010)

Minnesota Statute § 15.99 subd. 2:

Except as otherwise provided in this section and notwithstanding any other law to the contrary, an agency must approve or deny within 60 days a written request relating to zoning…. Failure of an agency to deny a request within 60 days is approval of the request. If an agency denies the request, it must state in writing the reasons for the denial at the time that it denies the request.

Lance Johnson owns two parcels of land in Cook County, Minnesota. Parcel A is zoned residential and Parcel B is zoned half residential and half commercial. Despite that parcel A is zoned residential, Johnson had a storage shed that was commercially used. On May 15th, 2001 Johnson filed an application to rezone parcel A and half of parcel B to general commercial use.

The county’s planning committee looked at the application during a public meeting in June and recommended to deny the request. In September the Board of Commissioners reviewed the application at a public hearing. After hearing testimony from the public and Johnson the request was denied.  The Board did not state in writing any reasons for the denial.

Then in 2005 Rita’s Grandview Ridge submitted an application to rezone a portion of its property from commercial to residential and for a conditional use permit to build a planned unit development. Both applications were granted. In 2006 Johnson brought a declary judgment action arguing that the commission erroneously denied his application and erroneously approved Rita’s. He also argued the denial constituted a taking of property, all under Minnesota Statute § 15.99, subd. 2.

Summary judgment was granted for the county in district court, stating that the denial was “reasonable.” Later, the Court of Appeals reversed the decision in an unpublished decision, stating that the application was automatically approved under § 15.99 because the county failed to state any written reasons for the denial.

The county then appealed to the Supreme Court, arguing that automatic approval is given only when the application is not acted on within the 60 days. They further argue that the written reasoning is a discretionary function of the statute. Johnson argues that the statute mandates action in writing within 60 days.

In Hans Hagen Homes, Inc v. City of Minnetrista the Supreme Court found that “denial is complete when a city votes to deny the application and adopts a written statement of its reasons for denial, whether or not the city provides notice to the applicant.” Johnson argued that the ruling in Hans Hagen Homes means that denial is not complete until the reasons for denial are provided in writing.

The Court refused to follow Johnson’s reasoning, pointing to a footnote in Hans Hagen Homes that explicitly left the necessity of providing written reasons within 60 days as an open question.  The Court affirmed previous cases that held “a statute may contain a requirement but provide no consequence for noncompliance, in which case we regard the statue as directory, not mandatory.” The Court concluded that the “state in writing the reasons for denial” language in § 15.99 is directory because no consequence for failure to comply is provided in the same sentence (i.e., that the 60-day deadline is in the previous sentence, implying that it only applies to the decision itself). The Supreme Court reversed the decision of the Court of Appeals.

Michigan adopts complete streets legislation

by Gary Taylor

Michigan has adopted an amendment to its planning enabling legislation to incorporate complete streets policies into local comprehensive plans.  Plans should address “all components of a transportation system and their interconnectivity including streets and bridges, public transit, bicycle facilities, pedestrian ways, freight facilities and routes, port facilities, railroad facilities and airports to provide for the safe and efficient movement of people and goods in a manner that is appropriate to the context of the community….”

Beginning January 1, 2016, the transportation element of a city, township or county comprehensive plan shall at a minimum address:

  • The level of service of all streets in the local street system and any recommended changes to the street system and/or levels of service,
  • The mechanism for assessing, preventing, and mitigating the traffic and other impacts of large, traffic-generating land uses that may be developed along existing or proposed major street corridors;
  • Major street corridor access management issues, proposed solutions to prevent traffic crashes and preserve street capacity, and proposed policies to prevent future traffic safety problems and to remediate existing problems;
  • Traffic noise along major street corridors, including proposed solutions and policies to limit noise;
    pedestrian and bicycle access and service issues along all streets, the potential for new or expanded pedestrian facilities and bicycle lanes and pathways, and appropriate recommendations for a complete streets policy, context sensitive design, traffic calming techniques, and walkability and bikeability policies.

