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INFORMATION #1 02-22-2005 Information MEMORANDUM TO: FROM: Mayor and City Council Michele MCPherso~rector of Planning DATE: February 22, 2005 SUBJECT: Miscellaneous Information Items Dry Cleanine Ordinance Staff has been asked to process an ordinance amendment to allow dry cleaning establishments in the Downtown District. This ordinance amendment would allow the process of dry cleaning to occur within the Downtown District area and would not limit such facilities to retail outlets whereby items to be cleaned would be dropped off, shipped off site for processing, returned, and picked up by the customer. The anticipated schedule to complete this ordinance amendment with a slight shift in schedule would be review by the Planning Commission on March 22nd and consideration by the City Council on April 4th. Land Use Leeal Trainine Peter Beck, City Attorney, will be conducting his regular land use legal training with the Planning Commission on March 8, 2005. The City Council is welcome to attend, attached is the outline that was reviewed in 2003. S:\PLANNING\Michele McPherson\MEMOS\02 22 05 CC info memo.doc land Use and Zoning - legal Review Planning Commission Meeting May I 3, 2003 V. Adoption and Amendment of Land Use Controls A. Comprehensive Plans 1. Statutory Authority a) Municipal Land Planning Act, Minn. Stat. ~462.351 to 462.365, ~462.353, subd.1 b) Metropolitan Land Planning Act, Minn. Stat. ~473.851 to 473.871; ~473.858 c) County Planning Act, Minn. Stat. Chapter 394. 2. Purpose and Scope a) A comprehensive plan is a general plan to control and direct the use and development of land in a city or county. The purpose of a comprehensive plan is to analyze existing economic, social and environmental conditions, layout the goals and policies that will guide future development, and provide the legal basis for land use controls. Comprehensive plans have been described as a strategic map to reach the community's vision of its future. b) Municipalities within the Twin Cities metropolitan area are required by the Metropolitan Land Planning Act to prepare a comprehensive plan for Metropolitan Council review and approval. Minn. Stat. ~ 473.858. Outside of the Twin Cities metropolitan area, comprehensive plans and formal planning activities are not required. However, State law specifically encourages each county (Minn. Stat. ~394.232, subd. 1) and each municipality (Minn. Stat. ~ 462.3535, subd. 1) to prepare and implement a community-based comprehensive plan. A comprehensive plan should be adopted if a community intends to adopt and enforce a zoning ordinance. c) Minn. Stat. ~ 394.232, sub. 4 and ~462.3535, subd 2 authorizes the preparation of regional comprehensive plans through the joint planning activities of contiguous counties, cities and/or towns; and mandates coordination with neighboring jurisdictions in the preparation of a plan. 3. Procedural Requirements. Minn. Stat. ~462.355 and ~ 394.232 set forth detailed procedural requirements for the preparation, adoption and amendment of comprehensive plans. In addition to these statutory requirements, it is recommended that cities and counties strive to achieve the greatest community involvement possible in the development of a comprehensive plan. land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 2 a) Initiation. The adoption or amendment of a comprehensive plan may be initiated by resolution of the governing body of the municipality or county, which is submitted to the city or county planning commission; or may be initiated by the planning commission itself by recommendation to the governing body. Affected property owners may also initiate a proposed comprehensive plan amendment. b) Elements of a comprehensive plan. Minn. Stat. ~ 473.859 sets forth in detail the elements of a comprehensive plan for metropolitan area communities. Minn. Stat. ~462.3S7, subd 2(c) provides that in all other municipal comprehensive plans: (c) the land use plan must provide guidelines for the timing and sequence of the adoption of official controls to ensure planned, orderly and staged development and redevelopment consistent with the land use plan. c) Hearing. The planning commission is required to hold at least one public hearing on a proposed comprehensive plan or amendment thereto prior to adoption by the governing body of any such plan or amendment thereto. Notice of the time, place and purpose of the hearing must be published once in the official newspaper of the jurisdiction at least ten days before the day of the hearing. Notice of a proposed county or regional plan must be provided to a number of state agencies, and coordination with surrounding counties and municipalities within the county is required. Minn. Stat. ~894.232. d) Planning Commission Recommendation. The governing body of a city cannot adopt or amend a comprehensive plan until it has received the recommendation of the planning commission on the proposed plan or amendment thereto, or until sixty days have elapsed from the date the governing body proposed a plan or amendment to the planning comnusslon. e) Voting Requirements. Adoption and amendment of a comprehensive plan by a municipality requires a favorable vote by two-thirds of all of the members of the governing body. f) State and Regional Approval. Municipalities located in the Twin Cities metropolitan area must submit all comprehensive plans and proposed amendments thereto to the Metropolitan Council for review and approval. Minn. Stat. ~473.17S subd. 1. Counties must submit proposed county and regional plans to the State Office of Strategic and Long Range Planning for review and approval. Minn. Stat. ~394.232, Subd. S. land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 3 g) Plan Updates. County plans outside the metropolitan area are required to be updated at least every 10 years. Minn. Stat. ~394.232, subd. 6. The comprehensive plans of all jurisdictions within the metropolitan area are also required to be reviewed and updated every 10 years. Minn. Stat. ~473.864, subd 2. 