5.11. SR 01-16-1996~.ty of
MEMORANDUM
TO:
FROM:
DATE:
Mayor & City Council
Pat Klaers, City Administrator
January 16, 1996
SUBJECT: Phoenix Enterprises Request
ITEM 5.11.
The city has received a request from Phoenix Enterprises to make an
exception to our city development policy regarding the role of the city
engineer with private development projects. Please see the attached letter
from Rick Foster.
The City Council should note that this request is opposite from the request
that we received in 1994 regarding the city engineering policies. The 1994
request was to allow engineers other than the city's to do public improvement
work on private projects that are financed by the developer. This new
request would have the city do work for a developer which under current city
policy can only be provided by the private industry. Accordingly, if the City
Council approves this city policy exception request, it is anticipated that we
will be hearing from local engineering firms about the city taking work away
from them.
The current city policy is to have the private development grading plans done
by the developer and to have the city engineer review these documents to
make sure that everything works for the plat and for the overall city plans.
In this manner there are "two sets of eyes" reviewing a proposal. There may
be some cities where the city engineer, whether it is a staff city engineer or a
consulting city engineer, does grading plans for private developers, but I am
not aware of any such city.
The current city policy is consistent with the League of Minnesota City's
recommendation and our city attorney's recommendation whereby tho city
keeps a clear distinction between the municipality and the private developer.
As the Council may recall, the city was very careful during the Elk Park
Center discussions to make sure that everyone knew that the development
was not a city project, but that the city was reviewing a request that was
within the rights of the private landowner to propose.
If the City Council approves this request, the city engineer would then be
doing the grading plans for the developer and would be reviewing his own
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
work for the city. At the public hearings, the city engineer in theory would
have to stand up twice; once as the developer presenting the grading plan,
and another time as the city to review and comment on the plans. Clearly at
this point, the city is "crossing over the line" and getting into the
development business on behalf of the private developer. The black and
white difference between the city and the development project at this point
would become gray, and the public or the citizens may begin to see no
difference between the city and the developer.
What is an even larger concern is that the courts may see the city as the
developer if there is a lawsuit involved with some parts of the grading plan
that don't work as proposed. The liability exposure to the city is the biggest
concern with this request. Please see the attached two page report from the
League regarding city liability and code enforcement. While the situation in
the report and this request are not identical, the "special duty" role of the city
and the liability concerns are comparable.
In many cases there are two, or even more than two, ways to do a grading
plan. If this is true in this project, a concern is whether or not the grading
plan is done in the best interest of the city or if the grading plan is done in
the best interest of the developer. The city engineer will be trying to serve
two different masters at this point, and while I believe the city's concerns will
"win", I do not believe that this is a good situation.
If this exception to city policy is approved, the city must also be concerned
about what additional requests will be coming in the future. I really don't
know what would be on the horizon, but if this policy exception is approved,
we have begun to cross the line and we can only hope that there will not be
other requests in the future. We especially do not want the city to do
residential grading plans.
This particular request from Mr. Foster is associated with his PUD project
and the proposed Menards project. I believe that the city engineer could do
the grading plans for this plat without it becoming a problem for the city
because of the ongoing good working relationship we have with Mr. Foster.
However, in the long term, and looking at the big picture, staff must
recommend against this request. I don't know how we could say yes and
make an exception to our policy in response to this request, and then say no
to other developers.
If the City Council disagrees with this staff recommendation for whatever
reasons, then the approval of this request should only happen if the developer
will sign a waiver of claim against the city and a hold harmless release for
the city for a claim by a third party. If this request is approved, it must be
noted that this is an exception to city policy and that it is not anticipated that
this type of exception will be approved again, especially not for residential
projects.
I must say that I really think having the city engineer do this grading plan
for Mr. Foster will work, but I can't find a good reason to make an exception
to our city policy. The potential negatives outweigh any potential city benefit
in doing work for the private developer.
This seems to be a relatively simple request by the developer, but many
questions and issues are raised when the city begins to do work for private
development projects.
January 11, 1996
Mr. Pat Klaers
City Administrator
City of Elk River
13065 Orono Parkway
Elk River, Mn. 55330
SUBJECT: HILLSIDE CROSSING II
Dear Pat,
I am writing this letter of request regarding the design and plans for this proposed
commercial development. The engineering firm ofM S.A. has had extensive involvement in the
design of the infrastructure and drainage throughout the HILLSIDE CROSSING project.
All previous design that was done factored in the future commercial uses with respect given to
location and calculated sizing of Sanitary Sewer, Watermain, Surface Drainage, and Storm Sewer.
This work was performed by M.S.A.