A copy of the bill (H.B. 6152) can be found here.

Landowner’s defense in zoning enforcement action barred by issue/claim preclusion

by Gary Taylor

Sharkey v. Dubuque County Zoning Board of Adjustment
(Iowa Court of Appeals, November 24, 2010)

Dennis Sharkey owns two parcels in Dubuque County.  Parcel A is zoned M-1 Industrial and M-2 Heavy Industrial. Parcel B is zoned R-3 Single Family Residential.  The properties, and Mr. Sharkey, have been the subject of numerous disputes since the 1980s.  In 1988 Sharkey entered into a stipulated agreement with the county to resolve a zoning enforcement action.  Under the terms of the agreement Sharkey was “permanently enjoined from conducting or permitting any vehicle salvage operation or storage of any vehicles or junk” on the property.  In 1989 Sharkey was found in contempt of the order.  In 1994 Sharkey was convicted of unlawful storage and disposal of hazardous waste on the property and sentenced to prison.

In March 2007, the Dubuque County zoning administrator sent Sharkey two letters outlining problems with his property. In regard to Parcel A, the letter stated there were semitrailers, scrap metal, wood, appliances, and vehicles being stored outside on the property, in violation of zoning ordinances. In regard to Parcel B, the zoning administrator stated there were boats, junk cars and trucks, scrap metal, tires, and piles of wood being stored outside on the property, in violation of zoning ordinances. The letters also noted no flood plain management permit had been issued for either property.

Sharkey appealed the zoning violations to the Dubuque County Zoning Board of Adjustment, and at a June 5, 2007 hearing the Board determined both properties were being used as illegal junkyards and that the proper flood plain permits had not been obtained.  Sharkey challenged the decision in district court raising several defenses, including that he had a permissible existing nonconforming use and that the definition of “junkyard in the Dubuque County zoning ordinance was impermissibly vague.  The district court found that Sharkey was barred from using these defensed by the legal doctrine of “issue preclusion” – that these issues were decided when Sharkey and the county entered into the 1988 stipulated agreement.  Sharkey appealed to the Court of Appeals.

A party asserting issue preclusion – in this case Dubuque County – must show (1) the issue concluded in the previous action is identical to that in the present action; (2) the issue was raised and litigated in the prior action; (3) the issue was material and relevant to the disposition of the prior action; and (4) the determination of the issue was necessary and essential to the resulting judgment.  The Court of Appeals concluded that issue preclusion did apply.  The issue of whether Sharkey’s property is subject to the Dubuque County Zoning Ordinance, as well as the issue of whether the Flood Plain Management Ordinance applies, was determined in the 1988 action. The district court found the use of the property for auto salvage and the storage of vehicles and junk constituted a public nuisance and was not permitted under the Dubuque County Zoning Ordinance. The court also found Sharkey needed to follow the Dubuque County Flood Plain Management Ordinance.

The Court found that “claim preclusion” applied to Sharkey’s assertion that the term “junkyard” is impermissibly vague.  Claim preclusion involves the following elements: (1) the parties in the two actions were the same; (2) the claim in the second action could have been fully and fairly adjudicated in the prior case; and (3) there was a final judgment on the merits in the prior action.  The Court found that the issue concerning the definition of “junkyard” could have been fully and fairly adjudicated by Sharkey in 1988.

Finding sufficient evidence that Sharkey was impermissibly storing semitrailers, scrap metal, appliances, boats, junk cars and trucks, tires, and piles of wood on property in the M-2 Heavy Industrial District without a special use permit, the Court affirmed the decision of the district court.

EPA announces Smart Growth Achievement award winners

The Environmental Protection Agency has announced five winners of its 2010 National Smart Growth Achievement Awards.  The awards are intended to highlight projects and programs that showcase the “benefits of adopting an integrated approach where community development based on smart growth principles supports a healthy social and natural environment.”