4. Legal Impacts from the Adoption of a Comprehensive Plan. a) Consistency of Zoning Ordinance and Other Official Controls. Pursuant to Minn. Stat. ~4 73.858, subd. 1, within the Twin Cities metropolitan area, if an adopted comprehensive plan is in conflict with an existing zoning ordinance, the zoning ordinance must be brought into conformance with the comprehensive plan. This section also prohibits local government from adopting any fiscal device or other official control which is in conflict with its comprehensive plan. Minnesota Statutes do not specifically mandate comprehensive plan and zoning ordinance consistency outside of the metropolitan area, and there are no cases holding that a zoning ordinance in a city outside the metropolitan area must be in conformance with an adopted comprehensive plan. However, comprehensive plan consistency, or the lack thereof, is a legitimate issue with respect to any land use approval. A community which has brought its zoning ordinance and other official controls into conformance with its comprehensive plan will have the strongest case for supporting its land use decisions in the courts. b) In addition, once a comprehensive plan has been adopted, all acquisitions and disposition of real estate and any capital improvements proposed within a city must be reviewed by the planning commission to consider the consistency of the proposed action with the comprehensive plan. The planning commission has 45 days in which to make such determination or the proposed acquisition, disposition or capital expense will be deemed approved. Minn. Stat. ~462.356. c) Standard for Judicial Review. Municipalities and counties act in their legislative capacity when adopting and amending comprehensive plans, and have the broadest discretion in doing so. Provided that the procedural requirements of the relevant statutes are met, courts will not interfere in decisions related to comprehensive plans unless they are shown to be arbitrary, confiscatory or discriminatory. Amcon Corp. v. City of Eagan, 348 N.W.2d 66 (Minn., 1984). Olsen v. City of Hopkins, 276 Minn. 163, 149 N.W.2d 394 (1967). land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 4 B. Zoning Ordinances 1. Statutory Authority. a) Minn. Stat. ~462.3S7, subd. 1 (cities). b) Minn. Stat. ~394.2S (counties). c) Minn. Stat. ~394.33 authorizes towns to plan and zone, provided that no zoning ordinance or other official control may be inconsistent with or less restrictive than the applicable county controls. Town controls may, however, be more restrictive than country controls. 2. Purpose and Scope. Minnesota law authorizes the adoption of zoning ordinances for the general purpose of preserving and protecting the public health, safety, morals and general welfare. Zoning ordinances regulate the uses of property, the height, width and size of buildings and the amount of vacant space on lots in each zoning district. Zoning regulations are required to be uniform within each district, but may vary across different districts. The authority to adopt and amend a zoning ordinance includes the authority to adopt and amend both the text of the ordinan<:e and the zoning map. 3. Procedure. The procedure for adopting municipal zoning ordinances is set forth in detail in Minn. Stat. ~462.3S7, and is summarized below. Minn. Stat. Chapter 394 sets forth similar requirements for the adoption of county zoning ordinances. a) Initiation. Any time after the adoption of a land use plan the planning commission of municipality, for the purpose of carrying out the policies and goals of the land use plan, may prepare a proposed zoning ordinance and submit it to the governing body with its recommendations for adoption. Minn. Stat. ~462.3S7, Subd 2. Amendments to the zoning ordinance may be initiated by the governing body of the municipality, the planning commission, or by petition of affected property owners as defined in the zoning ordinance. An amendment not initiated by the planning commission must be referred to the planning commission for study and report, and may not be acted on by the governing body until it has received the recommendation of the planning commission or until 60 days have elapsed from the date of reference to the planning commission. Minn. Stat. ~642.3S7, subd. 4. b) Hearing. After a new ordinance or amendment has been proposed, the planning commission must hold at least one public hearing. Notice of the time, place and purpose of the hearing must be published in the official newspaper of the municipality at least ten days prior to the date of the hearing. When an amendment involves changes in district boundaries affecting an area of five acres or less, a similar notice must be land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 5 mailed at least ten days before the date of the hearing to each owner of the affected property and all property situated wholly or pardy within 350 feet of the property to which the amendment relates. However, failure