Minn. shoreland zoning variance requirement of unnecessary hardship still applies to requests for area variances

by Victoria Heldt

Ed Mutsch, et al. v. The County of Hubbard, et al., Daniel J. Rehkamp, et al.
(Minnesota Court of Appeals, April 30, 2012)

The Rehkamps own property on Fifth Crow Wing Lake in Hubbard County (County) that is operated as a resort.  The property includes 11 boat slips.  In November 2009 the Rehkamps applied for a conditional use permit (CUP) to convert the resort into a residential planned unit development (PUD).  The request was heard by the County Planning Commission, the Zoning Board of Adjustment (ZBA), and the County Board of Commissioners.  The Board of Commissioners initially approved the CUP with three permanent boat slips and one access dock, per the County’s Shoreland Ordinance.  It recommended that the Rehkamps apply to the ZBA for a variance in order to retain all 11 boat slips.  The Rehkamps did so and were granted a variance.  The entire plan was approved by all necessary boards in April 2010.  Days after approval, Ed Mutsch (a resident on Fifth Crow Wing Lake) filed a complaint challenging the issuance of the variance.  The district court reversed the granting of the variance, concluding that the ZBA’s decision was arbitrary, capricious, and not according to law since it did not consider all the factors required by law.  This consolidated appeal followed.

On appeal, the Rehkamps first argued that Mutsch lacked standing to appeal the ZBA’s actions because he did not participate in the hearings and meetings regarding the variance.  The Court dismissed this argument, noting that Minnesota statute grants the right to appeal a ZBA decision to any aggrieved person without any requirements to participate in initial proceedings.  Since Mutsch is a property owner on Fifth Crow Wing Lake and evidence shows his property value will likely decline as a result of the additional boat slips, he qualifies as an “aggrieved person.”

The second issue questioned what type of zoning variance the ZBA granted since it was never specified during the trial.  Mutsch purported that it was a use variance, which requires a showing of “particular hardship” while the Rehkamps argued it was an area variance, which only requires a showing of “practical difficulties” according to the Minnesota Supreme Court’s opinion in In re Stadsvold (2010). The Rehkamps argued that Mutsch waived the argument that it was a use variance when the issue was not property raised in district court.  The Court agreed, and declined to address the question since it was not properly raised in initial proceedings.  Consequently the Court of Appeals analyzed the variance as an area variance.

Next, the Rehkamps and the County challenged the district court’s determination that the ZBA’s decision was arbitrary and capricious.  The district court concluded the decision was arbitrary because the ZBA failed to consider all of the required factors.  In regard to variances, there are two relevant guidelines for the Court to consider.  Section 1104 of the local Shoreland Ordinance provides a list of factors to consider and requires applicants to show an “unnecessary hardship” to receive a variance.  In addition, a list of factors provided in the Stadsvold opinion is applicable when determining whether an area variance is warranted.  The County first argued that, in light of the Stadsvold decision, section 1104 of the Shoreland Ordinance (unnecessary hardship) no longer applies to area variances in the shoreland zoning area, but rather the “practical difficulties” test solely should be applied.  The Court rejected this argument, ruling that the Stadsvold opinion did not render section 1104 of the Shoreland Ordinance inapplicable to area variances requested on land to which shoreland zoning applies.

The Rehkamps next argued that the BOA “melded” the factors in the Stadsvold opinion with the factors in section 1104.  The ZBA was required to “articulate the reasons for its ultimate decision, with specific reference to relevant provisions of its zoning ordinance.”  The ZBA used a worksheet addressing each of the six Stadsvold factors (practical difficulties) when making its decision.  The Court concluded that, since those six factors are not the same as the factors listed in section 1104, it did not “sufficiently articulate its reasons for ruling that the section 1104 factors (unnecessary hardship) were satisfied.”  It found the ZBA’s decision to be premature, not necessarily arbitrary and capricious.  It therefore remanded that portion of the decision to the ZBA for further consideration of the section 1104 standards.

The Rehkamps’ last argument was that the district court erred when it determined that not all of the ZBA’s findings in regards to the Stadsvold factors (practical difficulties) were supported by the record.  The Court reviewed the evidence that supported each of the ZBA’s findings and found each to be supported by the record.  It therefore reversed that part of the district court decision which found that the ZBA’s decision regarding the Stadsvold factors were not met.

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