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STATE OF MINNESOTA IN COURT OF APPEALS A08-0143 Franklin Kottschade, Appellant, vs. City of Rochester, Respondent. Filed February 10, 2009 Reversed and remanded Stauber, Judge Olmsted County District Court File No. 55CV0611405 Timothy S. Hollister (pro hac vice), Shipman & Goodwin, L.L.P., One Constitution Plaza, Hartford, CT 06103-1919; and Gary A. Van Cleve, Rob A. Stefonowicz, Larkin, Hoffman, Daly & Lindgren, 1500 Wells Fargo Plaza, 7900 Xerxes Avenue South, Bloomington, MN 55431-1194 (for appellant) Clifford M. Greene, Monte A. Mills, Greene Espel, P.L.L.P., Suite 1200, 200 South Sixth Street, Minneapolis, MN 55402 (for respondent) Richard D. Snyder, Joseph G. Springer, Fredrikson & Byron, P.A., Suite 4000, 200 South Sixth Street, Minneapolis, MN 55402-1425 (for amicus curiae) Considered and decided by Shumaker, Presiding Judge; Peterson, Judge; and Stauber, Judge.

SYLLABUS A landowner must exhaust all reasonable, necessary, and final steps to allow administrative agencies to exercise their full discretion in considering real estate development plans before an unconstitutional takings claim is ripe for review by the courts. And once a claim is ripe, a litigant need do nothing more to preserve that claim. OPINION STAUBER, Judge On appeal from the district court`s summary judgment that appellant-developer`s complaint alleging a regulatory taking by respondent-city was filed beyond the limitations period, appellant argues that (1) under the finality doctrine of Williamson County Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S. Ct. 3108 (1985), and its progeny, appellant`s complaint was timely because his claim was not ripe until after final administrative review of the denial of his variance application and (2) the record does not support the district court`s determination that appellant`s takings claim became moot. Because genuine issues of material fact exist and appellant`s claim was ripe and not moot, we reverse and remand for further proceedings. FACTS In 1992, appellant Franklin Kottschade acquired a 220-acre parcel of undeveloped property located on the southern edge of Rochester. In February 2000, appellant submitted a proposal, designated as General Development Plan (GDP) No. 151, to respondent City of Rochester (the city) for a development consisting of 104 townhome

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units.1 The townhomes were to be located on a 16.44-acre tract within the 220-acre parcel. The proposal included rezoning to permit the construction of the townhomes. Before submitting GDP 151, appellant, his design engineer, and his attorney met with city staff to discuss the project. City staff studied appellant`s proposal and initially recommended approval of the project with eight conditions. Appellant claims he specifically inquired of city staff regarding the financial impact of the staff`s conditions. He was told that costs could not yet be determined. Following several public hearings, the planning-and-zoning commission recommended approval of appellant`s rezoning request and GDP 151, subject to the eight conditions recommended by city staff. The city council discussed GDP 151 at public hearings on June 5 and 19, 2000. At the June 19 hearing, appellant`s counsel entered a general objection to each and every one of the conditions of approval recommended by the Planning and Zoning Commission and requested approval of GDP 151 without the imposition of any conditions. On July 5, 2000, the city council approved GDP 151 subject to the eight conditions initially proposed by city staff and adding the ninth condition recommended by staff at the public hearings in June. The conditions were: A. The GDP should be revised to include the following:

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The GDP is a plan or concept for development. Once approved by the city, city staff draft a development agreement which sets forth the details of the GDP plan. After the city provides subsequent development approval, various permits are issued followed by actual construction. 3

