With no vested right to develop under old ordinance, clock requiring agency action does not start

by Victoria Heldt

Kraemer Mining & Materials, Inc v. City of Sauk Rapids
(Minnesota Court of Appeals, July 5, 2011)

In 2004, Kraemer Mining Materials leased 164 acres of land located within the Sauk Rapids Township with the intent to mine granite deposits from the property.    At that time, Joint Board Ordinance 13 governed land use regarding mining operations.  It stated that mining was a conditional use and required a conditional use permit that would expire automatically in five years.  On May 11, 2007 Kraemer requested a conditional use permit and a variance from the five-year limit in Ordinance 13 since they anticipated the project to last between 20 and 40 years.    The Board was informed of Kraemer’s request, but did not review it because the size of the proposed mine required an Environmental Assessment Worksheet (EAW).  Kraemer was notified of the need for an EAW on May 29, 2007.  The same notification also stated that the 60-day deadline for an agency to act on a zoning request (required by Minn. Stat. § 15.99) would not begin to toll until the EAW process was complete.

During the 15 months that it took Kraemer to complete the EAW, the Board amended its zoning ordinances.  The goal of the amendment was to ensure that similar conditions were placed on future mines as those that the Board previously placed on a mine operated by Bauerly Bros. Inc.  In 2005, the Board granted an interim-use permit to Bauerly that contained conditions that were not contained in Ordinance 13.  In August of 2007, the Board adopted Ordinance 23 which it later included as Section 14 in Ordinance 25.  Ordinance 25 codified Ordinance 13 and all subsequent amendments into one easy, user-friendly ordinance.

On August 27, 2008 Kramer was notified that the EAW process was complete, and that it did not need to file an environmental impact statement.  Two days later, on August 29, 2008, Kraemer received a notice from Marney Curfman (City Planner) stating its conditional use permit application was now incomplete as it did not contain all of the information required by Section 14 under Ordinance 25.  The notice also informed Kramer that the 60-day deadline for acting on an application would not start until a complete application was received Although Kraemer felt that Ordinance 13 still applied to their application since it was in effect when the request was submitted, they submitted a second application for a conditional interim use permit (CIUP) that conformed to Ordinance 25.  In January of 2009 the Board unanimously approved Kraemer’s conditional use permit but denied its request for a variance from the five-year limit.

In district court, Kraemer argued that the Board violated the Minn. Stat. § 15.99, requirement that an agency address a permit application within 60 days.  They also claimed that several conditions in Section 14 were invalid under state law a lacked a rational basis.  Kraemer attempted to depose several people (i.e. the City Attorney, City Planner, and Community Development Director) but the Board objected to the depositions.  The court granted summary judgment for the Board.

On appeal, Kraemer brought forth its original two claims in addition to a challenge of the district court’s decision to deny Kraemer’s motion to compel depositions.  Kraemer argued that the Board violated Minn. Stat. § 15.99 based on two points.  It was of the opinion that Ordinance 13, and not Ordinance 25, applied to its application for a permit.  If this were the case, the clock on the 60-day limit would have begun to tick on August 27, 2008, when the environmental review process was complete, and the Board would have had to address it by October 27, 2008.  The Court disagreed with this logic.  It noted that the language of Ordinance 25 was clear in that it was to be “effective immediately.”  This means it applies to pending applications, consistent with the well-recognized principle that “there is no vested right in zoning.”  Only if a development has “progressed sufficiently with the physical aspects of the project or made a binding commitment to develop the property” can a developer use the vested rights principle to avoid the application of new rules.  Kraemer attempted to counter this decision with a previous case (Eagle Lake) where the Court ruled that a new zoning rule should not be retroactively applied.  This argument was rejected because the decision in Eagle Lake in fact held that the city could have discretion on which zoning rule to apply.  In this case, the Board has the discretion to apply the new ordinance if it so chooses.  The second part of Kraemer’s first claim asserts that the Board violated section 15.99 on the grounds that the letter received from the City Planner did not constitute notification by an “agency action” as required by the statute.  The Court dismissed this claim, stating that Curfman’s status as an employee of the City of Sauk Rapids is sufficient evidence that her letter is an agency action.

Next Kraemer contends that a CIUP is a “hybrid” permit that the Board is not authorized to make.  The Court disagreed, noting that Minn. Stat. § 462.3597 specifically allows municipalities to grant permits for interim uses of property.” The fact that the Board referred to the permit as a conditional interim use permit (as opposed to an interim use permit, with conditions) is irrelevant.  It is still simply an interim use permit regardless of its title.  Finally, Kraemer claimed that the five-year limitation on conditional permits lacks a rational basis because it does not “minimize conflicts with future development.”  All future development is hypothetical and the Board cannot predict when development will begin.  The Court decided that the five year limit is reasonably related to the purpose of preserving the transitional nature of the area, which will minimize conflicts with future development.  The Court also dismissed Kraemer’s claim that the mine will not have a detrimental effect on the surrounding property based on many complaints from property owners surrounding the Bauerly mine.

The Court ruled that the district court was correct in its refusal to compel depositions since the Board’s decision would be limited to the administrative record, the information was irrelevant, and the depositions would “impermissibly inquire into the mental impressions of the Board and its staff as well as information protected by attorney-client privilege.”

The Court of Appeals affirmed the district court decision.

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