to give mailed notice to individual property owners, or defects in the notice, will not invalidate the proceedings, provided a bona fide attempt to comply with the law is made. Minn. Stat. ~462.357, subd. 3. c) Planning Commission Recommendation. Following the public hearing before the planning commission, the commission reviews the information received at the public hearing and presents its recommendations to the governing body. The governing body is not required to hold a public hearing on the proposed zoning ordinance amendment, but is not prohibited from doing so. d) Voting Requirements. Minn. Stat. ~462.357, subd. 2(b), adopted in 2001, provides that the governing body may adopt and amend a zoning ordinance by a majority vote of all its members. The adoption or amendment of any ordinance which changes all or part of the existing classification of a zoning district from residential to either commercial or industrial requires a two-thirds majority vote of all members of the governing body. The opinion of the Attorney General is that the voting requirement language adopted in 2001 is mandatory, and that this voting requirement may not be superceded by inconsistent charter provisions or ordinance requirements. A.G. Op. 59a-32. (Jan. 25,2002). e) Publication. Following adoption, zoning ordinances and amendments thereto, including rezonings, become effective upon publication in the official newspaper of the city or county. 4. Limitations. Although a municipality or county has broad discretion in the adoption and amendment of zoning ordinances and maps, there are limitations. A municipality has no inherent power to enact zoning regulations. It receives its power to zone only by legislative grant of that authority by the State. Therefore, the municipality must stricdy comply with the procedural requirements attached to the authority delegated to it by the State, and may not exceed the limitations imposed upon it by its enabling legislation. Cosdey v. Caromin House. Inc. 313 N.W.2d 21 (Minn., 1981); Denney v. City of Duluth, 295 Minn. 22, 202 N.W.2d 892 (1972); 2600 University Inn. liC v. City of Minneapolis, 556 N.W.2d 218 (Minn. App., 1996). a) Compliance with Procedural Requirements. The courts have generally required strict compliance with procedural requirements, such as the requirement of notice to adjoining land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 6 landowners. See Olsen v. City of Hopkins, 276 Minn. 163, 149 N.W.2d 394 (1967); Glen Paul Court Neighborhood Association v. Paster, 437 N.W.2d 52 (Minn., 1989); Pilgrim v. City of Winona, 256 N.W.2d 266 (Minn., 1977). Strict compliance with the statutory voting requirements is also required. See A.G. Op. 59a-32. Gan. 25,2002). b) Statutory Limitations. Minnesota law contains a number of limitations on the exercise of the zoning power, including limitations with respect to manufactured housing, group homes, nonconforming uses and amortization (see below), and others. With respect to some uses, federal law imposes limitations on local zoning ordinances. Examples include the Federal Fair Housing Act and the Religious Land Use and Institutionalized Persons Act of 2000 ("RLUIP A"). RLUIP A provides that no government may impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person, unless the government can show the burden is in furtherance of a compelling government interest and is the least restrictive of furthering that interest. The first reported case to address the constitutionality of RLUIP A upheld the statute. Freedom Baptist Church of Delaware County v. Township of Middletown, 204 F.Supp.2d 857 (B.D. Pa 2002). c) Constitutional Limitations. Zoning ordinances also may not violate the State or Federal Constitutions. Constitutional challenges typically involve the due process and takings clauses of the Constitution. (See discussion elsewhere in this manual.) d) Interpretation of Zoning Ordinances. Because zoning ordinances restrict landowners in the exercise of their common law right to lawfully use their property, zoning ordinances are stricdy construed by the courts. Where doubt exists as to the intent of the enacting body, courts will interpret zoning ordinances to favor the landowner and disfavor any implied restriction on his property rights. Zoning ordinances are construed according to the plain and ordinary meaning of their terms; in favor of the property owner; and in light of the ordinances' underlying goals. See Olsen v. City of Hopkins, 276 Minn. 163, 149 N.W.2d 394 (1967); Frank's Nursery Sales. Inc. v. City of Roseville, 295 N.W.2d 604 (Minn., 1980). Therefore, it is important that zoning ordinances be clear and be adopted in strict compliance with the statutory requirements. land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 7 5. Standards for Judicial Review. a) Notwithstanding the limitations set forth above, local government has very broad discretion with respect to the adoption and amendment of zoning ordinances. The adoption of a zoning ordinance is a legislative act of local government. Courts will generally not interfere with the legislative discretion and policy decisions of a local governing body. Dennyv. City of Duluth, 295 Minn. 22, 202 N.W.2d 892 (1972); Sun Oil Co. v. Village of New Hope, 300 Minn. 326,220 N.W.2d 256 (1974). In determining the constitutionality of a zoning ordinance, the courts will presume that the governing body investigated and found conditions necessary for enactment of the proposed legislation, will presume that the legislation is constitutional, and will shift the burden of proving an ordinance unconstitutional to the party attacking its validity. If a zoning ordinance is not clearly unreasonable and arbitrary, is supported by a rational basis, and operates uniformly on all persons similarly situated, it will be upheld. I<.1ges v. City of St. Paul, 240 Minn. 522, 62 N.W.2d 363 (1953); City of St. Paul v. Dalsin, 245 Minn. 325, 71 N.W.2d 855 (1955); Connor v. Chanhassen Tp., 249 Minn. 205, 81 N.W.2d 789 (1957). C. Rezoning. The authorization and procedures for acting on rezonings are identical to those set forth above for zoning ordinance adoption and amendments. Rezonings are also considered by the Minnesota courts to be a legislative act of the governing body, and therefore entitled to great deference from the courts. 