Developer Beware: Land Use Issues When Two Governmental Agencies “Control”

13 Apr

The Minnesota Court of Appeals recently held that a party seeking to develop real property in an area regulated by both the Department of Natural Resources (DNR) and a city must carefully ensure compliance with the more restrictive reading of the two sets of rules – even where the DNR had previously declared the city’s ordinance in “substantial compliance” with its own rules.  Failure to do so, even in reliance upon past statements by the DNR, will not excuse non-compliance.


The case, In the Matter of the Denial of Certification of the Variance Granted to David Haslund by the City of St. Mary’s Point, resulted in a holding that when a municipality’s zoning ordinance conflicts with the DNR’s rules enacted under the Lower St. Croix Wild and Scenic River Act (the Act), the DNR’s rules control.  That case can be found here:  http://www.lawlibrary.state.mn.us/archive/ctappub/0901/opa080427-0127.pdf.  In it, the property owner (Owner) unsuccessfully challenged the Commissioner of Natural Resources’ refusal to certify a city’s decision to allow him to develop a parcel of land.


The City of Saint Mary’s Point (City) granted the owner a variance that would have allowed him to construct a residence on a parcel along the St. Croix River.  The parcel is subject to the City’s bluffland/shoreland management ordinance (BSM ordinance), which it passed pursuant to the Act.  That ordinance prohibited construction of a residence on a lot of less than 150 feet at the shoreline of the St. Croix River if the lot is “within a group of ‘contiguous platted lots under a single ownership.'”


The DNR also passed certain rules pursuant to the Act, including a rule that a lot which does not meet the requirements for development may not be developed separately from an adjacent lot if the two lots had ever been held in common ownership at any time since May 1, 1974.  This is inconsistent with, and more restrictive than, the City’s BSM ordinance which stated only that contiguous platted lots under the same ownership are prohibited from independent development.

The owner bought the lot in question in 1986, and came into ownership of a second, adjoining lot in 2000.  Both lots were narrower than 150 feet at the waterline, but neither had been platted and therefore it appeared under the BSM ordinance that either could be developed independently of the other pursuant to a City-approved variance.  The owner obtained the City’s variance permitting him to construct a dwelling on one lot and he sold the second lot.  Before granting the variance, the City’s mayor had consulted with the DNR, which indicated the variance should be okay.  The DNR’s comments regarding the request, however, were apparently made without the knowledge that the owner had title to the lot in question at the same time as he owned an adjoining lot.


Both the DNR’s rules and the City’s Ordinance had been passed pursuant to the Act.  The Act directed the DNR to develop a master plan for the development of the area in a manner consistent with the legislature’s goals of protecting the environments along the river.  Local government units, such as the city, were also instructed by the applicable state statute to adopt ordinances consistent with the DNR’s “guidelines and standards.”


The Minnesota Court of Appeals has held that the City was not permitted to grant a variance under its own ordinance that was inconsistent with the DNR’s rules without the approval of the Commissioner of Natural Resources.  The Court held that the statute expressly directed the city to adopt an ordinance that complied with the scheme established by the DNR, and by failing to enact an ordinance that was as restrictive as, or more restrictive than, the DNR’s rules, the ordinance in effect conflicted with state law.  A municipality may not enact local regulations that conflict with state law, which may include situations where the statute permits what the ordinance forbids, or where the ordinance forbids what the statute expressly permits.


The proposed variance granted by the City conflicted with the DNR’s rule by attempting to permit development that the rule forbids.  By not ensuring his proposal’s compliance with both the ordinance and the rule, the property owner was unaware until after he had sold his adjoining parcel that he could not build on the parcel in question.  Somewhat surprisingly, the owner was not spared by his reliance on the apparent consultation by the City’s mayor with the DNR before issuing its decision to grant a variance, or by the DNR’s prior determination that the City’s ordinance “substantially complied” with the DNR’s interpretation of the Act.  Had he consulted both authorities and applied the more restrictive reading of each, he could have been spared the unfortunate outcome of now holding an un-developable lot.  To avoid the same fate, parties seeking to develop land should ensure they are in compliance with all applicable ordinances and rules and have counsel ready to assist them in their interpretation and compliance.


Entry by Matt Drewes.  Matt is a shareholder at Thomsen & Nybeck, P.A. and head of the firm’s Community Association Representation Group.  He practices primarily in the areas of real estate litigation, townhome and condominium law, construction litigation, debtor/creditor law, insurance litigation and employment law.  For more information on our general real estate services, please visit: http://www.tn-law.com/CM/Real-Estate/Real-Estate-Law.asp, or visit this page for information about real estate litigation:  http://www.tn-law.com/CM/Custom/TOCLitigation.asp.


UPDATE:  04/29/10 -Minnesota Supreme Court overturns Minnesota Court of Appeals’ decision in In the Matter of the Denial of Certification of the Variance Granted to David Haslund by the City of St. Mary’s Point.  You can read the opinion here.  In it, the Minnesota Supreme Court held that the City’s BSM ordinance, even though not as restrictive as the DNR’s rules, was valid because it had been approved by the DNR pursuant to the Act.  In a concurring opinion, Justices Gildea and Anderson agreed with the result the majority reached, but opined that the DNR had no authority either to certify or to deny the variance issued by the city, regardless of its independent rulemaking powers.  As a result of this ruling, the development of the lot in question, separate from the neighboring tract, may proceed.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: