Condemnation by Minneapolis Community Development Agency (MCDA), of Certain Lands in City of Minneapolis Situated in Development Dist. No. 57, South Nicollet Mall, Matter of

• Decision Date: 25 August 1998
• Docket Number: No. C2-98-276,C2-98-276
• Citation: 582 N.W.2d 596
• Parties: In the Matter of Condemnation by Petitioner, the MINNEAPOLIS COMMUNITY DEVELOPMENT AGENCY (MCDA), OF CERTAIN LANDS IN THE CITY OF MINNEAPOLIS SITUATED IN DEVELOPMENT DISTRICT NO. 57, SOUTH NICOLLET MALL. MINNEAPOLIS COMMUNITY DEVELOPMENT AGENCY (MCDA), petitioner, Respondent, v. OPUS NORTHWEST, LLC, a Delaware limited liability company, Appellant, University of St. Thomas, et al., Respondents Below, and OPUS NORTHWEST, L.L.C., a Delaware limited liability company, Appellant, v. MINNEAPOLIS COMMUNITY DEVELOPMENT AGENCY, Respondent, City of Minneapolis, Respondent.
• Court: Minnesota Court of Appeals

Page 596

582 N.W.2d 596

In the Matter of Condemnation by Petitioner, the MINNEAPOLIS

COMMUNITY DEVELOPMENT AGENCY (MCDA), OF CERTAIN LANDS IN THE

CITY OF MINNEAPOLIS SITUATED IN DEVELOPMENT DISTRICT NO. 57,

SOUTH NICOLLET MALL.

MINNEAPOLIS COMMUNITY DEVELOPMENT AGENCY (MCDA), petitioner, Respondent, v. OPUS NORTHWEST, LLC, a Delaware limited liability company, Appellant, University of St. Thomas, et al., Respondents Below, and OPUS NORTHWEST, L.L.C., a Delaware limited liability

company, Appellant, v. MINNEAPOLIS COMMUNITY DEVELOPMENT AGENCY, Respondent, City of Minneapolis, Respondent.

No. C2-98-276.

Court of Appeals of Minnesota.

Aug. 25, 1998.

Syllabus by the Court

1. Public purpose and necessity cannot be thwarted by alleging that condemnation is illegal if the alleged illegality has not yet occurred or by alleging that the purpose for condemning the property is too speculative if in fact the project is officially supported by the governmental entity and ordinary agreements are in place to realize the project.

2. There is no need to create updated findings for a tax increment financing district if the original estimated amount of indebtedness for the district has not been exceeded.

John M. LeFevre, Jr., Robert J. Lindall, Robert A. Alsop, Stephen J. Bubul, Kennedy & Graven, Chartered, Minneapolis; and Michael L. Schwab, Development Counsel, Minneapolis Community Development Agency, Minneapolis, for respondent Minneapolis Community Development Agency.

Douglas A. Kelley, John M. Lee, Steven E. Wolter, Douglas A. Kelley, P.A., Minneapolis; and James S. Holmes, Sean D. Kelly, Holmes & Galey, Ltd., Minneapolis; and Regina M. Chu, Regina M. Chu, P.A., Minneapolis; and John D. Hagen, Jr., Minneapolis; and Leland J. Frankman, Minneapolis, for appellant.

Jay Heffern, Minneapolis City Attorney, Michael T. Norton, Deputy City Attorney, James A. Moore, Assistant City Attorney, Minneapolis, for respondent City of Minneapolis.

Considered and decided by SCHUMACHER, P.J., and RANDALL and KALITOWSKI, JJ.

OPINION

SCHUMACHER, Judge.

A joint trial was held on the condemnation of appellant Opus Northwest, L.L.C.'s property and its civil taxpayer action under the tax increment financing statute. The trial court decided both actions in favor of respondents Minneapolis Community Development Agency and City of Minneapolis (the city). We affirm.

FACTS

The city seeks to invoke the power of eminent domain to take two parcels of property located on Nicollet Mall in downtown Minneapolis. The condemnation is being undertaken to serve the city's desire to locate a mid-priced retail store, parking complex, extended skyway access, and an office building in the south Nicollet Mall area. Due to the high cost of downtown property, the city has used tax increment financing to attract a mid-priced retailer to locate downtown.

The city has been unsuccessful for a number of years in bringing development projects to south Nicollet Mall. There has been no large-scale development in the area for a number of years, and the city complains that a lack of skyway connections, insufficient parking, and parcelization of land ownership prevents projects that could improve the tax base and economy of the area. In the mid-1980s, the city designated the area as a redevelopment district and a tax increment financing district. At that time, it made detailed findings supporting those designations. In 1996, before commencing the Ryan-Dayton Hudson project, the city updated and confirmed its earlier findings.

The city is contracting with Ryan Corporation for the development, construction, and eventual ownership of much of the project. The retail store will be owned and operated by the Dayton Hudson Corporation, which will place a Target store on the first and second floors of the building (hereinafter Dayton Hudson and Target collectively referred to as Dayton Hudson).

Opus is the owner of the two parcels being condemned. Before the city and Dayton Hudson chose Ryan, Opus also bid on the project, but it was not chosen because, among other reasons, Opus could not secure a mid-priced retailer as an anchor tenant. Opus now proposes to build a $120 million office building on its property without any government subsidies, however, its current proposal still does not contain a mid-priced anchor retailer. Opus objected to the condemnation proceedings.