2010 Award Winners:

* Overall Excellence – Smart.Growth@NYC: Policies and Programs for Improving Livability in New York City, New York, New York.

* Smart Growth and Green Building – Miller’s Court, Baltimore, Maryland.

* Programs, Policies, and Regulations – Making the Greatest Place: Metro’s Strategic Implementation of the 2040 Growth Concept, Portland, Oregon.

* Rural Smart Growth – Gateway 1 Corridor Action Plan, Maine, Gateway 1 Communities.

* Civic Places – Mint Plaza, San Francisco, California.

The announcement and detailed descriptions of each project can be found here.

Manufacturer’s wastewater lagoon not entitled to agricultural exemption from Sioux County zoning

by Gary Taylor

Kramer et al. and Sioux Pharm, Inc. v. Sioux County, Iowa
(Iowa Court of Appeals, November 24, 2010)

Plaintiff Sioux Pharm, Inc. manufactures chondroitin sulfate through an extraction process using cow tracheas, pig and chicken parts, and corn. This process produces 15,000 to 18,000 gallons of industrial wastewater daily at Sioux Pharm’s manufacturing facility. The wastewater is described as a “filtered food-grade bovine protein solution.” The city of Sioux Center will not accept the wastewater into its municipal treatment facility, and so in 2003 Sioux Pharm began construction, without prior approval from Sioux County or the Iowa Department of Natural Resources (DNR), of an earthen wastewater storage lagoon located on farmland in rural Sioux County owned by plaintiff Carol J. Kramer, as trustee of her revocable trust.

In April 2004, the DNR approved the wastewater storage lagoon as built, and issued Sioux Pharm a permit, but stated that “any product going to the proposed lagoon is truly waste.” The lagoon is an uncovered earthen pit that holds a total of 859,000 gallons of “high-strength organic” wastewater.  Plaintiff Dr. Allan Kramer farms the land owned by the Carol J. Kramer trust, and he periodically purchases wastewater from Sioux Pharm and applies it to nine application sites at the rate the DNR authorizes.. The wastewater contains nutrients that have some benefit to crops. Although Sioux Pharm has a commercial fertilizer manufacturer/dealer license, it is not authorized to sell wastewater after it has been stored in the lagoon, as once the wastewater is placed into the lagoon it becomes contaminated with bacteria.

Under the Sioux County zoning ordinance, “treatment facilities in an Agricultural District require a Special Exception Use permit.” Although the DNR approved both Sioux Pharm’s construction (after the fact) and use of the lagoon, Sioux Pharm had not obtained a special exception use permit from Sioux County Board of Adjustment. Upon receipt of multiple complaints about the lagoon and the odor emitting from it, the Sioux County Zoning Administrator determined that the lagoon was being operated without a special use permit. In January and March 2008, the zoning administrator provided Sioux Pharm with written notices that its construction and use of the lagoon was in violation of the zoning ordinance. Sioux Pharm met with the Sioux County Planning and Zoning Commission at its April 2008 meeting and represented to the commission that the wastewater stored in the lagoon was a “filtered food-grade bovine protein solution.” After the meeting, Sioux Pharm applied for a permit for a “non-farm” use involving “industrial wastewater.” In August 2008, the Board granted Sioux Pharm a temporary special exception use permit “for construction of an earthen wastewater lagoon used for storage of industrial wastewater from the Sioux Pharm plant in Sioux Center, Iowa.” The temporary permit was subject to several conditions, and expired on June 1, 2009 at which time the application was to be reviewed for extension or expiration by the Board of Adjustment.