1. Requests for Rezoning. The original classification of a property is presumed to be well planned and intended to be more or less permanent. The burden is therefore on the property owner seeking a rezoning to show either some mistake in the original zoning, or that the character of the neighborhood has changed to such an extent that no reasonable use can be made of the property in its current zoning classification. Honn v. City of Coon Rapids, 313 N.W.2d 409 (Minn., 1981). Even though there may be a significant change in the character of the neighborhood, such change in itself will not compel a rezoning absent probative evidence that no reasonable use can be made of the property in its current zoning classification. Sun Oil Co. v. Village of New Hope, 300 Minn. 326,220 N.W.2d 256 (1974). The courts have held that the denial of a request for rezoning is a legislative act which must be upheld unless the existing classification is not supported by any rational basis related to the public health, safety or welfare. Kehr v. City of Roseville, 426 N.W.2d 233 (Minn. App., 1988); Freundshuh v. City of Blaine, 385 N.W.2d 6 (Minn., App. 1986); St. Croix land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 8 Development. Inc. v. City of Apple Valley, 446 N.W.2d 392 (Minn. App., 1989). Although the burden on the landowner is high, in some circumstances the courts have found that there was no rational basis to support the denial of a proposed rezoning, and have ordered the rezoning approved. Communications Properties Inc. v. County of Steele, 506 N.W.2d 670 (Minn. App,. 1993). 2. Challenges to Rezoning Actions. On the other hand, a decision to rezone will be upheld unless opponents prove that the new classification is unsupported by any rational basis related to promoting public health, safety, morals or general welfare. Where a rational basis for the rezoning can be found in the record, the rezoning will be upheld. Krmpotich v. City of Duluth, 474 N.W.2d 392 (Minn. App., 1991); Reversed on other grounds, 483 N.W.2d 55 (Minn., 1991). The usual presumption of the validity attached to zoning amendments as legislative acts applies. State. by Rochester Ass'n. of Neighborhoods v. City of Rochester, 268 N.W.2d 885 (Minn., 1978). 3. Spot Zoning. The term "Spot Zoning" is applied to rezonings, typically of small parcels of land, which establish a use classification inconsistent with surrounding uses, which create an island of non- conforming use within a larger zoned district, and which dramatically reduce the value of either the rezoned lot or the abutting property. State. by Rochester Ass'n. of Neighborhoods v. City of Rochester, 268 N.W.2d 885 (Minn., 1978). Although the Minnesota Courts have found that spot zoning is preferential treatment, piecemeal zoning, and the antithesis of planned zoning (Amcon Corp. v. City of Eagan, 348 N.W.2d 66 (Minn., 1984)); they have been very slow to invalidate a rezoning as a spot zoning, unless there is a total destruction or substantial diminution of the value of the property. Alexander v. City of Minneapolis, 267 Minn. 155, 125 N.W.2d 583. (1963). D. Public Hearing Procedure. The following suggestions for the conduct of public hearings in rezoning and other land use approvals are directed at those in the audience who are responsible for conducting public hearings on zoning issues. Although recommended for hearings on all types of zoning approvals, including the adoption and amendment of comprehensive plans and zoning ordinances, these considerations are particularly relevant to hearings on rezonings, and to hearings on conditional use permits, variances and other quasi-judicial and administrative actions. 1. Notice. Be sure that all statutory requirements for notice are met. 2. Keep a record. The governing body should assure that a complete transcript of the public hearing can be prepared, if needed, for court review. Video tapes, if available, should be preserved for contested land use applications at least until it is clear that there will be no judicial proceedings If video tapes are not available, consideration should be given to having a court reporter transcribe the proceedings Land Use and Zoning - Legal Review Planning Commission Meeting May 13, 2003 Page 9 on contested land use applications. All documents relied on during the hearing should be kept by the municipality until final a decision is made and the time for appeal has run. 3. Testimony. All persons desiring to testify at the hearing should be allowed to do so, after providing their names and addresses for the record. Although there is no requirement that witnesses be sworn under oath or subject to formal cross examination, and this is not the practice in any community the speaker is aware of, the Minnesota Supreme Court has indicated there may be times when such a procedure may be preferred, if not required, as a matter of fairness. See Kletschka v. LeSueur County Bd .of Comm'rs., 277 N.W.2d 404 (Minn., 1979). 