Country Joe, Inc. v. City of Eagan

Decision Date06 March 1997
Docket NumberNo. C8-95-2289,C8-95-2289
Citation560 N.W.2d 681
PartiesCOUNTRY JOE, INC., et al., Respondents, v. CITY OF EAGAN, petitioner, Appellant.
CourtMinnesota Supreme Court

Syllabus by the Court

A statutory city lacks express or implied authority to impose a road unit connection Greene & Espel, P.L.L.P., Clifford M. Greene, John M. Baker, Minneapolis, Sheldon, Sheldon, Dougherty & Molenda, James F. Sheldon, Michael G. Dougherty, Apple Valley, for Appellant.

charge as a condition to issuance of building permits within its borders.

Thomas H. Goodman, Gerald S. Duffy, Wood R. Foster, Jr., Anthony J. Gleekel, Siegel, Brill, Greupner & Duffy, P.A., Minneapolis, for Respondents.

Campbell, Knutson, Scott & Fuchs, P.A., Roger N. Knutson, Eagan, amicus curiae.

Heard, considered and decided by the court en banc.

OPINION

KEITH, Chief Justice.

This case requires us to decide whether the City of Eagan may lawfully impose a road unit connection charge as a condition of issuance of all building permits within its borders. The city adopted such a charge in 1978 for the purpose of funding major street improvements. The respondents, home building contractors, challenged the city's authority to impose such a charge and sought a refund of all charges collected within the six-year statute of limitations. They also sought class certification on behalf of themselves and all others subjected to the charge. On cross-motions for summary judgment, the parties entered into a stipulation calling for the district court to initially consider only the question of the city's authority to impose the charge. After a hearing, the district court concluded that the city had the authority under its police powers to impose a road unit connection charge. The court of appeals reversed, concluding that the charge was unauthorized either by statute or case law. Country Joe, Inc. v. City of Eagan, 548 N.W.2d 281, 284 (Minn.App.1996). We affirm.

On February 14, 1978, the Eagan city council adopted a resolution imposing a road unit connection charge payable as a condition to issuance of all building permits within the city. 1 The resolution stated that its purpose was to provide "an equitable source of funding for major county and city street construction * * * in order to accommodate new development and traffic generated from future anticipated residential, commercial and industrial construction * * *."

The charge was prompted by a study conducted by the city's consulting engineers in 1977, which projected a shortfall of $1.11 million in funds available to finance major street construction in the city through the year 2000. The consulting engineers proposed that the city make up this shortfall by imposing a road unit connection charge, patterned after the water and sewer connection charges already imposed by the city pursuant to state law. See Minn.Stat. § 444.075, subd. 3 (1996).

The city deposits road unit connection charges collected into a Major Street Fund account, along with other sources of road funds. 2 Funds are not earmarked for any particular project and the city does not attempt to link expenditures to any particular funding source. In addition to major street construction costs, miscellaneous charges such as sealcoating and the purchase of signal lights are occasionally paid out of the account.

The original plan recommended that the charge "be reviewed annually and totally revised every 5 years in order to adjust for any significant changes in construction costs, revenue projections or changes in the development pattern within the City of Eagan." In December 1979, the city revised its estimated costs of construction upward to include the addition of pedestrian walkways to the city's street design. As a consequence, the city increased the road unit connection charge for a single family residence from $75 to $185. Except for annual increases based on an inflationary index, the plan has not been updated since this initial revision of 1979. The inflation-adjusted charge for a single family residence had increased from the initial $75 to $410 at the time this lawsuit was filed in 1994.

On appeal, the city contends that the imposition of a road unit connection charge is a lawful exercise of its implied powers under Minnesota law. The city suggests that the authority to finance road improvements can be implied from several sources, including the city's municipal planning authority under Minn.Stat. ch. 462; the implied power to impose an "impact fee" to fund infrastructure improvements, as currently recognized in numerous other states; and the city's power to collect regulatory and license fees pursuant to its general welfare powers under Minn.Stat. § 412.221, subd. 32.

I.

