City Hall update: Appeals court rules in citys favor in Loring Park developer lawsuit

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May 20, 2011
By: Nick Halter
Nick Halter
The Minnesota Court of Appeals on May 3 ruled that the city of Minneapolis did not violate a developer’s due process rights in 2004, but upheld a district court decision saying the City Council was unfair when it ruled against the developer.

The ruling means the city won’t have to pay $526,000 in attorney fees and damages, which the Hennepin County District Court had awarded to the developer.

The appeals court did, however, rule that the City Council’s decision to deny land-use application for the development was  “arbitrary and capricious.” It cited Council Member Lisa Goodman’s (7th Ward) actions in 2004, saying she was closed-minded in hearing Hoyt’s proposal and made efforts to mobilize neighbors and sway City Council members against the project.

That means developer Brad Hoyt is entitled to another hearing before the City Council for his proposed 21-story residential tower in Loring Park. His attorney, Bill Skolnick, said on May 9 that Hoyt would first ask for a review of the case by the Minnesota Supreme Court.  

“The court’s failure to provide a meaningful remedy is extremely disappointing,” Skolnick said in a statement. “The only remedy the court had the courage to award is to go back and have another unfair hearing.”

Minneapolis City Attorney Susan Segal disagreed with the court’s ruling that the city was unfair in 2004, but said that if Hoyt wants it, he will get a fair hearing before the City Council.

 “If the court found some problems with process, the proper route to go was for a new hearing in front of the City Council and that’s what they did,” she said, applauding the rest of the court’s decision.

The appeals court said the City Council did have a basis in 2004 for denying Hoyt’s development applications, because there is evidence that the proposal was “inconsistent with the scale and character of the neighborhood and might block views of landmarks, open spaces, or bodies of water.”

Bill to reverse city’s NRP freeze makes its way through Legislature

With $10 million in frozen neighborhood funds at stake, City Hall and Minneapolis neighborhood groups took their fight to the Minnesota Legislature in early May.

Neighborhoods, so far, are winning in their quest to get back money that had been set aside from a state-authorized program that allowed money from development projects to be diverted to neighborhood groups.

The neighborhoods are finding an unlikely ally in at the Capitol. On a 9–6 vote in a House committee on May 5, eight Republicans supported the neighborhoods while five DFLers sided with City Hall.

The vote came after testimony from Mayor R.T. Rybak and Council President Barb Johnson, who said the state would be overreaching and taking over local control of the city’s efforts to hold the line on taxes.

“What you would be saying if you passed this bill is when a local unit of government makes a tough choice in the name of property tax relief, they better be looking over their shoulder,”
Rybak said.

Rybak and the City Council in December froze $12.7 million in money that had been set aside for neighborhood groups. The city later released $2.7 million of that money, but plans to use the remaining $10 million to fund neighborhoods through the city’s own program — a move they say will help hold the line on property taxes in 2012 and 2013. “Our plans for the future continue to support neighborhood associations,” Johnson said. “If this bill is passed, Minneapolis will have two separate neighborhood support programs running simultaneously until 2014.”

Minneapolis DFLers Rep. Phyllis Kahn and Sen. Ken Kelash are carrying the bill in the House and Senate, respectively.

They argued that the city does not have the authority to take that money because, when the state approved the Neighborhood Revitalization Program in the early 1990s, funding was meant for neighborhoods and not for the city.

“We are not trying to take any money from the city,” Kelash said. “This money was never in the city’s budget. I wanted to make that very clear because there’s some talk that this bill raises taxes. It does not.”

NRP Director Robert Miller said neighborhood associations are wary that the city will only fund neighborhoods until the unspent NRP funding has dried up.

Most of the DFL members of the House Government Operations and Elections Committee voted with City Hall, including Southwest Minneapolis reps. Frank Hornstein and Marion Greene.

Rep. Bev Scalze (DFL-Little Canada) said it’s not the state’s place to tell Minneapolis elected officials what to do.

“I’m not interested in telling cities that they have to behave, because we give them rights, and we give them powers, and then when they do something wrong, the citizens have the right to un-elect them at the next election,”
she said.

A similar committee passed the Senate version of the bill on May 2. The Legislature is scheduled to convene on May 23.