Brookfield Trade Center, Inc. v. County of Ramsey

• Citation: 584 N.W.2d 390
• Decision Date: 13 August 1998
• Docket Number: No. C1-97-2171,C1-97-2171
• Parties: BROOKFIELD TRADE CENTER, INC. and Petula Associates, Ltd., Respondents, v. COUNTY OF RAMSEY, Relator.
• Court: Minnesota Supreme Court

Page 390

584 N.W.2d 390

BROOKFIELD TRADE CENTER, INC. and Petula Associates, Ltd., Respondents, v. COUNTY OF RAMSEY, Relator.

No. C1-97-2171.

Supreme Court of Minnesota.

Aug. 13, 1998.

Rehearing Denied Oct. 9, 1998.

Syllabus by the Court

A tax increment financing assessment agreement which provides that the agreement's minimum market value for real estate tax purposes would be of "no further force and effect" upon the termination of the agreement does not affect assessed values established before termination of the agreement or real estate taxes based on these assessed values.

Susan Gaertner, Ramsey County Atty., M. Jean Stepan, Asst. County Atty., St. Paul, for relator.

Thomas R. Wilhelmy, Laurie J. Miller, Fredrikson & Byron, P.A., Minneapolis, for respondents.

Carla J. Heyl, St. Paul, for amicus curiae League of Minnesota Cities.

Peg Birk, City Atty., Peter J. McCall, Asst. City Atty., St. Paul, David F. Herr, Wayne S. Moskowitz, Maslon Edelman Borman & Brand, L.L.P., Minneapolis, for amici curiae City of St. Paul and HRA of City of St. Paul.

Considered and decided by the court en banc without oral argument.

OPINION

PAUL H. ANDERSON, Justice.

In a grant of summary judgment in favor of respondents Brookfield Trade Center, Inc. and Petula Associates, Ltd., the Minnesota Tax Court held that the January 2, 1993 real estate tax valuation for the Minnesota World Trade Center must be recalculated so as to reflect the Trade Center's actual fair market value on that date. The tax court rejected relator County of Ramsey's argument that the minimum market value established in an assessment agreement executed as part of a tax increment financing development agreement was the correct basis for determining the Trade Center's 1993 valuation. In arriving at its holding, the tax court interpreted language in the assessment agreement providing that the minimum market value established in the agreement "shall be of no further force and effect" after the agreement's termination as eliminating the effect of the minimum market value on taxes payable after the termination of the assessment agreement and, implicitly, the valuations on which these taxes were based. We conclude that the tax court's interpretation of the assessment agreement is contrary to the plain language of the assessment agreement and the scheme of Minnesota's real estate tax laws. Therefore, we reverse the decision of the tax court and remand for determination of the remaining issue of whether the assessor's certification of the assessment agreement met statutory requirements.

In July 1985, the City of St. Paul and its Housing & Redevelopment Authority entered into a development agreement with Oxford Development Minnesota, Inc. to build the Minnesota World Trade Center. The agreement provided that the city would issue tax increment financing (TIF) bonds to finance the construction of the Trade Center. In conjunction with this development agreement, Oxford and the city entered into the assessment agreement at issue in this case.

The assessment agreement, dated July 2, 1985, set the Trade Center's minimum market value for real estate tax purposes at $1,800,000 on January 2, 1986, $10,827,401 on January 2, 1987, and $43,309,606 on January 2, 1988, and on each January 2 valuation date thereafter during the course of the agreement. The agreement provided for its own termination upon the happening of the earliest of four listed events, one of which was the retirement or discharge of the TIF bonds. Specifically, the agreement provided that, upon the happening of a listed event, "[t]he minimum market value herein established shall be of no further force and effect and this Agreement shall terminate[.]"

The Trade Center's real estate tax revenue was to be used to pay the interest and principal on the TIF bonds. The TIF bonds were projected to be paid off in full on February 1, 1993. The last payment on the bonds was to be made with funds received from the payment of the second one-half of the 1992 real estate taxes, payment of which was to be made in October 1992. As projected, real estate taxes due and payable in 1992 and all prior years were paid in full and the city retired the bonds on February 1, 1993. Retirement of the bonds, one of the listed events in the assessment agreement, triggered the agreement's termination.

