MN Appeals Court Holds Imposition of Park Dedication Fees Don’t Violate Local Law

This post was authored by Sebastian Perez, Touro University Jacob D. Fuchsberg Law Center

Appellant purchased real property that was zoned for commercial use but had a lawful non-conforming house in which he and his family lived in until 2017. In 2018, Appellant sought to redevelop the land and applied to the City of Burnsville for approval of a preliminary and final plat of the property, a conditional use permit (CUP), and variances related to signage and land grading. In response to the application, the City’s planning commission recommended Appellant pay a park-dedication fee in the amount of $37,804. Appellant asked the City to waive the fee arguing that the redevelopment would not result in a need for more parkland or park services. The city council reviewed the planning commission’s recommendations and later reduced the park-dedication fee to $11,700. Appellant maintained his objection to the fee and the city council reviewed the application for a second time. At a later city council meeting, the city attorney reasoned the park-dedication was necessary because business development generally increased the demand on public parks and such fees helped address that need. The council denied the request for a waiver of the park-dedication fee and Appellant commenced an action in District Court for review of the decision. The District Court concluded the imposition of the fee was lawful. This appeal followed.

The Court of Appeals looked to a state statute regulating subdivisions which permitted an ordinance to require a “reasonable portion” of the buildable land to be set aside for public use after the municipality “reasonably determined” it would need to acquire a portion of the land for purposes related to its comprehensive plan. Alternatively, the statute provided the municipality to accept a cash fee instead of taking a reasonable portion of the land which would fund the development of public services and not for the maintenance of existing public services. Whether the municipality takes a reasonable portion of land or accepts a cash payment, there must be an essential nexus between the fees or dedication and the municipal purpose sought to be achieved by the fee or dedication, and the fee or dedication must bear a rough proportionality to the need created by the proposed subdivision or development.

The Court reviewed the statute’s relevant part using a deferential standard of review and asked whether the lower court’s decision was unreasonable, arbitrary, or capricious which required a two-step process. First, the Court needed to determine whether the reasons given by the city were legally sufficient and if so, second, whether the reasons had a factual basis in the record. For the first prong, a legally sufficient reason was not provided because the City failed to show a need for the acquisition and development of a portion of land due to the subdivision’s approval. Therefore, the City’s decision to impose a park-dedication fee on Appellant’s development application did not have a proper legal basis. For the second prong, a brief discussion about the Appellant’s application at a city council meeting was not a sufficient factual basis. The City only offered, as an exhibit, a transcript of the city council meeting which did not overcome the Court’s deferential standard of review. Therefore, the Court decided the park dedication fee did not have a proper factual basis.

Next, the Court addressed the Appellant’s challenge to the factual basis of the City’s reasons for imposing the fee by defining the statute terms “essential nexus” and “rough proportionality”. With guidance from Nollan, an essential nexus was found when the City imposed a park dedication fee to preserve and improve parkland from Appellant’s development of his property. Further guided by Dolan, a rough proportionality was also not found because the City failed to make an individualized assessment of the impact from the proposed development by simply applying a formula. Therefore, the Court found the City was in violation of local law when it imposed a park dedication fee on Appellant’s development application.

The Court held that the City’s imposition of an $11,700 park dedication fee was arbitrary and capricious and reversed the lower court’s decision.

Puce v City of Burnsville, 2022 WL 351119 (MN App. 2/7/2022)