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Annexation Court Decision


 

STATE OF MINNESOTA COUNTY OF ST. LOUIS

CASE TYPE: APPEAL FROM ADMINISTRATIVE AGENCY DISTRICT COURT SIXTH JUDICIAL DISTRICT

In re the Matter of the Annexation of Certain Real Property to the City of Proctor From Midway Township

Judge: Hon. Eric L. Hylden

Court File No.: 69DU-CV-16-2676

COURT’S ORDER

The above-entitled matter came before the undersigned Judge of District Court on May 10, 2017. The City of Proctor was represented by Attorney John Bray, the Office of Administrative Hearings was represented by Attorney Nathan Hartshorn, the City of Duluth was represented by Attorney Nathan LaCoursiere, and Midway Township was represented by Attorney Kenneth Butler. The Court had previously reviewed all submissions of the parties and, on the day of the hearing, listened to arguments from all sides.

Based on all of the files, records, and proceedings herein, the Court hereby issues the following:

ORDERS:

  1. The request of the City of Duluth and Midway Township to vacate the October 10, 2016 Order of Chief Administrative Law Judge Tammy L. Pust is hereby granted.
  2. The attached Memorandum of Law is incorporated herein by reference. BY THE COURT: Honorable Eric L. Hylden Judge of the District Court

MEMORANDUM OF LAW

This matter involves the annexation of 92 acres of real property (hereinafter, the ‘Subject’ Property) currently located within Midway Township. Chief Administrative Law Judge Pust’s October 10, 2016 ruling includes extensive Findings of Fact, which are incorporated by reference here. For clarity’s sake, however, the Court provides the following timeline of events relative to various annexation efforts in this area.

DATE

February 13, 2012 - City of Proctor adopts Annexation by Ordinance of Oliver property, which abuts the Subject Property - 5

January 2013 - City of Proctor attempts annexation of all of Midway Township

January 14, 2013 - City of Duluth and Midway Township enter into Orderly Annexation Agreement. The Subject Property is within Parcel II.

March 6, 2014 - Office of Administrative Hearings denies City of 6 Proctor’s attempted annexation of all of Midway Township

May 15, 2014 - Subject Property owners Savalas and Hovland petition 39 City of Proctor for Annexation by Ordinance.

July 21, 2014 - Duluth Annexation by Ordinance of Parcel I, 13 a designated area within the Orderly Annexation Agreement

August 4, 2014 - City of Proctor holds public hearing on petition for 40 Annexation by Ordinance of Subject Property

August 18, 2014 - City of Proctor adopts Annexation by Ordinance of 41 Subject Property

August 25, 2014 - City of Duluth requests approval of Annexation by 14 Ordinance of Parcel I

October 8, 2014 - City of Duluth amends previous request to include 15 Orderly Annexation of Parcel I

October 14, 2014 - Chief Administrative Law Judge approves Orderly 16 Annexation of Parcel I

January 8, 2015 - City of Proctor files and pays for Annexation by 43 Ordinance of Subject Property

January 16, 2015 - City of Duluth objects to City of Proctor’s Annexation 44 by Ordinance because of Orderly Annexation Agreement

August 21, 2015 - Chief Administrative Law Judge issues original 46 Findings of Fact and Order to Supplement Record

October 6, 2015 - Midway Township joins

 October 9, 2015 - Subject Property tour by Chief Administrative Law 50-51 Judge, record closes

October 10, 2016 - Chief Administrative Law Judge Pust issues Findings of Fact, Conclusions of Law and Order For Annexation of Subject Property

The standard of review on an appeal from an administrative agency is that the district court essentially acts as an appellate court. Town of Stillwater v Minn. Mun. Comm’n, 300 Minn. 211, 217, 219 N.W.2d 82, 86-87 (1974). The district court “may not assume legislative functions and may not substitute its views for that of an administrative agency.” City of Lake Elmo v City of Oakdale, 468 N.W.2d 575, 577 (Minn. App. 1991), and Township of Thomastown v City of Staples, 323 N.W.2d 742, 744 (Minn. 1982). Agency decisions enjoy a presumption of correctness (Big Fish Lake Sportsmen’s Club, Inc., v State Water Resources Board, 400 N.W.2d 416, 419 (Minn. App. 1987)) and will not be interfered with, “unless the decision is either based on an erroneous theory of law or is not supported by substantial evidence in the record.” McNamara v Office of Strategic and Long Range Planning, 628 N.W.2d 620, 625 (Minn. App. 2001).

As an initial matter, the City of Duluth and Midway Township make the argument that Chief Administrative Law Judge Pust’s Order was untimely, as it appears to have been issued one year and one day after the property had been viewed and the record closed. The City of Duluth and Midway Township rely on Minn. Stat. § 414.07, subd. 1 (2016), but the Court does not believe that the timing provisions of that statute are applicable and therefore denies the appeals based on this ground.

In a similar way, the City of Duluth and Midway Township also assert that Chief Administrative Law Judge Pust’s conclusion that public wastewater facilities were not ‘otherwise available’ to the property was erroneous. Minn. Stat. § 414.033, subd. 2(3) should have prevented an Annexation by Ordinance if, among other things, such facilities are not ‘otherwise available.’ The statute does not define the phrase. According to Chief Administrative Law Judge Pust’s Findings of Fact, however, the nearest wastewater facilities are miles away from the Subject Property and would cost millions of dollars to be brought there. Under these circumstances, the Court must concur, on the face of it, with Chief Administrative Law Judge Pust’s conclusion that the facilities were not otherwise available for this particular piece of land.

This brings us to the most compelling question presented by this appeal: What happens with conflicts between Annexation by Ordinance under Minn. Stat. § 414.033 and Orderly Annexation under Minn. Stat. § 414.0325?