On May 16, 1994, Brookfield and Petula, Oxford's successors in interest, filed a petition for review of the Trade Center's real estate taxes due and payable in 1994 and the January 2, 1993 assessment upon which these taxes were based. The petition requested that the tax court reduce the Trade Center's January 2, 1993 assessed value to reflect its actual fair market value. Brookfield and Petula sought this relief because they believed that the Trade Center's actual fair market value on that date was substantially less than the minimum market value established in the assessment agreement.

Following discovery, Brookfield and Petula filed a motion for summary judgment on four grounds: 1) under the assessment agreement's plain language, the minimum market value established in the agreement had no force or effect upon real estate tax proceedings commenced after the agreement terminated; 2) the parties intended the effect of the minimum market value established in the agreement to terminate after determination of the January 2, 1991 assessed value and payment of the 1992 real estate taxes that were based upon this assessed value; 3) the governing statute, Minn.Stat. § 273.76 (1984), authorized them to seek a reduction; and 4) the assessment agreement was unenforceable because the assessor's certification failed to comply with statutory requirements.

Relator Ramsey County filed a cross-motion for summary judgment on the ground that the tax court was barred from considering the effect of the termination of the assessment agreement on the assessed value because the termination occurred on February 1, 1993, nearly a month after the January 2, 1993 valuation date.

The tax court granted Brookfield and Petula's motion for summary judgment, holding that the minimum market value established in the assessment agreement did not control taxes payable after the termination of the assessment agreement on February 1, 1993 or the valuation dates on which these taxes were based. Therefore, the court concluded that the agreement did not control taxes due and payable in 1994 or the Trade Center's January 2, 1993 assessed value on which these taxes were based. Accordingly, the court went on to conclude that the January 2, 1993 assessed value should be retroactively changed to reflect the Trade Center's actual fair market value. The tax court based this holding on its interpretation of the following clause in the agreement: "[t]he minimum market value herein established shall be of no further force and effect and this Agreement shall terminate[.]" The court determined that in order to give the clause "of no further force and effect" a reasonable and effective meaning apart from the language indicating that the agreement would terminate, this clause must eliminate any legal consequences of the agreement's minimum market value after the retirement of the TIF bonds on February 1, 1993, including its effect on real estate taxes due and payable after that date. The tax court then went on to hold that as the agreement did not control the real estate taxes due and payable in 1994, the assessment agreement had no force and effect in determining the Trade Center's assessed value on the January 2, 1993 valuation date on which those taxes were based. ¹ Additionally, the tax court found that this holding was consistent with the parties' intent to use the agreement's minimum market value as a means to ensure that there would be sufficient taxes to repay the TIF bonds used to finance the Trade Center. The tax court then ordered the remaining issue of the fair market value of the Trade Center as of January 2, 1993 to be scheduled for trial. Ramsey County now seeks review of the tax court's decision.

In reviewing a summary judgment motion, we determine whether there are any genuine issues of material fact and whether the lower court erred in its application of the law. L & H Transp., Inc. v. Drew Agency, Inc., 403 N.W.2d 223, 227 (Minn.1987). We review de novo the tax court's conclusions of law, including the interpretation of relevant statutes. F-D Oil Co., Inc. v. Commissioner of Revenue, 560 N.W.2d 701, 704 (Minn.1997).

As an initial matter, we note that the tax court's order did not determine the entire controversy and, therefore, is not properly before us pursuant to Minn.Stat. § 271.10, subd. 1 (1996). However, we may permit discretionary review of such an order pursuant to our inherent powers and in the interests of justice. See Tarutis v. Commissioner of Revenue, 393 N.W.2d 667, 669 (Minn.1986). We conclude that it is in the interests of justice and, particularly, in the interest of judicial economy to review this matter now.

In interpreting the Trade Center's assessment agreement, it is important to understand the basic contours of Minnesota's real estate tax system and the TIF laws that authorize such an agreement. A fundamental element of our real estate tax system is a uniform valuation date when the annual value of all real property is determined. Minnesota Statutes section 273.01 (1996) provides that "[a]ll real property subject to taxation shall be listed * * * with reference to their value on January 2 preceding the assessment." Hence, real property values are established in accordance with the property's value on the January 2 preceding the assessment, irrespective of events occurring after January 2 that may change the value of the property. We confirmed this principle in Stoltzmann v. County of Ramsey, where we held that, when setting the fair market value of the petitioner's home for real estate tax purposes, the assessor was prohibited from...