4. Rebuttal. Even if witnesses are not sworn or cross-examined, governing bodies should allow for informal questioning of witnesses. It is also important to allow the applicant sufficient time to respond to concerns and objections raised at the hearing. This may occur during the hearing or, if the applicant requests or agrees to extend the municipality's time for decision (see below), at a subsequent meeting. 5. Findings of Fact. Findings of fact should be prepared with respect to any contested land use matter, including legislative decisions such as requests for comprehensive plan or zoning ordinance amendments and rezonings. Findings of fact should be based on the evidence presented at the hearing, and should be keyed to the statutory and ordinance requirements for the proposed land use approval. Findings may be prepared in advance of the hearing, but should be supplemented by specific action of the governing body as necessary to make them consistent with the testimony received at the hearing. The governing body may also continue the hearing to allow for the preparation of more detailed findings for consideration at a future date, provided that sufficient time remains for final action. 6. Publication. Zoning ordinance text amendments and rezonings are effective upon publication. E. 60 Day Rule 1. Minn. Stat. ~1S.99, commonly referred to as the "60 day Rule," provides, in subdivision 2, as follows: 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. land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page I 0 2. Section 15.99 goes on to set forth detailed requirements for compliance with the 60 day rule, and the courts have required strict adherence to these requirements. 3. Application. The 60 day time period does not begin until an application is complete. However, a determination that an application is incomplete must be made within 10 days of its submission, or the 60 day time period will begin regardless of the application's completeness. The applicant must be notified within the 10 day period (preferably in writing, although the statute does not specify in writing) that the application is incomplete and what information is missing. 4. Extension. The 60 day period may be extended for an additional 60 days, but only if written notice of the extension is provided to the applicant during the initial 60 days stating the reasons for the extension and its anticipated length. Strict compliance with the requirements of this section of the statute is necessary. Additional extensions are not available except with the applicant's approval. It is recommended that such approval be in written form and not be accepted unless a specific date or time period for the extension is agreed to by the applicant. See Northern States Power Co. v. City of Mendota Heights, 646 N.W.2d 919 (Minn. App., 2002). 5. Other approvals. The 60-day time period is extended if state law requires a separate process to occur before the municipality may act on the application. For example, the 60 day period for a project that requires environmental review under the Minnesota Environmental Quality Board's environmental review program is extended until 60 days after the completion of the environmental review process. 6. The statute provides that failure to deny a request within 60 days is approval of the request. Failure of a motion to approve an application has been found by the courts not to be a denial. Therefore, if another motion is not made and adopted to deny the application, the application will be deemed approved by the statute. Manco of Fairmont. Inc. v. Town Bd. of Rock Dell Tp., 583 N.W.2d 293 (Minn. App., 1998); Demolition Landfill Services. LLC v. City of Duluth, 609 N.W.2d 278 (Minn. App., 2000). 7. The 60 day rule supercedes all other time limits in local zoning ordinances and in the Land Planning Acts. Therefore, local ordinances and procedures should be revised as necessary to insure that the 60 day rule is complied with. For example: . Periods for staff review, notice and hearing should be shortened so thatfiual review can occur within the 60 days mandated by statute. . If the City's normal review procedure will not allow for completion of the process within 60 days, form letters should be sent to every applicant extending the 60 day period for up to an land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page II additional 60 days so that the city review process can be completed. It is not acceptable to require an applicant to consent to a 60 day extension as a condition of applying for the approval. American Tower. L.P. v. City of Grant, 636 N.W.2d 309 (Minn., 2001). However, a letter notifying the applicant of an extension and setting forth the reasons therefore may be sent at any time following receipt of the application and prior to the expiration of the initial 60 day review period. . When denial is recommended, proposed findings of fact should be set forth in staff reports and/or in a separate proposed resolution for adoption by the decision maker, so that the reasons for denial are set forth at the time a request is denied. . If there are no specific findings for denial set forth in the record, the review time should be extended so that formal findings of fact can be made and brought back for adoption prior to the expiration of the 60 day period or any extension thereof. VII. Special Issues A. Vested Rights. . 