Recent Decision by the Minnesota Supreme Court Agrees that a City Has No Statutory Authority to Impose Major Roadway Assessments

By Andy Pratt | Public Finance

For those who work in the development industry, whether for private developers or municipalities, all are talking about a landmark decision recently released by the Minnesota Supreme Court. In Harstad v. City of Woodbury, the Supreme Court invalidated the imposition of a “major roadway assessment” by the City of Woodbury against a private developer. The developer was seeking to build 183 new homes on 77 acres, and the City cited a policy that all new development must pay its own way. As a part of the policy, the City proposed fees for future major roadway and intersection improvements that eventually would be needed due to new traffic created from the development. The developer sued and won at the District Court and Court of Appeals levels, and the Supreme Court agreed that the City had no statutory authority to impose the major roadway assessments.

How can cities regulate and financially afford expensive new infrastructure, given the Harstad decision?

Special assessments are a tried and true method for cities to finance infrastructure, and continue to be viable. However, state law requires the assessed property to be benefited in at least the amount of the special assessment.

Cities may still impose conditions on private developers through development agreements, which are almost always utilized for new projects. But cities may not impose impermissible regulations, fees and charges through a development agreement.

Cities may still require financial security from developers for these types of projects. The Supreme Court seemed to fault the major roadway assessment idea because these fees would be deposited by the City in its general funds, instead of being retained as “financial security,” as the applicable law requires. The City should categorize a developer’s financial deposit for infrastructure as a financial security and repay the security when the project is finished.

It is unclear whether a city may impose conditions and fees that are applicable to off-site improvements. In other words, may a city impose a financial requirement on a developer for a need that will arise miles away from the project? The supreme court did not answer that question.


QUESTIONS ABOUT THIS TOPIC?

If you have any questions about the content of this article please contact Public Finance attorney Andrew Pratt at 651-351-2125, or email at apratt@eckberglammers.com.

This site uses cookies and other tracking technologies to assist with navigation and your ability to provide feedback, analyze your use of our website, and assist with our promotional and marketing efforts. Read our Privacy Policy for more information.