Because of M. S.A.'s knowledge of the design features, I would like the city to consider
my request to have M.S.A. design and provide the plans for the Grading Plan for common
excavation. The grading and drainage is directly connected to the Storm Sewer location and
design which will be done by MS.A. I feel it would be unwise and time consuming to throw
another engineering firm into the pot. Another engineering firm would have to familiarize their
staff with design already completed and installation inspected by M.S.A. Calculations for future
projects that are dependant upon the completed drainage design and infrastructure has also been
completed by M.S.A.
It is for these reasons that I am asking the city to allow us to have M.S.A. produce the
Grading Plan for common excavation. The detailed elevation plans will be part of each site plan
submittal and will be done by that applicant's engineer.
Thank you for considering this request.
Respect~ su, b~_~t.~?
Richard Foster
Phoenix Enterprises, L.L.C.
Loss Control Quarterly
A__P~lication of the l~ague of Minnesota Cities Insurance Trot
l~al11993 Number 22
Liability for building code administration
Thomas L. Grundhoefer, LMC~
Consider the following situation.
Smith[own is a rapidly growing ¢om.
mur~i~. Residential development has
increased 100 percent over the Ias[ 10
years. Smithtown's building inspec-
tion department consists of Joe, who
has been Smithtown's only building
official nor the past 25 years, and a
single support staff person, Joe gener-
ally works about 50 hours per week,
reviewing plans and conducting the
required inspections under the state
building code. Smith[own has a num:
bet of different contractors working
within the community., some are more
financially stable tha~ others.
Recently. an angry homeowner sued
Smith[own because Joe apparently
Overlooked a deficient construction
item on the homeowner's recently con-
structed home, The homeowner also
believes [hat Joe was negligent in issu-
ing a certificate of occupancy for the
home when it was not adequately con-
structed. The homeowner also sued
his contractor, Poor Construction, Inc.
bu: not surprisingly Poor Constructior
is no longer in business, having filed
bankruptcy six months earlier.
If the preceding scenario hits too
close to home, you are probably not
alone. Cities and their building officials
Senior Staff Counsel
have come under increasing public
scrutiny for the way they conduct build-
ing Jnspec:ions. Over the past several
years, building practices in Minnesota
have been a subject of a number of
newspaper articles, legislative activi-
ties, and even an i-team report. (The I-
team is a group of investigative report-
ers for WCCO-TV in Minneapolis/St.
Paul.) At the same lime. the League of
Minnesota Cities Insurance Trust
(LMCIT) has seen an increase in the
number of complaints from angn/
homeowners claiming negligent building
insl2ection practices.
~'Fortunately for Minnesota cities, the
courts continue to afford protection to
cities for [~qeir inspection and permit
issuance activities. This article will at.
tempt to define the current law in Minne-
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October 28 on the Americans with Disabilities Act (ADA). The telecon-
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will begin at 9:00 am and conclude by 3:30 pm. Presenters will be ~om
the Attorney General's Office and the Minnesota State Council on
Disabitity,
The telecor, ference wilt give participants detailed informal, ion about
ADA, the federal leoisla[ion which guarantees equal rights for people with
disabilities. EmphaSis will be placed on employment Title I of the act and
accessibility Title I1, Participants will be able :o ask questions cf
oresenters.
Contact Nell Doughty. Department of Human Services, ¢612} 296-2113
for registration information. ·
sofa regarding building inspection
activities, tt also offers some constn~c-
tive suggestions cities might use to
t~ead off complaints, AS many cities
well know, even though they may r~ot
ultimately be found liable, the time. ex-
pense, and inconvenience associ-
ated with defending these ciaim$ can
be penalty enough.
Current law
Historicafty, courts have differenti-
ated between "public duties," those
owed to society as a whole, ~ "spe-
cial duties,' ~ose owed to particular
individuals. They have said that public
duties cannot provide the ~undation
for a negligence action, The courts
have said that since building inspec-
tions invorve the enforcement of a state-
wide law designed to protect society
as a whole, these actMties create only
a public duty. Failure to properiy ad-
minister the building code will there-
fore, generally, not result in a finding of
negligence against a city. On the other
hand, if a homeowner is able to estab-
lish the existence of a special duty.
then the homeowner may~
create a valid action against = city.
The courts have looked at four fac-
tors to de[ermine if a city owes a spe-
cial duty to a particular landowner.
Those four factors include:
1. Actual kr~wledge of a dangerous
conditior~;
Continued on page 2
MINNESOTA CITIES ! OCTOBER 1993
. 2 / LOSS CONTROL QUARTERLY FALL 1993
Continued from page 1
2, Reasona01e reliance on representa-
tions a building ofl~cial made;
3. The existence of a special statute
designed to protect a special class
of individuals: and
4. The building inspector has increased
the dsk 0¢ harm t.o a ioarticular prop-
arty owner.