1. Vested Right to Zoning. The Minnesota courts have consistently held that there can be no right, or vested right, to a specific zoning status. Olsen v. City of Hopkins, 288 Minn. 25, 178 N.W.2d 719 (1970). Therefore, a zoning regulation may generally be applied retroactively to deny a building permit or site plan, even though the application for the building permit or site plan was made prior to the effective date of the new or amended regulation. Rose Cliff Landscape Nursery Inc. v. City of Rosemount, 467 N.W. 2d 641 (Minn. App., 1991); Property Research and Development Co. v. City of Eagan, 289 N.W.2d 157 (Minn., 1980). 2. Vested Right to Use. The point at which a developer or property owner has an absolute right to proceed with the development of property for a specific use has been the subject of considerable litigation throughout the country and within the State of Minnesota. In most cases, the Minnesota courts have found no right to a use that has not been fully established. For example, in Kiges v. City of St. Paul, 240 Minn. 522, 62 N.W.2d 363 (1953), the Supreme Court found that obtaining a building permit, incurring obligations and expenses preliminary to actual construction, and the completion of surface preparation and excavation did not create a vested right which precluded the application of new zoning regulations prohibiting the proposed building. The court held that there would be no right to proceed unless the work done prior to enactment of the regulation was sufficient to constitute an actual existing structure above ground. This rule has been followed in most of the subsequent cases, including Wermager v. Cormorant Tp. Bd., 716 land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page I 2 F.2d 1211 (8th Cir.,1983), which held that a landowner does not have a vested right to develop property in accordance with the laws that existed prior to a change in the zoning regulation if the landowner has not progressed sufficiently with construction. In that case, the landowner had constructed a sewer system for the proposed use, but had not begun physical construction of the structure. See also, Ridgewood Development Co. v. State, 294 N.W.2d 288 (Minn., 1980). The courts have not fixed a definite percentage of the total cost which establishes a vested right to complete and establish a use, but have held that it depends on the type of project, its location, ultimate costs, and the extent to which the use is in conformity with the zoning regulations. Jasaka Co. v. City of St. Paul, 309 N.W.2d 40 (Minn., 1981). See also Stotts v. Wright County, 478 N.W.2d 802 (Minn. App., 1991). However, most of the cases do recognize that there is a point at which, if the property owner or developer has proceeded in reliance on the existing zoning, they are entitled to complete the development and establish the use. See Olsen v. City of Minneapolis, 263 Minn. 1, 115 N.W.2d 734 (1962); Jasaka Co.v. City of St. Paul, 309 N.W.2d 40 (Minn., 1981); City of St. Paul v. Rein Recreation Inc. , 298 N.W.2d 46 (Minn., 1980). More recently, the Supreme Court has warned zoning authorities that they do not have "carte blanche" to arbitrarily block otherwise lawful development by the passage of new zoning law. Interstate Power Co.. Inc. v. Nobles County Bd. of Comm'rs., 617 N.W.2d 566 (Minn., 2000). In that case the court noted that application of the new zoning requirement would result in a "manifest injustice" that warrants deviation from the usual rule of applying the law as amended. 3. Estoppel. Related to the concept of vested rights is the theory that government can be estopped from enforcing its building and zoning ordinances in certain circumstances. The central concept to the doctrine of equitable estoppel is inducement. The claim in these cases is that the zoning authority should be estopped from preventing a developer or landowner from proceeding with an activity that the zoning authority induced, for instance, by issuing a building permit. The general rule is that issuance of a building permit under a zoning ordinance falls within the governmental rather than the proprietary functions of a municipality, and that estoppel will not lay against a municipality for its actions performed in a governmental capacity. Kiges v. City of St. Paul, 240 Minn. 522, 62N.W.2d 363 (1953); Frank's Nursery Sales. Inc. v. City of Roseville, 295 N.W.2d 604 (Minn., 1980); Ridgewood Development Co. v. State, 294 N.W.2d 288 (Minn., 1980); Dege v. City of Maplewood, 416 N.W.2d 854 (Minn. App., 1987). However, in certain circumstances a vested right may be established under an invalid building permit. See Snyder land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 13 v. City of Minneapolis, 441 N.W.2d 781 (Minn., 1989). The fact that a city has previously granted other permits in conflict with the terms of its zoning ordinances will also generally not estop the city in subsequent cases from denying similar permits. Arcadia Development Corp. v. City of Bloomington, 267 Minn. 221, 125 N.W.2d 846 (1964). 