The Board held a meeting on May 27, 2009 and reviewed recommendations of the Planning and Zoning Commission with regard to the status of the temporary permit. The Board determined Sioux Pharm had failed to meet the conditions imposed by the temporary permit and declined to extend the permit. The temporary permit expired on June 1, 2009, but Sioux Pharm continued to transport wastewater to the lagoon daily, despite the expiration of the temporary permit. On June 1, 2009, Sioux Pharm filed suit in district court, premised upon establishing that the use of the wastewater storage lagoon was “primarily adapted for use for agricultural purposes” under the language of Iowa Code 335.2 and was therefore exempt from Sioux County zoning regulations.  The district court entered judgment in favor of the county, concluding substantial evidence supported the Board’s finding that Sioux Pharm’s storage lagoon did not meet the agricultural exemption.  The district court specifically stated:

“The storage lagoon was built by Sioux Pharm, Inc., not the landowner. Sioux Pharm, Inc. is a manufacturer who is not involved in agriculture. Even though Sioux Pharm, Inc. calls its wastewater ‘fertilizer,’ it has never registered the wastewater as a fertilizer or soil conditioner with the Iowa Department of Agriculture and has not complied with regulations for the storage of liquid fertilizer. It has obtained a fertilizer license but is not in the business of storing or selling fertilizers or soil conditioners. It is not in the business of raising crops or livestock. Sioux Pharm, Inc., is a pharmaceutical manufacturer.”

On appeal to the Iowa Court of Appeals, Sioux Pharm argued that Sioux County Board of Adjustment and the district court erroneously interpreted Iowa Code 335.2.  In making its case Sioux Pharm drew an analogy between its wastewater lagoon and the hog waste lagoon determined to be part of an agricultural operation in the 1993 Iowa Supreme Court case, DeCoster v. Franklin County.  In that case the Supreme Court determined that the storage and disposal of hog waste from a holding basin was a part of the agricultural function, reasoning that it would be incongruous to exempt hog confinement buildings from county regulation and at the same time subject the waste storage basin adjoining those buildings to county regulation.  The Court of Appeals, however, found the factual distinction between the DeCoster case and the present case “fatal to Sioux Pharm’s claim.”

“In DeCoster, the storage basin was constructed to store the waste that was the by-product of the livestock raised in hog confinement facilities located on the plaintiff’s farm. In this case, the lagoon was constructed to store the wastewater that is the by-product of Sioux Pharm’s industrial manufacturing facility located in Sioux Center…. Although the wastewater is eventually used to fertilize the land farmed by Dr. Kramer, the fact remains that the primary purpose and functional aspect of the lagoon is to store Sioux Pharm’s industrial wastewater.”

Accordingly, the Court of Appeals found that the Sioux Pharm waste lagoon was not exempt from the regulations of the Sioux County zoning ordinance.

Dates and locations for Intro to Planning and Zoning Workshops

Make plans now!  The dates and locations for the Spring 2011 Introduction to Planning and Zoning Workshops for Local Officials are:

March 22 – Quad Cities – Scott County Extension Office
March 23 – Fairfield – Fairfield Arts & Convention Center
March 29 – Fort Dodge – Best Western Starlight Village
March 30 – Urbandale – Urbandale Public Library
April 5 – Dubuque – Grand River Conference Center
April 6 – Waterloo – Ramada Hotel & Convention Center
April 12 – Council Bluffs – Hilton Garden Inn
April 13 – Spencer – Clay County Regional Events Center

Registration materials will be mailed out to cities and counties, and posted on this blog, in mid-January.  The registration fee will be $55 per individual. This fee is reduced to $45 per individual if a city or county registers 5 or more persons to attend. The fee covers supper and the workshop materials. Registration materials and payment must be received at least two weeks before the scheduled date of the workshop you wish to attend. Registrations will be accepted at the door, but a meal will not be provided.

The Introduction to Planning and Zoning for Local Officials is a three-hour workshop designed to introduce the basic principles of land use planning and development management to elected officials, planning and zoning officials, and board of adjustment members without formal training in the subjects. Using case scenarios in a highly-interactive format, it will highlight issues frequently faced in the land use process.  The workshop is offered annually in eight locations across the state. Locations change from year-to-year so that city and county officials are able to attend a location near them at least once every two years.





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