The city of Eagan is a "statutory city," meaning it is a municipal corporation that has not adopted a home rule charter as provided for under Minnesota law. See Minn.Stat. § 410.015. As a limited statutory creation, the city has no inherent powers beyond those "expressly conferred by statute or implied as necessary in aid of those powers which have been expressly conferred." Mangold Midwest Co. v. Village of Richfield, 274 Minn. 347, 357, 143 N.W.2d 813, 820 (1966). We first consider the city's contention that the road unit connection charge is a valid exercise of its implied municipal planning authority under Minn.Stat. ch. 462, the Municipal Planning Act. The policy statement introducing the act clearly expresses the legislature's intent to confer broad planning authority on cities: "It is the purpose of sections 462.351 to 462.364 to provide municipalities, in a single body of law, with the necessary powers and a uniform procedure for adequately conducting and implementing municipal planning." Minn.Stat. § 462.351. The city asserts that the road unit connection charge is merely an example of its lawful exercise of the broad planning authority conferred upon it under the act.

The city relies on our decisions in two municipal planning cases in support of its assertion. In Naegele Outdoor Adver. Co. v. Village of Minnetonka, we upheld an ordinance adopted by the village requiring advertisers to phase out billboards located in exclusively residential zones. 281 Minn. 492, 505, 162 N.W.2d 206, 215 (1968). We concluded that while no statute expressly authorized such an ordinance, the power to do so must necessarily be implied to effectuate the village's express statutory authority to create exclusively residential districts. Id. at 504, 162 N.W.2d at 215.

In Almquist v. Town of Marshan, we upheld the town's adoption of a zoning moratorium against a landowner's contention that, by expressly extending the authority to adopt such a moratorium to county boards while remaining silent on the power of municipalities to adopt similar moratoria, the legislature evinced an intent to withhold the authority from municipalities. 308 Minn. 52, 64, 245 N.W.2d 819, 825 (1976). We rejected the negative inference urged by the landowner, noting that, among other arguments, "an equally persuasive argument may be made that the legislature * * * simply assumed that municipalities had inherent power to enact such ordinances." Id. Thus, the city urges that after Almquist, absent an explicit expression of a contrary purpose by the legislature, cities are presumptively endowed with broad municipal planning powers--including the power to finance municipal improvements--subject only to the limitations of good faith and nondiscrimination. Id. at 65, 245 N.W.2d at 826.

Relying on Almquist, the city contends that the court of appeals erred in concluding that the legislature's failure to explicitly authorize the road unit connection charge in the tax statute was an "explicit expression" of its intent to withhold such authority. Country Joe, 548 N.W.2d at 284. To the contrary, the city asserts that not only is the construction of roads to meet new development needs reasonably related to the welfare of its citizens, see Minn.Stat. § 412.221, subd. 32, but also the implied authority to finance such construction can be derived from the Municipal Planning Act, see id. § 462.351, as well as from the city's authority to make public improvements under Minn.Stat. § 429.021, subd. 1 and Minn.Stat. § 412.221, subd. 6.

Finally, the city cites a Virginia case in arguing that the "authority to finance public activity is implicit in [the] authority to undertake it[.]" In Tidewater Ass'n of Homebuilders, Inc. v. City of Virginia Beach, the Virginia Supreme Court rejected the contention of an association of contractors that statutory authorization for a $200 million water project alone was insufficient and that "the financing mechanism or fee chosen by the City must be authorized separately * * *." 241 Va. 114, 118, 400 S.E.2d 523, 526 (1991). The court noted,

In order to exercise the duty and authority to provide a water system then, the corresponding ability to pay for the system must exist. We agree with the trial court that the ability to finance the cost of providing this service is inherent in the authority to provide it, and the specific mechanism chosen by the City to finance the project need not be defined by statute.

Id. at 119, 400 S.E.2d at 526.

We agree that Naegele and Almquist broadly define a city's ability to plan for the use of property within its borders. That the Municipal Planning Act expressly confers broad municipal planning powers on cities does not necessarily imply that the legislature similarly intended to confer broad financing powers under the act. In fact, the legislature's actions support the opposite conclusion. Although the legislature expressly provided for the sewer and water charges after which the city patterned its road unit connection charge, see Minn.Stat. § 444.075, subd. 3, it failed to provide such authorization for a road charge. That this lack of express statutory authorization was not the result of legislative oversight is evidenced by statutory provisions expressly...

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