McShane v. City of Faribault, 49531.
| Decision Date | 04 April 1980 |
| Docket Number | No. 49531.,49531. |
| Parties | James W. McSHANE, et al., Respondents, v. CITY OF FARIBAULT, et al., Appellants, County of Rice, et al., Appellants. |
| Court | Minnesota Supreme Court |
Warren D. Chamberlain, Faribault, for City of Faribault.
R. Scott Hill, Faribault, for Rice County.
James R. Tschida, St. Paul, for respondents; David W. Nord, St. Paul, of counsel.
Stanley G. Peskar, St. Paul, for League of Minnesota Cities.
Smith, Carpenter, Petterson & Bailey and Jay R. Petterson, Bemidji, for City of Faribault, County of Rice and The Faribault and Rice County Joint Zoning Bd.
Eric W. Ingvaldson, St. Paul, for Minn. Dept. of Transp.
Oppenheimer, Wolff, Foster, Shepard & Donnelly and Michael Berens and Thomas
W. Anderson, St. Paul, for Metropolitan Airports Commission.
Harstad & Rainbow, Minneapolis, for State, Aeronautics Div.
Heard, considered, and decided by the court en banc.
Defendants City of Faribault, County of Rice, and the Faribault-Rice County Joint Airport Zoning Board appeal from a judgment issuing an alternative writ of mandamus compelling the city to initiate eminent domain proceedings with respect to approximately 42 acres of land owned by plaintiffs James McShane and members of his family and affected by zoning regulations adopted by the board. Plaintiffs had sued in the alternative for an injunction against the ordinance, damages, or mandamus to compel eminent domain.
The trial court determined there had been a substantial diminution in the value of plaintiffs' property, resulting in a taking without compensation in contravention of U.S.Const. amend. V and Minn.Const. art. 1, § 13. The court further held mandamus to compel the city to initiate eminent domain proceedings was the appropriate remedy and awarded attorneys' and experts' fees to plaintiffs under Minn.Stat. § 117.045 (1978). We agree in substance with the trial court's conclusion that enforcement of the zoning regulations would constitute a taking of plaintiffs' property without just compensation, but we reverse the judgment issuing mandamus and remand with instructions.
Plaintiffs are the owners of 64.86 acres of real estate located partly within the Faribault city limits and wholly within Rice County. The land lies adjacent to the Faribault Municipal Airport and is trisected by Interstate Highway No. 35 and Trunk Highway No. 390. Although plaintiffs' land has up to the present been used for agricultural purposes, the trisection of the property by the highways has, as all parties concede, made the property much more valuable for commercial and industrial use, and there was testimony that the current agricultural use of the property has been made impractical and in some places impossible by the location of the highways. A small portion of the property is now zoned commercial, some is zoned industrial, and a large section is zoned "urban expansion" (agricultural, but future rezoning contemplated).
Section 360.063, subd. 4, provides that the Commissioner of Aeronautics may prescribe an "approach plan" for public airports, indicating airport hazards and the measures to be taken to eliminate those hazards. This plan represents a minimum standard which the city or board must put into effect by zoning ordinances. If such ordinances are not adopted within a reasonable time, the commissioner may himself impose the required regulations on the airport hazard area. § 360.063, subd. 6.
Pursuant to § 360.063, subd. 4, the commissioner promulgated regulations dealing with use, population density, and permissible structures on land lying just beyond airport runways. These regulations, AERO-9 and AERO-10, were subsequently adopted as an ordinance by the board.1 The particular restrictions challenged here are in §§ 4 and 5 of the ordinance, which establish two "safety" zones within which some 42 acres of plaintiffs' land is located — 16.49 acres within Zone A and 26.04 within Zone B.
Zone A is a cone-shaped area just beyond the airport runway, equal to two-thirds the length of the runway. In Zone A, above-ground structural uses and uses which would attract an assembly of persons on the land are proscribed. The permitted uses include agriculture, horticulture, cemeteries, and the like. It is undisputed that commercial development would be out of the question.
In Zone B, the restrictions are less severe but still substantial. Zone B is just beyond Zone A and extends for a distance of one-third the runway length. Height of structures is limited, but the most restrictive provision is that population density may not exceed 15 persons per acre, and lots must be at least 3 acres. Furthermore, all public and quasi-public assembly uses, such as churches, schools, hotels, theaters, and hospitals, are forbidden.