4. Nonconforming uses. Nonconforming uses are uses that were legally in effect prior to the adoption or amendment of a zoning ordinance and, in recognition of the landowner's property rights, are allowed to continue even though such uses are subsequendy prohibited. The reason for identifying nonconforming uses in a zoning ordinance is to secure the gradual or eventual elimination of nonconforming uses. Besides being allowed to remain in effect, nonconforming uses also escape requirements subsequendy enacted, such as setback requirements. Although these uses must be allowed to continue, zoning ordinances may prohibit them from being expanded or rebuilt, which places restrictions and limitations on their ability to exist over time and makes their eventual elimination more likely. Prior to 2001, municipalities had some flexibility in how they regulated non-conforming uses. However, the 2001 legislature adopted Minn. Stat. ~463.357, Subd. 1 (e), which specifically governs non-conforming uses and preempts local zoning ordinances with respect thereto. The statute provides as follows: Any non-conformity, including the lawful use or occupation of land or premises existing at the time of the adoption of an additional control under this chapter, may be continued, including through repair or maintenance, but if the non-conformity or occupancy is discontinued for a period of more than one year, or any non-conforming use is destroyed by fire or other peril to the extent of greater than 50% of its market value, any subsequent use or occupancy of the land or premises shall be a conforming use or occupancy. A municipality may by ordinance impose upon non-conformities reasonable regulations to prevent and abate nuisances and to protect the public health, welfare, or safety. This subdivision does not prohibit a municipality from enforcing an ordinance that applies to adults-only bookstores, adults-only theaters, or similar adults-only businesses as defined by ordinance. This statutes supercedes local zoning ordinances which are inconsistent therewith. Therefore, it is recommended that local ordinances be amended to comply with this legislation. land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 14 The Court of Appeals has held that in determining whether a non- conformed building or structure has been destroyed to an extent of 50% or more of its market value, a reviewing authority must consider the market value of the entire non-conforming use. Buss v. Johnson, 624 N.W.2d 781 (Minn. App., 2001). 5. Amortization. Prior to 2001, zoning ordinances often established an amortization period for pre-existing, non-conforming uses. These ordinances typically provided that at the expiration of the amortization period the use must cease. Courts typically upheld such amortization periods, holding that the adoption of an ordinance establishing an amortization period is a legislative act to which the courts should afford great deference, even when the amortization period was as short as two years. See A VR Inc. v. City of St. Louis Park, 585 N.W.2d 411 (Minn. App., 1998). However, the 2001 Legislature also addressed the issue of amortization, enacting Minn. Stat. ~462.357, Subd. 1 (c), which provides as follows: Except as otherwise provided in this subdivision, a municipality must not enact, amend or enforce an ordinance providing for the elimiflation or termination of a use by amortization which use was lawful at the time of its inception. This subdivision does not apply to adults-only bookstores, adults-only theaters, or similar adults-only businesses, as defined by ordinance. This statute also supercedes local zoning ordinances, and prohibits local government from amortizing out non-conforming uses, except those uses specified in the last sentence of the ordinance. B. Moratoria. 1. Authorization. Minn. Stat. ~462.355 Subd. 4. Specifically authorizes the adoption of Moratoria, defined in the statute as "interim ordinances", as follows: If a municipality is conducting studies or has authorized a study to be conducted or has held or has scheduled a hearing for the purpose of considering adoption or amendment of a comprehensive plan or official controls as defined in Section 462.352. Subdivision 15, or if new territory for which plans or controls have not been adopted is annexed to a municipality, the governing body of the municipality may adopt an interim ordinance applicable to all or part of its jurisdiction for the purpose of protecting the planning process and the health, safety and welfare of its citizens. The interim ordinance may regulate, restrict or prohibit any use, development, or land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page I 5 subdivision within the jurisdiction or a portion thereof for a period not to exceed one year from the date it is effective, and may be extended for such additional periods as the municipality may deem appropriate, not exceed a total additional period of 18 months. No interim ordinance may halt, delay or impede a subdivision which has been given preliminary approval prior to the effective date of the interim ordinance. 2. Adoption. Although the statute talks about an "interim ordinance", the Minnesota courts have allowed moratoria to be adopted by less formal approaches, including resolutions and even internal municipal communications. Wedemeyer v. City of Minneapolis, 540 N.W.2d 539 (Minn. App. 1995). Even when characterized by the governing body as a "moratorium ordinance", the courts have not required that the requirements for adoption of a zoning ordinance be followed for the adoption of a moratorium. Duncanson v. Board of Supervisors of Danville Tp., 551 N.W.2d 248 (I\1inn. App., 1996). 