Minneapolis ordinances require contractors to file affirmative action plans before doing business with the city. Dayton Hudson has not filed an affirmative action plan with the city. Opus, as a private taxpayer under the tax increment financing statutes, challenges the legality of the overall project.

ISSUES

1. Did the trial court err when it approved the condemnation petition?

2. Did the trial court err when it upheld the city's proposed use of and procedures for tax increment financing?

ANALYSIS

1. Condemnation

From the 19th century to the present, the judiciary's review of condemnation proceedings has remained "very narrow." State ex rel. Simpson v. Rapp, 39 Minn. 65, 67, 38 N.W. 926, 928 (1888); County of Dakota (C.P.46-06) v. Lakeville, 559 N.W.2d 716, 719 (Minn.App.1997). We review only whether the taking serves a public purpose and is necessary. City of Duluth v. State, 390 N.W.2d 757, 763, 764 (Minn.1986).

Great weight must be given to the determination of the condemning authority, and the scope of review is narrowly limited. If it appears that the record contains some evidence, however informal, that the taking serves a public purpose, there is nothing left for the courts to pass upon. * * * The court is precluded from substituting its own judgment for that of the [public body] as to what may be necessary and proper to carry out the purpose of the plan.

Id. at 763 (quoting Housing & Redev. Auth. v. Minneapolis Metro. Co., 259 Minn. 1, 15 Opus admits that this court should show deference to the city's legislative condemnation findings but contends that the deference should not be "slavish." Opus argues that "substantial authority" requires that we apply a "heightened scrutiny" to any condemnation that benefits private interests. Opus's foreign authority, however, is distinguishable. See Wilmington Parking Auth. v. Land With Improvements, 521 A.2d 227, 230-31 (Del.1986) (government parking authority acted outside its narrow statutory parking power when underlying purpose of condemnation was to benefit newspaper, not create parking); City of Lansing v. Edward Rose Realty, Inc., 442 Mich. 626, 502 N.W.2d 638, 645 (1993) (city sought to condemn apartment building because owner refused to use city's franchised cable company; court held condemnation served no public purpose because there was no statutory grant of power to allow access for cable T.V., and public benefit was not clear and predominant); Poletown Neighborhood Council v. City of Detroit, 410 Mich. 616, 304 N.W.2d 455, 457, 459 (1981) (court, despite announcing it was using heightened standard, affirmed Detroit's condemnation of land to allow General Motors to construct assembly plant to increase employment and revitalize economic base of community); City of Ctr. Line v. Chmelko, 164 Mich.App. 251, 416 N.W.2d 401, 402 (1987) (city's condemnation was "complete fiction" because city acted as agent for local car dealer and alleged public purposes were not supported by the evidence); City of Jamestown v. Leevers Supermarkets, Inc., 552 N.W.2d 365, 372, 374 (N.D.1996) (case remanded for court to determine if "primary object" was public; court noted trend is to allow broad legislative discretion to use powers of eminent domain for variety of economic development purposes).

104 N.W.2d 864, 874 (1960)). Public purpose and necessity are questions of fact, and the district court's decisions on these matters will not be reversed on appeal unless clearly erroneous. State by Humphrey v. Byers, 545 N.W.2d 669, 672 (Minn.App.1996).

Unlike the condemnations criticized in City of Lansing and Wilmington Parking, the condemnation of Opus's property falls within the city's prescribed authority. Additionally, it appears that the application of a heightened level of scrutiny to review condemnation proceedings, for which Opus cites these foreign cases, is out of touch with the national trend. 2A Nichols on Eminent Domain, § 7.06[c], at p. 7-242 (Matthew Bender revised 3d ed.1998) (trend is to sanction "broad legislative discretion to use eminent domain for a variety of economic development purposes.").

Finally, Opus's foreign authority is inconsistent with Minnesota caselaw. Minnesota courts have not employed a heightened standard of review in appeals involving governmental condemnation benefiting private parties. See, e.g., City of Duluth, 390 N.W.2d at 763-64 (condemnation of Jeno Paulucci's Chun King plant to allow a paper mill to be built); City of Minneapolis v. Wurtele, 291 N.W.2d 386, 390 (Minn.1980) (condemnation of private property to construct City Center in downtown Minneapolis). We reject the invitation to change our well-established and limited standard of review.

What constitutes a "public use" or "public purpose" is broadly defined. City of Duluth, 390 N.W.2d at 763. As noted, it includes a city's acquisition of private property for use by a different private entity. Id. at 763-64. If there is some evidence in the record that the taking serves a public purpose, there is nothing left for the court to decide. Id.

Condemnation efforts undertaken to enhance deteriorating urban areas and to create jobs satisfy the public purpose aspect of a condemnation proceeding. Id. at 763; see also Wurtele, 291 N.W.2d at 390. The legislature has recognized that actions taken to foster new development, including the financing thereof, "in areas of a city that are already built up in order to provide employment opportunities, to improve the tax base, and to improve the general economy of the state * * * are [examples of] a public purpose." Minn.Stat. §...