MN Supreme Court: Redevelopment authority need not have binding development agreement in order to condemn property

Yesterday, the Minnesota Supreme Court issued its opinion in Eagan Economic Development Authority v. U-Haul Co. of Minnesota, No. A08-767 (July 29, 2010). The state supreme court reversed a 2009 appellate court decision which invalidated a “quick-take” condemnation on the basis that the Eagan Economic Development Authority (EDA) exceeded its authority to acquire property via eminent domain as the city had not executed “a binding development agreement respecting the project.”

In 2007, the EDA filed a “quick-take” condemnation petition in order to obtain title to several parcels of private property for a redevelopment project in the Cedar Grove area, to “reawaken the spirit and vitality of [that] part of Eagan” and to “replac[e] a market obsolete regional shopping center.” The lower court found that the EDA had a valid public purpose for acquiring private property and granted the condemnation petition. Three property owners appealed and the court of appeals reversed, concluding that the EDA exceeded the scope of its authority in condemning the property without first securing a binding development agreement for the property. (See Robert Thomas’s blog here for more background on this case and an article by Erin Johnson for Thisweek Newspapers.)

However, yesterday the Minnesota Supreme Court overturned the appellate decision and held that:

The Eagan Economic Development Authority is bound by the prohibitions and requirements of the “Redevelopment Plan for the Establishment of the Cedar Grove Redevelopment Project Area” it prepared, adopted, and submitted to the Eagan City Council for approval, which approval was granted.

Subsection 1-8 of the “Redevelopment Plan for the Establishment of the Cedar Grove Redevelopment Project Area,” which deals with the proposed reuse of property, does not require the Eagan Economic Development Authority to have a binding development agreement before it can condemn private property in this circumstance.

To reach its decision, the Minnesota Supreme Court considered the “enabling resolution,” the initial resolution that established the EDA, which was not presented to the district court and was, therefore, not in the record for the court of appeals to consider. The Court explained: “Usually, an appellate court ‘may not consider matters not produced and received in evidence below.’…But we have taken judicial notice of public records and have said we have the ‘inherent power to look beyond the record where the orderly administration of justice commends it.’” (Opinion p. 12, citations omitted).

The Court found that the enabling resolution “provided the EDA with the powers of a housing and redevelopment authority under Minn. Stat. §§ 469.001-.047, the powers of a city under Minn. Stat. §§ 469.124-.134, and the powers of an economic development authority as contained in Minn. Stat. §§ 469.090-.108, which include the power to acquire property and to exercise eminent domain.” (Opinion p. 15).

In its opinion, the Court then sought to interpret other resolutions and agreements, including the Redevelopment Plan and TIF Plan, to determine that the EDA did not go beyond the scope of its authority. In reviewing these documents, the Court notes that the Redevelopment Plan , specifically Subsection 1-8, and TIF Plans are “poorly drafted” and that the “imprecise language” makes interpretation “challenging.” The Court concluded that the EDA did not exceed the scope of its authority when it acquired the private properties of the respondents. However, the justices did offer 2 caveats. First, the justices indicate that this opinion is in no way an endorsement of a universal interpretation of such drafting or substantive policy, as the drafting was poor and the interpretation challenging. Second, the Court notes that the EDA drafted these documents and could have taken greater care in its drafting. Nonetheless, Subsection 1-8 of the Redevelopment Plan as drafted does not require that the City enter into a binding development agreement prior to the EDA acquiring property. (Opinion pp. 31-32).

Finally, the court held that:

Because the court of appeals invalidated the quick-take order on the ground that the EDA exceeded the scope of its eminent domain authority, it did not address the property owners’ other claims that the taking was not necessary for public use and that the EDA was not entitled to use quick-take procedures. Therefore, we reverse and remand to the court of appeals to consider the property owners’ other claims.
(Opinion p. 32)

There will be more to come as this case goes back to the appellate court for consideration of the public use necessity and of the EDA’s authority to utilize “quick-take” eminent domain procedures.

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