Back to the May-Jun 2022 issue

City’s Zoning Variance Denial Upheld by MN Court of Appeals

Practical difficulties test

A cabin in the woodsJill Moore filed a lawsuit after the Morrison County Board of Adjustment denied her request for an after-the-fact variance from its zoning regulations. The requested variance would allow her to maintain the size and configuration of a new, non-conforming deck that she had built on her lakeshore property. The district court ruled in Moore’s favor and reversed the variance denial. The district court concluded that the Board of Adjustment had not properly applied the “practical difficulties test,” which is a test that zoning authorities use to decide whether to approve a variance request. The district court reasoned that the Board of Adjustment, when applying this test, should have considered additional factors that two prior appellate court decisions had ruled were relevant.

The Minnesota Court of Appeals reversed the district court’s decision, ruling that the Board of Adjustment had acted properly when it only considered the definition of the practical difficulties test that is set out in state statute, and that there was sufficient evidence in the record to support the decision to deny the variance. The Court of Appeals noted that the Legislature had amended the zoning statutes in 2011, by adding a list of mandatory factors for zoning authorities to consider when applying the practical difficulties test. The Court of Appeals concluded that this legislative amendment superseded the factors established in the pre-2011 appellate court decisions.

Moore v. Commissioner of Morrison County Board of Adjustment, 969 N.W.2d 86 (Minn. Ct. App. 2021).

Municipal hospital district

The Perham Hospital District (district) was formed in 1976 as a public, nonprofit health care organization to provide health care to rural communities near Perham, Minnesota. The district is a municipal corporation and a political subdivision of the state. The district owns and operates Perham Hospital (hospital). In 2011, the district acquired three clinics: Perham Clinic, Ottertail Clinic, and New York Mills Clinic (clinics). Otter Tail County classified the clinics as commercial properties, subject to property taxes, after determining that the tax exemption in state statute for hospital districts is available only to hospitals and not to clinics (see Minnesota Statutes, section 447.31).

The district filed tax refund claims, contending that the clinics should be classified as tax-exempt property. The county denied those claims, and the district filed timely appeals with the Minnesota Tax Court for each tax year at issue. For property to qualify as tax-exempt under state statute, a hospital district must own, use, or occupy the property “to improve and run” the hospital.

The Tax Court judge ruled in the district’s favor, concluding that it had used the clinics to improve and run the hospital during the tax years at issue. The Minnesota Supreme Court affirmed the Tax Court judge’s decision, adopting a broad interpretation of the statutory term “hospital,” and concluding that there was sufficient evidence in the record to support the Tax Court judge’s findings and conclusions.

Perham Hospital District v. County of Otter Tail, 969 N.W.2d 366 (Minn. 2022).

Park dedication fees

A city park

Almir Puce applied to the City of Burnsville to redevelop his residential property into commercial property with two businesses: an automobile dealership and a bakery/coffee shop. The city approved the application, and it ultimately imposed an $11,700 park dedication fee. The fee is consistent with the city’s ordinance, which authorizes a park dedication fee equal to “[5%] of the gross land area … multiplied by the average cost per acre by zoning district as established, from time to time, by the City Council.”

Under the state subdivision statute (Minnesota Statutes, section 462.358), cities may impose park dedication fees instead of requiring a dedication of a reasonable portion of the buildable land for public use. The subdivision statute provides that such a fee may be “based on the average fair market value of the unplatted land for which park fees have not already been paid.” The subdivision statute also provides that “[t]here must be an essential nexus between the fees … and the municipal purpose sought to be achieved by the fee,” and that “[t]he fee … must bear a rough proportionality to the need created by the proposed subdivision or development.”

Puce filed a lawsuit, claiming in part that the city’s application of its ordinance did not comply with the subdivision statute and had resulted in an unconstitutional taking of his property in violation of state and federal constitutional provisions. The district court ruled in the city’s favor, upholding the park dedication fee. The Minnesota Court of Appeals reversed the district court’s decision, concluding that the city’s imposition of the park dedication fee did not comply with the subdivision statute, based on the lack of the city’s “individualized determination” of the proposed development’s impact on city parkland.

The Court of Appeals ruled that a city may impose a park dedication fee only if it first reasonably determines that it will need to acquire and develop or improve a reasonable portion of parkland because of the development’s approval. The Court of Appeals also ruled that there must be a rough proportionality between the fee and the need for the acquisition and development or improvement of parkland due to the proposed development, as demonstrated by an individualized determination that the fee is related both in nature and extent to the proposed development’s impact.

Puce v. City of Burnsville, N.W.2d (Minn. Ct. App. 2022). Note: The League of Minnesota Cities Insurance Trust defended the city. The city plans to file a petition asking the Minnesota Supreme Court to review this decision.

Water and sewer rates

Patti Amanda’s Inc. operates a rental property in the City of Biwabik that contains five residential units and one commercial unit. The property receives water and sewer services through a single connection to the main line. In the past, the city had sent the business one utility bill that covered all six units. In 2014, the city changed its practice and began billing separately for each unit. Currently, each unit is charged a flat-fee base rate, along with a fee based on its metered usage.

A dripping faucetPatti Amanda’s sued, claiming that the city’s decision to charge a separate flatfee base rate for each unit was “illegal” because it effectively requires a multiunit building to “subsidize” other utility users without linking the flat-fee base rate to the city’s actual costs. The district court ruled in the city’s favor.

The Minnesota Court of Appeals affirmed the district court’s decision, ruling that the billing practice complies with the city charter and city ordinance, and that it also complies with state statute (Minnesota Statutes, section 444.075), which requires water and sewer charges to be proportionate, fair, and equitable. The Court of Appeals noted that cities have broad authority to establish different rate structures for water and sewer services, and that state statute specifically authorizes a combination of “use, availability, and connection” fees.

Patti Amanda’s Inc. v. City of Biwabik, No. A21- 0680 (Minn. Ct. App. Feb. 7, 2022) (nonprecedential opinion).

Water meter replacement

The City of Long Prairie operates a citywide water system. It undertook a systemwide upgrade after determining that its existing water meters and data collection systems were outdated. The city provided new water meters at no cost to residents. The city was able to replace all the water meters on the city’s system except for Ronald Schneider’s water meter. Between June and October 2019, the city sent four notices to Schneider regarding the required replacement of his water meter, but Schneider refused to allow the city to enter his property to install a new water meter.

Plumbing tools and partsUltimately, the city filed a lawsuit, seeking injunctive relief that would require Schneider to allow the city to install a water meter. The city later made a motion for summary judgment (court-ordered judgment without a trial). The district court granted the city’s motion and ordered Schneider to allow the city to install a new water meter at his residence. Schneider appealed, claiming that the district court erred when it concluded that city ordinances authorized the water meter’s replacement. He also claimed that summary judgment was not proper because there were genuine issues of material fact regarding his defense that he could not allow the installation of a new smart meter because of his “electrosensitivity disability.”

The Minnesota Court of Appeals affirmed the district court’s decision, ruling that that district court had not erred in its interpretation of the city ordinances, and that Schneider had not properly raised his disability defense in the district court.

City of Long Prairie v. Schneider, No. A21-0504 (Minn. Ct. App. Dec. 13, 2021) (nonprecedential opinion).

Written by Susan Naughton, research attorney with the League of Minnesota Cities. Contact: or (651) 281-1232.