Property and Construction Law Update
Summer 2006
Was Your Land Taken Without Your Knowledge?
Did the Minnesota Supreme Court Open The Door to Uncompensated Takings?
By Allen Wheeler
Imagine yourself as a real estate developer trying to evaluate whether to buy a golf course. It is located in a local city and zoned residential with the golf course as a conditional use. The city also has a comprehensive plan which allows the property to be used as a golf course but not for residential purposes. Fortunately, at the time of purchase, a Minnesota law provides that a city’s zoning ordinance takes priority over conflicting comprehensive plan designations.
Because the zoning ordinance trumps the comprehensive plan, the dual-zoning status makes your investment appear foolproof. You can buy the property, run the golf course, and then make a determination whether the golf operation can make money. If it does, great. If it does not, then the property can be converted to a residential use in accordance with the zoning ordinance.
Not long after you buy the property, however, a new law is passed providing that the comprehensive plan now overrides a conflicting zoning ordinance. The new law orders cities to reconcile conflicts between comprehensive plans and zoning ordinances but your city fails to reconcile its conflict. When your golf course fails financially, you apply to the city to convert it to residential use. Surprisingly, the city denies your request because the city’s comprehensive plan designates that area as a golf course only. You ask the city to reconcile the conflict between the comprehensive plan and the zoning ordinance by making the comprehensive plan consistent with the zoning ordinance. The city can do this by including residential development in the comprehensive plan. The city refuses and tells you that the only use for your property is to continue to operate it as a golf course. Your worst nightmare has been realized: you own a golf course which cannot be operated profitably and you cannot change its use. Can the city force you to continue to use the property as a golf course?
The Comprehensive Plan Trumps the Zoning Ordinance
This was the scenario faced by the landowners in the recent case of Mendota Golf, LLP v. City of Mendota Heights. In that case, the landowners sued the city and won. On appeal, the Minnesota Supreme Court held that the city did not have to reconcile its comprehensive plan to make it consistent with the zoning ordinance.
The court held that the city had broad discretion in deciding how to reconcile the zoning ordinance and comprehensive plan because land use planning is within the city’s legislative prerogative. The court noted that even if the city’s decision on how to reconcile these differences was debatable, courts do not interfere so long as there is a rational basis for the city’s decision. Here, the court found such a rational basis in the city’s interest in open and recreational areas for its residents, which in turn promoted the citizens’ “health, safety, morals and general welfare.”
The court also said that while zoning ordinances are intended to carry out the policies of the city’s comprehensive plan, the comprehensive plan is the primary land control document and it supersedes all other municipal regulations. The court held that it lacks the statutory power to order the city to amend its comprehensive plan to conform to its zoning ordinance because that would undermine the supremacy of the comprehensive plan.
Finally, the court noted that the city’s comprehensive plan was a piece of a larger comprehensive plan controlled by the Metropolitan Council. The Metropolitan Council retains the ultimate power to review and order modifications of city comprehensive plans which fall within its jurisdiction.
Where Does This Leave the Landowner?
When Mendota Golf purchased the property, it could be used either for residential or golf course purposes. Now, because the comprehensive plan limits its use to golf course purposes only and the comprehensive plan takes priority over the previously existing zoning ordinance, Mendota Golf can only use the land for golf course purposes. It has already been demonstrated that the golf course is not a financially self-sufficient operation. Many believe that this constitutes an effective taking by regulation without compensation, and as a matter of constitutional law, the property owner should be compensated. Unfortunately, because Mendota Golf did not specifically raise this issue, the court did not consider it. Whether Mendota Golf will be able to return to court and seek just compensation for the city’s taking is unclear.
Where Does This Leave Other Landowners?
If you have already purchased land and the zoning designation and comprehensive plan designation differ, contact your lawyer or a member of Maslon’s Real Estate Team to help you steer through the veritable maze of statutory land use controls or to pursue a claim against the local government for just compensation.
If you are purchasing land, before signing a purchase agreement, have your lawyer or a member of Maslon’s Real Estate Team ensure that the purchase agreement is contingent on confirmation that the zoning ordinance and the comprehensive plan contain the same land use designations. If they conflict, talk with the municipality to determine its intent. For now, however, rely only on the comprehensive plan’s use designation.
If you have questions, contact Allen Wheeler at 612.672.8390 or allen.wheeler@maslon.com.
