Developer of denied condo project wants $23.6 million from city

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September 28, 2009 // UPDATED 8:44 am - September 28, 2009
By: Dylan Thomas anc Cristof Traudes
Dylan Thomas anc Cristof Traudes
// A judge earlier ruled that Council Member Lisa Goodman didn’t follow due process when considering the Parc Centrale proposal //

Attorneys for a Wayzata developer say the city owes him millions of dollars because a City Council member’s bias sunk his 2004 proposal for a Loring Park residential development.

Judge Stephen Aldrich ruled Sept. 16 that City Council Member Lisa Goodman (7th Ward) failed to remain impartial during the “quasi-judicial” review process of the so-called Parc Centrale project.

Parc Centrale would have been a 21-story mixed-use tower flanked by two-story town homes, but it was denied by a unanimous City Council in 2004. Developer Brad Hoyt’s attorneys said they would seek $23.6 million in damages. A hearing was set for Sept. 29–30.

During quasi-judicial reviews, which apply to all rezoning applications, council members are not allowed to use opinion to make decisions, instead weighing merits on existing codes. That differs from most issues that come before the council, when it can use constituents’ input to determine approvals.

Council members are allowed opinions on zoning issues only when creating and passing ordinances, said Fred Morrison, a longtime University of Minnesota professor who teaches local government law. It’s then when the council members are supposed to make major zoning decisions, he said, not when considering applications.

“They’re not supposed to say, ‘It’s 27 feet from the road but too close for my view. Or it’s 12 feet from site property lines, but I don’t think it ought to be that close,’” Morrison said. “They’re supposed to simply administer the ordinance.”

This is where Aldrich found Goodman got herself into trouble. In his decision, he said Goodman had a “closed mind” going into a zoning committee hearing on Parc Centrale. He cited e-mails uncovered by Hoyt’s attorneys in which Goodman told constituents such things as, “… if we want to stop the high-rise we should stick to the points the planning commission will evaluate in the making the decision.”

Furthermore, Aldrich said, Goodman appeared to have lobbied fellow council members, as shown in e-mails where she told constituents that “we have [Council Member Gary] Schiff” and “I am very worried about the [zoning committee] meeting. I am hoping you can get a good number of folks to show up.”

That, Aldrich said, was “unlawful conduct.”

In ruling, some affirmations

Aldrich’s findings didn’t lean entirely against the city, affirming that the city had acted appropriately when it rejected several applications for variances and conditional-use permits.

According to court documents, Hoyt purchased the property at the intersection of Oak Grove Street and Clifton Avenue in 2003. With architecture firm Meyer, Scherer and Rockcastle, he developed several concepts for the site, eventually settling on a 21-story mixed-use tower design. City staff reviewed the project in August 2004 and recommended all applications be denied, noting that most buildings in the neighborhood were between three and six stories.

The Planning Commission subsequently denied the applications, followed by the zoning committee and the full council.

Hoyt, in his lawsuit, claimed the city had wrongly and arbitrarily denied the variances he requested, based on approvals for similar projects nearby. But Aldrich ruled the city had fact-based grounds for denial.

“We are pleased that the Court recognized both that the City had an appropriate factual basis to deny the Plaintiff’s application and that the proposed project was inconsistent with the City’s Downtown 2010 Plan,” City Attorney Susan Segal said in a statement, the city’s sole public comment since the ruling. (Goodman’s office has referred all comments to the city attorney.)

Damages and beyond

It’s unknown what the fallout from Aldrich’s ruling will be. First up is the damages hearing, after which the judge will have 90 days to make a decision.

Morrison, the law professor, said it’s unlikely the city will end up paying anywhere close to $23.6 million.

“These cases usually end up in some kind of compromise,” Morrison said. “They either end with the city taking the position that this was right — that the vote was not decisive because (a number of) other people voted the same way and a single vote didn’t make a difference and so forth — or they end up in some kind of renegotiation with the developer.”

Even then, there could be more trouble for the city. Hoyt attorney William Skolnick said there should be further investigation of what he called its “illegal conduct” in handling e-mail records. (Hoyt had to hire a forensic computer expert to uncover the e-mails later used in Aldrich’s decision.)

And, he said, perjury charges could be brought forward if Goodman is found to have lied in her pre-trial deposition. The council member said in the deposition that she couldn’t recall such things as who the constituents were who opposed the project — aside from two people — and which council members she talked to about Parc Centrale prior to the zoning committee meeting.

“I don’t recall expressing opposition,” she said in the deposition, done in April 2008. “If anything, I would have expressed concern. But I did not make a decision with regard to the specific applications at hand until after the zoning and planning committee meeting.”

Skolnick said he believes that, “ultimately, there will be a complaint, or at least the information will be brought to the U.S. Attorney’s office or the county attorney’s office for an investigation.”

Regardless, Loring Park resident and Goodman friend Scott Mayer already is disappointed. He said Aldrich’s ruling ignored overwhelming opposition to the project from neighborhood residents, many of whom thought the tower was too tall. A petition drive organized by Mayer to oppose the project resulted in more than 600 signatures.

Goodman “did not organize the neighborhood. It was a group of neighborhood residents who did that, and she merely was reflecting the interests of that neighborhood,” Mayer said.