50 feet of right-of-way shown as being dedicated for 40th Street S.W. and 11th Avenue S.W., consistent with the adopted Thoroughfare Plan; Pedestrian facilities along the east side of 11th Avenue S.W. and the south side of 40th Street S.W., consistent with the adopted Thoroughfare Plan; The site details (haul roads, stockpiles, proposed excavated ponds) of the approved conditional use permits covering this property and the adjacent properties; B. Stormwater management must be provided for this development. Controlled access must be provided along the entire length of 40th Street S.W., with the exception of the private street access that is shown across from Willow Heights Drive S.W., and along 11th Avenue S.W., with the exception of the private roadway shown in the southwest corner of the GDP. The existing access immediately east of Willow Court S.W. must be closed upon construction of the private roadway. [Appellant] shall enter into a Development Agreement with the City that outlines the obligations of the applicant relating to, but not limited to, stormwater management, park dedication, traffic improvements, pedestrian facilities, right-of-way dedication, SAC and WAC fees and contributions for public infrastructure improvements and contributions for future th reconstruction of 40 Street S.E. Current City policy for substandard street requires a contribution of $30.00 per foot of frontage for residential developments. The City may create a Transportation Improvement District in the area that may result in a capacity component being added to the substandard street reconstruction charge. If the development of this property occurs prior to the reconstruction of 40th Street S.W., grading of this property must be compatible with the street profile and 4

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cross-sections being proposed for the 40th Street S.W. reconstruction in the Street Layout Plan. The private roadway connections to public streets must meet City intersection sight line standards. F. [Appellant] agrees to dedicate a total of 50 feet of right-of-way from the centerline of 40th Street S.W. This dedication must be provided with the first plat of this development or when the City notifies the owner that a roadway improvement project is programmed, whichever comes first. [Appellant] must agree to meet the parkland dedication requirement for this development in the form of cash in lieu of land. The development has a parkland dedication requirement of approximately 1.76 acres based on a maximum density of six units/acres. A revised GDP shall be filed with the Planning Department reflecting all required modifications. *** I. The private roadway running parallel to 40th Street S.W., be relocated on the GDP outside of the proposed street profile and cross sections for 40th Street S.W., as indicated on the preliminary plans prepared for 40th Street S.W., as reflected in the street plan of the City of Rochester`s current 6-year Capital Improvement Program.

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The city`s imposition of the conditions reduced the buildable area to 4.93 acres, and resulted in a site that could accommodate only 26 of the proposed 104 townhome units. In September 2000, the city provided appellant with its draft development agreement. The draft agreement added a tenth condition, not included in the city`s earlier decision, requiring appellant to dedicate two ponds to the city to create a 40-acre lake.

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The draft development agreement clarified several of the conditions, including costs for stormwater-management participation, sewer and water fees, future 40th street costs, developer infrastructure contributions, and roadway improvement charges. This was the first time that appellant was able to fully appreciate the economic impact of the now ten conditions on his development proposal. According to appellant, the cost and size limits of the conditions made his project economically infeasible.2 Appellant did not sign the development agreement. Appellant applied to the city`s zoning board of appeals (ZBA) for a waiver of the ten conditions. His variance application noted that [t]he conditions placed on the development made the project economically unfeasible because of the cost impact of the conditions and the amount of land left available for development. On October 4, 2000, the ZBA conducted a hearing. At the hearing, there was extensive discussion regarding the ZBA`s perceived lack of jurisdiction to decide appellant`s application. City staff and a representative of the City Attorney`s office advised the ZBA that it did not have authority to overturn the city council on its issuance of a GDP. However, the ZBA heard the merits of appellant`s appeal.

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When appellant challenged the charges and conditions under the development agreement as excessive, he was, in effect, alleging an exaction theory. Cities rely on exactions to ensure that new developments pay a fair share of public costs. Exactions are fees used to fund public infrastructure directly connected to new development. As long as the degree of the exactions demanded by the permit conditions bears the required relationship to the projected impact of the proposed development the exactions are appropriate and would not be considered a regulatory taking in violation of the Fifth Amendment. Dolan v. City of Tigard, 512 U.S. 347, 374, 114 S. Ct. 2309, 2312 (1994). 6

Appellant presented testimony, sworn affidavits, and a before and after scenario to show that the number of possible units was reduced from the proposed 104 to 26, that infrastructure costs rose by $2.3 million, the per-unit cost increased from $22,378 to $89,511, the city`s projected traffic counts were inaccurate, and that the conditions made the project economically infeasible. The ZBA denied appellant`s application for lack of jurisdiction. Alternatively, the ZBA concluded on the merits that appellant presented insufficient evidence to support reversal of any of the ten conditions. As provided by Rochester Code of Ordinances (R.C.O)

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