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MINUTES <br />City Council <br />May 27, 1981 <br />The Flttorney further stated that the insurance policy would take up the <br />cost of defense in a downzoning claim. Parks fe7t that a downzoning <br />claim is probably a gray area and it would not be unti7 the case was <br />decided in court that it would be determined whether the insurance policy <br />would provide coverage. <br />Fahey stated that it would be possible that the City would have coverage <br />for defense in a downzon~ng case, but not coverage for any damages that <br />might be awarded. <br />Parks felt that generally downzoning damages are not covered 6y insurance <br />companies, or the insurance companies would be out of business. However, <br />Parks felt that just the coverage for defense costs might be worth the <br />cost of the po7icy. <br />Mrs. Nardini asked if just the amount of records within the City pertaining <br />to the Schrier property including the appraisa1s on the property would put <br />the City in the position of doing a willful act in any downzoning of this <br />property. <br />Fahey replied that willful means the Council would do an illegal act <br />willfully. <br />Mrs. Scalze stated that the downzoning of the Schrier property might be <br />legal, but it could cost the City. <br />The Attorney stated that in a downzoning it is not always found that the <br />owner should receive a demunition in value on the property. Courts are <br />taking the position that the City has more authority to do these types <br />of things than they have found in the past. Courts are recognizing the <br />authority of the City to make changes for the good of the whole. If the <br />City has good reasons for the downzoning, and not just because the <br />neighbors want it, than there is solid reason for the downzoning. Such <br />reasons should be perhaps the health or safety of the area or drainage <br />prob7ems, increased crime and police costs. The City must have actual <br />data to back up these c1aims. <br />Mayor Hanson cited the case of the Mosted property and the City's having <br />to pay $40,000 in damages. The Flttorney replied that in this case the <br />City took property away from the owner. In a downzoning, the owner would <br />still have the property to develop, but it could only be developed in a <br />different fashion. Also the Mosted case went to a jury, and juries <br />generally sympathize with the property owner. <br />Mr. McNamara informed the Counci1 that the insurance company has to7~ <br />him that out of 16 cases they have handled on downzonings, the insurance <br />company won 15 of them and only one is going before the Supreme Court. <br />The Attorney felt these cases probably involved special use permits or <br />variances, with downzonings only being a small proportion of the cases. <br />However, the Attorney felt that the City would prevail in the great <br />majority of these types of cases. <br />Mrs. Scalze did not feel the City had documented evidence on a traffic <br />problem or crime problem in the area of the Schrier property. <br />Page -4- <br />