Plaintiffs' expert appraisers testified at trial that plaintiffs' land was worth $522,000 when put to its highest and best use, commercial development. There was also testimony that just prior to the announcement of the airport zoning regulations plaintiffs had negotiated a lease-purchase agreement and an option agreement to sell parcels for commercial development, but the options were not exercised. Plaintiffs testified they do not plan to develop their own property but want to sell it and are actively trying to sell it to someone who does. Plaintiffs' experts concluded that the total diminution caused by Zone A and Zone B restrictions was $360,000, or 67 percent. Defendants' appraisers valued the land without the restrictions at $234,500. They estimated the Zone A land was worth $63,740 and was reduced 50 percent in value to $32,520, and the Zone B land was worth $179,710 and was reduced 9.3 percent to $163,000. All parties concede the diminution in value was substantial.
After unsuccessful attempts to convince defendants to withdraw the ordinance or to pay the damages as determined by plaintiffs' experts, plaintiffs brought the action from which this appeal was taken.
1. Defendants contend, first, that plaintiffs failed to exhaust their administrative remedies and therefore cannot challenge the zoning ordinance in court. Section 360.072, subd. 4, provides that any person aggrieved by an airport zoning regulation must apply for a permit, variance, or exception, or appeal to the Board of Adjustment and exhaust all administrative remedies provided for in §§ 360.067 and 360.068 before judicial review may be sought. Defendants argue that since plaintiffs never requested a variance from the ordinance they are not entitled to judicial review thereof.
We believe that in the circumstances of this case plaintiffs were not required to seek a variance before challenging this ordinance in court. We have consistently held that administrative remedies need not be pursued if it would be futile to do so. Alevizos v. Metropolitan Airports Comm'n, 298 Minn. 471, 216 N.W.2d 651 (1974). Here, a variance would neither be adequate nor appropriate relief from the effect of the airport zoning regulations.
Plaintiffs do not wish to develop the property themselves. They wish to sell it to someone who will develop it, but have not yet found such a buyer. Accordingly, plaintiffs have no development plans upon which to base a request for a variance, and, as defendants themselves recognized, a variance cannot be considered in a vacuum. The Board of Adjustment ordinarily would need to consider specific plans for development to determine whether the variance "would not be contrary to the public interest * * * and be in accordance with the spirit of the regulations and chapter 360" (§ 360.067, subd. 2). Thus, action on a request for a variance would have to wait until plaintiffs could sell their property to a buyer with specific plans for it, and the marketability of the property would almost certainly be decreased because of the uncertainty. As a result, plaintiffs are affected to their detriment by the zoning regulations even if a variance ultimately is granted.
Furthermore, it is doubtful that a variance would even be appropriate. In the circumstances of this case, it would be virtually impossible to grant a variance to allow the full extent of plaintiffs' desired commercial development without undermining the safety goals of the regulations. We hold, therefore, that plaintiffs are not precluded from bringing this action by their failure to seek a variance.
2. We turn, then, to the issue of whether there was in fact a taking of plaintiffs' property without just compensation in contravention of U.S.Const. amend. V and Minn.Const. art. 1, § 13. Defendants do not challenge the trial court's finding that there was a substantial diminution in the value of plaintiffs' property as a result of the ordinance but argue that where a zoning regulation is involved, the appropriate test is not diminution in value but whether the regulation is so restrictive that there are no reasonable uses of the property left to plaintiffs. Defendants argue that since there are reasonable uses left, though not the most profitable, there was no compensable taking.
The opinion of the trial court and the arguments of the parties indicate to us that there is a great deal of confusion over the standards used to determine whether there has been a taking of private property as a result of governmental regulation of land use. The seemingly conflicting cases and principles can be reconciled, however.
We note at the outset that there is a distinction between interference with the use and current practical enjoyment of property by physical governmental activity, as where land is taken for a highway, or flooded by a dam project, or affected by airport noise and pollution, and a regulation of property use, as through zoning. In instances of the former type of governmental action, we have consistently held that where the activity causes a definite and measurable decrease in the value of plaintiffs' property and interferes with the current practical enjoyment of...
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