Rarely do the third ~J'~d fourth fac-
tors come into play. The state building
code according to the courts is not 8
special statute designed for the pro-
tection of a particular class of individu-
als. Similarly, building inspections are
not generally viewed as increasing the
risk of harm to particular individuar,~.
Most of the legal analysis in this area
has centered on whether the city had
actual knowledge of a particular code
deficiency and whether a property
owner could have reasonably relied o~
representations made by a building
official.
In viewing the actual knowledge
requirement, the courts stated tl~e
buildir~g inspector must have actually
viewed or witnessed a building infrac.
tion or deficiency in order [o meet [his
[actor. In most cases, buildin9 inspec-
tors will not knowingly sign off on an
inspection if [hey are aware of code
violations. Typically what happens is
through inadvertence or oversight, an
inspector will miss a code violation.
The courts have been faJdy clear thai
inadvertence or simply missing an in-
fraction does r~t result in the city being
liable,
Regarding [he reliance factor, the
courts have said that generalized reli-
ance upon the fact that an inspection
was conducted is not enough to meet
this factor. Recently, t;qe Minnesota
Court of Appeals reiterated that build-
ing inspections and issuance of buitd
ing permits are not meant to be guar..
antees to property owners that a home
is in full compliance with the Minnesota
state building code.
The courts have atso looked at
whether issuing a certif,2ate of occu-
pancy to a homeowner might be a
'900d housekeeping seal of approval"
upon which property owners can rea-
sonably rely. Again. the Minnesota
Court of Appeals recently affirmed that
issuance of a certificate of occupancy
- . I is a protected discretionary function
'.'. Loss COntrol Quarterly" courts have found a specia
' ' ~ \l duty exists only when a building
,Edit. o.r: .:.. ' ' ..::. '.X ~l spector steps out of the public role and
.LMCrrStaffAttorne-j~,:,~,.'.;.'..~:.~.'..Jl sultant. For instance where a
':')~,oma~.~eru.ndh.,~.~~.,~¢,=~J homeowner has consu ted and asked
,. .... . ,. ,,~,,. ,- e ngpector to a e spec fic racom.
.... ~.' '. - ' "' ' .... '.' .,. ..... "~ .~ ,ng or oes~gn metr~odo ogy cour[s nave
quarterly by the:League of Minnesota '
Cities Insurarlce Trust for. lbo purpose of
educating and informing ckias about loss..
contro~ methocte and risk management.,..
The opinion~'..~xp, re. ssed in'~i~, publication
ate those'of the autrio~ and ate not
intencled to provide specific legal advice.
:
League o! Minnesota Cities."
Insurance Tru~
3490 Lexington Avenue North
St. Paul, Minnesota 55126 .
In light of recent case law &qd the
increased litigation cities are facing,
there am a couple practical sugges-
tions which cities may want to look at
in order to head off ctaims adsing out of
building code administration.
Provide an advisory statement
when issuing permits. While those
in the building construction trade know
that building inspections are not a guar-
antee, the general public !2robably may
not hold the same view. Homeowners
who have had an inspector approve
their construction plans and have re-
ceived a certificate of occupancy prob-
ably feel tibet they can rely on these
appcovals,
To counter this perception, we sug-
gest that cities develop a form to hand
out with the building permit and certifi-
cate of occupancy which spells out in
no uncertain terms 'that 'the issuance of
permits and the inspections conducted
does not constitute any sort of guaran-
tee from the city that the home is in
perfect compliance with the state build-
ing code. The form may even want to
suggest that a homeowner procure
the services of a pdvate inspector if
they desire tl~e additional protection.
By giving out this advisory when
issuing permits, cities may be able to
head off the misguided litigation which
orlon results when a contractor's work
is not up to the Clualit'y [he homeowner
expected ....
Avoid acting like a consultant,
~f the building inspector steps out of the
public rote and acts as an advisor to
the homeowner or the contractor it can
cause problems, While it may seem
like the "nice" thing to do, it can result
in liability exposure for the city,. AS a
general rule, city inspectors should
avoid taking on this role.
At [he very least, if an inspector is
going to get involved in solving unique
problems encountered a[ building sites,
we recommer~d the cify develop a
waiver form. For instance, if the
homeowner asks for help solving a
problem the inspector should ask the
homeowner to sign a document re-
leasing the city from any liability that
may result from following the inspector's .
suggestions. The city would want the
homeowner to sign the waiver form
prior tO the inspector making any rec-
ommendations.
Conclusion
While the courts continue to afford a
wide amount of !:yotection to cities in
the building inspection area, the cost
of defending these claims has become
very significant, Additionally. the nega-
tive publicity these cases can generate
is also costly. Consequently, LMClT
suggests that cities take a hard look at
their building inscection practices in
order to better educate the public about
what inspections and permits are meant
to represent. ·
32 II II I MINNESOTA CIrl'IES I OCTOBER lgg3