Annexation by Ordinance is governed by Minn. Stat. § 414.033 (2016). Subd. 2(3) of that statute provides as follows:

A municipal council may by ordinance declare land annexed to the municipality and any such land is deemed to be urban or suburban in character or about to become so if...the land abuts the municipality and the area to be annexed is 120 acres or less, and the area to be annexed is not presently served by public wastewater facilities or public wastewater facilities are not otherwise available, and the municipality receives a petition for annexation from all the property owners of the land.

With the exception of whether the public wastewater facilities are ‘otherwise available’, all parties agree that the Subject Property is eligible for annexation by ordinance under this statute.

Minn. Stat. § 414.0325 governs Orderly Annexations. Subd. 1 describes initiating the proceeding and designating an unincorporated area in need of orderly annexation. Once an area has been identified and a joint resolution is made, subd. 1(c) states, “The joint resolution will confer jurisdiction on the Chief Administrative Law Judge over annexations in the designated area and over the various provisions in said agreement by submission of said joint resolution to the Chief Administrative Law Judge.” Subd. 1(e) goes on to state:

Thereafter, an annexation of any part of the designated area may be initiated by: (1) submitting to the chief administrative law judge a resolution of any signatory to the joint resolution; or (2) the chief administrative law judge.

§ 414.0325, subd. 6, entitled “Validity, effect of orderly annexation agreement” goes on to state:

An orderly annexation agreement is a binding contract upon all parties to the agreement and is enforceable in the district court in the county in which the unincorporated property in question is located. The provisions of an orderly annexation agreement are not preempted by any provision of this chapter unless the agreement specifically provides so. If an orderly annexation agreement provides the exclusive procedures by which the unincorporated property identified in the agreement may be annexed to the municipality, the municipality shall not annex that property by any other procedure.

Most of the argument to the district court concerned the preemption indicated by the middle sentence of subd. 6. All parties and the Chief Administrative Law Judge focus on discerning the legislative intent behind that sentence. Excellent arguments are made on both sides concerning whether the preemption language applied only to signatories to the Orderly Annexation agreement or to all other municipalities that might want to annex the property by ordinance. In this Court’s view, however, all of those arguments miss a more important point.

That point is found in the jurisdictional scheme created by the legislature in § 414.0325, subd. 1. Once a joint resolution has identified a designated area as being appropriate for orderly annexation, that “will confer jurisdiction on the chief administrative law judge over annexations in the designated area and over various provisions in said agreement...” (See subd. 1(c).) Importantly, subd. 1(e) goes on to state that annexation “of any part of the designated area” may be initiated either by a signatory to the joint resolution or by the chief administrative law judge. While the word ‘only’ is not used in subd. 1(e), this Court determines that the statute unambiguously provides only two ways to initiate an annexation of ‘any part’ of the designated area: (1) A resolution by one of the orderly annexation signatories, or; (2) some action by the chief administrative law judge. An Annexation by Ordinance of a non-signatory fits neither of these categories.

This statutory scheme dovetails well with the subd. 6 statement on the validity and effect of an orderly annexation agreement – that is, that no other part of the chapter (in this case, Chapter 414) can preempt or, in the words of the parties and Chief Administrative Law Judge Pust, ‘trump’ the terms of the orderly annexation agreement. Subd. 1(e) and subd. 6 unambiguously work together to prevent the Annexation by Ordinance that was attempted by the City of Proctor in this case. When a statute is unambiguous, there is no need to inquire further. Am. Family Ins. Group. v Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) and Minn. Stat. § 645.16. This Court therefore decides the Chief Administrative Law Judge’s Order for Annexation is based on an erroneous theory of law.

The Chief Administrative Law Judge’s decision takes a very different tack on the statutory scheme. First, it focuses on the definition of ‘designated area’ in § 414.0325, subd. 1(b) and omits any discussion of the jurisdictional statement the legislature placed in subd. 1(c). That jurisdiction with the Chief Administrative Law Judge should then inform any analysis of subd. 1(e), which states that annexation of “any part of the designated area” may come from the Chief Administrative Law Judge or a signatory to the Orderly Annexation agreement.

The Chief Administrative Law Judge, however, sees the word ‘may’ in subd. 1(e) as permissive, rather than the mandatory ‘must’ or ‘shall,’ and concludes that since the legislature did not more explicitly prohibit Annexation by Ordinance in areas designated under an Orderly Annexation Agreement, that she could not add that to the statute. This Court believes that to be an erroneous theory of law. The legislature set up what appears to be parallel systems for annexation. One of those systems, Orderly Annexation, is to be favored, since it seems to take the long view. (See Minn. Stat. § 414.01, subd. 1(5).) Once an area is designated, the legislature confers jurisdiction over annexations in the area to the Chief Administrative Law Judge, who presumably will also take the long view. That jurisdiction is then confirmed by subd. 1(e), which provides two ways to initiate an annexation in a designated area. (Importantly, the Subject Property owners’ petition, adopted by the City of Proctor’s annexation ordinance, is neither of those two ways.) Subd. 6 then ties it all up, saying that no other provision of

Chapter 414 (presumably including 414.033) can preempt an Orderly Annexation Agreement unless the agreement itself provides for it.

In the Court’s view, the legislature has unambiguously provided a parallel track system designed to favor Orderly Annexation Agreements. The statute is best harmonized by recognizing the tracks are separate and distinct. Any other decision is based on an erroneous theory of law.

Because the October 10, 2016 decision does not follow all portions of the statute, the Court vacates the Conclusions of Law and Order for Annexation to the City of Proctor. Any further annexation proceedings concerning the Subject Property will need to be initiated pursuant to § 414.0325, subd. 1(e).

ELH

 

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