3. Validity. The Minnesota courts have allowed local government broad discretion in the adoption of moratoria. Both the Minnesota courts and the Federal courts have found that ordinances which do not allow for any use of a property for the moratorium period are not constitutionally compensable takings. Woodbury Place Partners v. City of Woodbury, 492 N.W.2d 258 (Minn. App., 1992); Tahoe-Sierra Preservation Council. Inc. v. Tahoe Regional Planning Agency, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002). Although Minnesota municipalities have broad authority to enact moratoria, that authority is not unlimited. The municipality must exercise its authority for the purpose of protecting the planning process and may not arbitrarily enact an interim moratorium ordinance to delay or prevent a single project. Medical Services. Inc. v. City of Savage, 487 N.W.2d 263 (I\1inn. App., 1992); City of Crystal v. Fantasy House. Inc., 569 N.W.2d 225 (Minn. App., 1997). C. Exclusionary Zoning. 1. "Exclusionary Zoning" refers to the array of local zoning practices which, singly or in combination, results in the exclusion of housing for low and moderate income groups from the suburban communities where most of the growth in employment opportunities has occurred in the past several decades. Exclusionary zoning practices and devices include such things as: exclusion of multiple family dwellings; restrictions on the number of bedrooms in multiple family dwellings; exclusion of mobile homes; and minimum building and lot size requirements. Large lot zoning, in particular, has been found to have an impact on housing costs. Land Use and Zoning - Legal Review Planning Commission Meeting May 13, 2003 Page 16 There has been considerable debate in the last three decades over the definition and existence of exclusionary zoning; the wisdom of pursuing the social goal of opening up suburbs for lower income housing through zoning policy; and the role of the courts in this debate. In 1975, the New Jersey Supreme Court decided the case of Southern Burlington County N.A.A.C.P. v. Mount Laurel Tp., 67 N.J.151, 336 A.2d 713, (1975). In this case, the court held that the township of Mount Laurel must, by its land use regulations, make realistically possible the opportunity for an appropriate variety of choice and housing for all categories of people who may desire to live there, including those of low and moderate income. The court required the township to permit multi-family housing, without bedroom or similar restrictions, as well as small dwellings on very small lots and other types of high density housing without artificial or unjustifiable minimum requirements as to lot size, building size and the like. In spite of rapidly rising housing costs in the Twin Cities Metropolitan Area, the Minnesota courts have not been called upon to specifically address an alleged exclusionary zoning situation. However, the Minnesota legislature has enacted a number of initiatives to address the issues raised by courts in other jurisdictions in exclusionary zoning cases, including efforts to promote affordable housing through the Minnesota Livable Communities Act and through various amendments to the Land Planning Acts intended to make it easier to obtain approval for affordable housing, such as the removal of the super majority voting requirement for zoning decisions. D. Contract Zoning and Conditional Zoning 1. Generally. "Contract Zoning" is generally described as an agreement between a municipality and a landowner which includes a promise by the city to rezone land in accordance with the terms of the contract and a promise by the owner or developer to observe restrictions on the use of the land in consideration of the rezoning. Historically, such agreements have been found to be an illegal delegation or abrogation of the police power and invalid. However, in more recent years, courts have been more open to such agreements, particularly in the planned unit development context. "Conditional Zoning", on the other hand, has found more favor with the courts. Conditional zoning is where land is zoned, or rezoned, on condition that the landowner or developer comply with certain conditions, such as the completion of specified work on the land to be rezoned, payment of fees, etc. The concepts of contract zoning and conditional zoning have received very little mention in Minnesota judicial decisions. Where the issue has arisen at all, the courts have seemed to implicirly land Use and Zoning - legal Review Planning Commission Meeting May 13, 2003 Page 17 validate the potential contract or conditional zoning. See City of Mahtomedi v. Spychalla, 243 N.W.2d 31 (M:inn., 1976); Housing and Redevelopment Authority for Lincoln County v. Jorgenson, 328 N.W.2d 740 (M:inn., 1983). The Minnesota courts have not reversed or invalidated a local government zoning action by finding it an illegal contract or conditional zoning. Furthermore, the Attorney General has issued an opinion concluding that the amendment of a zoning ordinance conditioned upon the successful annexation of land lying outside the corporate limits of the city is valid. (Op., A.G. 59-a-32, October 8, 1970). 2.Planned Unit Developments. Although Minnesota law does not expressly authorize Planned Unit Development ("PUD") Agreements, Minn. Stat. ~462.3593 does authorize the approval of PUDs as conditional uses, and Minn. Stat. ~ 462.358, subd. 2(a) and 3(c) authorize municipalities to enter into development agreements, including agreements which provide for "planned and staged development". The courts have also acknowledged the validity of PUDs as conditional uses or overlay zones, and there is little doubt PUDs are a valid planning tool in Minnesota. GP:930289 v1