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2003-2010 Staff Reports/Misc.
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2003-2010 Staff Reports/Misc.
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MV City Charter Commission
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was mixed commercial and residential development, rejecting the city's contention that before the 40th Street SW <br />improvements, street infrastructure and access were insufficient to support any development except low-density <br />residential. The district court found the following facts that undercut this city argument and supported the court's <br />findings: Rochester had rezoned significant portions of the SJC property fronting TH 63 from low-density residential to <br />commercial -industrial use; Rochester had approved a general development plan proposed by Kottschade for a 70 -acre <br />commercial development prior to the special assessments and the 40th Street SW improvements; Rochester had approved <br />a preliminary plat for the proposed commercial development; and Kottschade had established at trial that he had two <br />legal access points for the SJC property, the minimum access necessary for commercial development. <br />The district court further found that the special assessments were not uniform in that the city only levied the assessments <br />against undeveloped land within the Willow Creek TID. The evidence through traffic engineer testimony showed, however, <br />that a residential area north of 40th Street SW accounted for the vast majority of the traffic on 40th Street and, accordingly, <br />had benefited from the 40th Street improvements. The court found that the Rochester policy of assessing only undeveloped <br />properties and not developed properties within the Willow Creek TID was "unfounded" and "unsupported." "No meaningful <br />fact or reason was given as to why developed properties would not be benefited by a new road, bridge, and amenities such as <br />sidewalks and a bike path."18 <br />Ultimately, the district court recognized that the assessments failed all legal tests because the city never devised the fees as <br />assessments, but rather as impact fees based on the city's TID formula. <br />The TID formula is not one that looks at special benefit based upon a market approach but is rather a formula that starts <br />with the projected cost of a project and divides that cost amongst the properties deemed to be benefited based upon <br />projected traffic usage as determined by the size and zoning of the property and the projected trips associated with that <br />size of zoned property.19 <br />Accordingly, the district court concluded that the TID fees established by the city for the SJC property were <br />in the exact same amount as the special assessment ultimately levied against Plaintiffs' property, $1,716,586.34. TID fees <br />cannot be imposed involuntarily as they are not authorized under Minnesota law. The TID fee has the characteristics of a <br />road impact fee, which is not legally sanctioned.20 <br />For these reasons, the district court set aside the special assessments in excess of $1.7 million. <br />Conclusion <br />The SJC decision demonstrates that attempting to clothe an impact fee as a special assessment cannot bestow a legal <br />imprimatur on the fee because of the divergent nature and purposes of impact fees and special assessments. Rochester's <br />TID fees are the culmination of a process in which the city has attempted to implement a formula to meet the projected <br />costs of future transportation improvements in a designated area of the city (a TID) by having developers pay for the <br />impact of their developments on transportation infrastructure based on the TID fee formula. The TID calculation is devoid <br />of any consideration of the extent to which the developer's property has received any special benefit, that is any increase <br />in value, as a result of the transportation improvements. This disconnect between the inherent nature of special <br />assessments and impact fees proved fatal for Rochester when forced to defend its impact fees under the measure of <br />Legality provided by special assessment law. <br />Simply put, Minnesota cities should not be attempting to adopt and impose impact fees for road improvements unless the <br />Minnesota Legislature—as 25 other state legislatures across the country have done—adopts enabling legislation with <br />uniform and fair standards for implementing such fees. <br />See, e.g., "Assessments: Not a special feeling," 1/27/08 Minneapolis Star Tribune. <br />z SJC Properties, LLC, et at. v. City of Rochester, Olmsted County Dist. Ct. File Nos. 55-C6-05-1988/1991/1992/1994/1995/1996 <br />/1997, July 3, 2008, appealed Sept. 2, 2008, and pending as App. Ct. File No. A08-1536 ("SJC Properties"). <br />3 MINN. STAT. Ch. 429. <br />4 Carlson -Lang Realty Co. v. City of Windom, 240 N.W.2d 517, 519 (Minn. 1976). <br />
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