2003-2010 Staff Reports/Misc. - Laserfiche WebLink

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new growth and substandards streets." In addition, the resolution granted authority to establish interchange TIDs, under which the city purportedly could seek to collect costs related to the construction of interchanges. Undeveloped land within an established TID would be charged a fee—to be imposed at the time the property owner sought development approval—that would be based upon a formula attempting to attribute and quantify the impact of development of the land upon area transportation infrastructure. The formula for TID fees that was devised by the city engineer and adopted by the city council first determined an estimate of the total cost for projected transportation improvements needed in a TID as a result of development of undeveloped land in that district. Then the fees to be charged to the undeveloped property owner would be calculated based upon a formula that took into account the acres of developable land on the site, the zoning of the land, and the projected traffic that would be generated by the site when fully developed. The SJC property became part of what Rochester established as the Willow Creek Transportation Improvement District (Willow Creek TID). When the city established the Willow Creek TID, it identified all developable property within the district, determined the nature and extent of development that this land could support, projected the amount of traffic the fully developed land would generate, and, in turn, projected the total cost of the transportation improvements that would be needed within the Willow Creek TID to support the increased traffic from development. This exercise produced a figure of some $15 million that the city projected for the cost of future transportation improvements it believed would be needed for the Willow Creek TID. Transportation improvements in the immediate vicinity of the SJC property included the expansion of 40th Street SW from a two-lane to a four -lane road, which became the city -funded portion of the improvements, and the construction of a grade -separated interchange at 40th Street SW and TH 63, which was a state and federally funded project. During the entire period of Rochester's regional transportation planning process dating back to 1995, Kottschade had been attempting to develop the SJC property and, to that end, had made numerous development proposals to the city. At the time the city adopted its TID program and the Willow Creek TID, Kottschade had before the city a proposed commercial development for some 70 acres of the SJC property adjacent to TH 63. The city approved a general development plan and gave preliminary plat approval to this proposal, subject to Kottschade entering into a development agreement with the city. The development agreement included a requirement that Kottschade pay over $1.7 million in TID fees that had been calculated by the city based upon the developable acreage within the SJC property, the zoning, the projected traffic that full development would generate, and the total cost of all transportation improvements that the city determined would be required within the Willow Creek TID. When Kottschade objected to the TID fees, the city invoked Minn. Stat. Ch. 429 to levy the precise amount of the TID fees as special assessments against the SJC property. Kottschade exercised his statutory right to appeal the assessments to Olmsted County District Court, where the appeal was tried before the court in January 2008 and decided in July 2008. The SJC Decision Because Rochester had levied the TID fees as special assessments, the fees were subjected to judicial scrutiny under the legal standards applicable to special assessments. Primarily, this meant determining whether the amount of the special assessments exceeded any special benefits conferred on the SJC property.17 A "special benefit" means an increase in market value of the property resulting from the improvement. Another legal consideration in special assessment appeals is whether the assessments are "uniform upon the same class of property." That is, whether all properties that have specially benefited have been treated the same. Key issues at the special assessment appeal trial were what portions of the 40th Street SW transportation improvements, if any, provided special benefit to the SJC property; what was the highest and best use of the SJC property before and after the 40th Street SW improvements; and whether the assessments were uniform. Appraisers, traffic engineers, and civil engineers gave testimony related to these issues. The city argued at trial that both the improvements that widened 40th Street SW from a two-lane to a four -lane road and that created the grade -separated interchange at 40th Street SW and TH 63 should be considered in determining the special benefit conferred upon the SJC property. The district court found that the only improvements appropriately considered in determining the amount of special benefit conferred on the SJC property were those improvements that were funded by the city, which excluded the grade -separated interchange—a state and federally funded project. Moreover, the district court found that the expansion of 40th Street SW to four lanes provided only limited benefit to the SJC property because topographic challenges precluded any access point from the SJC property to 40th Street SW except at the northeast corner, near TH 63. The court further found that the traffic levels on 40th Street SW to the west of this access point (which led traffic away from, not toward, the city proper) did not justify a four -lane road to the west—either currently or even in the year 2025, which was the traffic - projection year relied on by the city. The district court also found that the highest and best use of the SJC property before the 40th Street SW improvements