In Re Application of Locust Hills Development, LLC.

In Re Application of Locust Hills Development, LLC. A06-1882; A07-652, Court of Appeals Unpublished Decision, December 18, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS
A06-1882

A07-652

 

In Re Application of Locust Hills Development, LLC

 

Filed December 18, 2007

Affirmed

Dietzen, Judge

 

Lake Minnetonka Conservation District

 

 

Carl S. Wosmek, Amy L. Court, McGrann Shea Anderson Carnival Straughn & Lamb, 800 Nicollet Mall, Suite 2600, Minneapolis, MN 55402 (for relators Stephen and Karen Sanger)

 

James H. Gilbert, Steven R. Hedges, James H. Gilbert Law Group, P.L.L.C., 12700 Anderson Lakes Parkway, Eden Prairie, MN 55344 (for respondent Locust Hill Development Group)

 

George C. Hoff, Justin L. Templin, Hoff, Barry & Kozar, P.A., 160 Flagship Corporate Center, 775 Prairie Center Drive, Eden Prairie, MN 55344 (for respondent Lake Minnetonka Conservation District)

 

Virginia A. Bell, Mary R. Vasaly, Maslon Edelman Borman & Brand, LLP, 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 (for amicus curiae Grays Bay Homeowners Association)

 

            Considered and decided by Dietzen, Presiding Judge; Kalitowski, Judge; and Harten, Judge.*

U N P U B L I S H E D   O P I N I O N

DIETZEN, Judge

            In this consolidated certiorari proceeding, relators challenge the decisions of the Lake Minnetonka Conservation District (the LMCD) Board of Directors granting a multiple dock license to respondent Locust Hills Development, LLC in 2006 and 2007, arguing that the decisions of the board were based on errors of law and were otherwise arbitrary and capricious and not supported by substantial evidence.  We affirm. 

FACTS

            The LMCD is a public corporation that has certain statutory powers to regulate the usage of Lake Minnetonka.  Minn. Stat. §§ 103B.605, .611 (2006).  Those powers include the right to adopt rules and regulations that designate the types of boats that may be used on the lake; govern "the construction, installation, and maintenance of permanent and temporary docks and moorings consistent with federal and state law"; and limit the usage of the lake at various times and at various locations.  Minn. Stat. § 103B.611, subds. 3, 4.  Pursuant to its authority, the board has adopted a Code of Ordinances that regulates, among other things, a property owner's right to place and use docks on the lake. 

            Locust Hills owns approximately 70 acres of land on Lake Minnetonka that it seeks to develop into 44 villa homes and three single family homes.  The  property has two separate shorelines: 4,705 linear feet of continuous shoreline frontage on Grays Bay and the adjacent lagoon (Grays Bay property), and 2,464 feet of continuous shoreline frontage on the Minnetonka inlet (Inlet property).  Over the past several years, Locust Hills has obtained several permits and prepared an environmental assessment worksheet for the project.  In July 2006, Locust Hills submitted an application to the LMCD for a multiple dock license to build and maintain five docks with 44 boat storage units (BSUs), or slips, on the Grays Bay property (Grays Bay application) and a separate application to build and maintain one dock with seven BSUs on the Inlet property (Inlet application). 

            Relators Steven and Karen Sanger own property on Grays Bay with a direct view of the proposed docking structure on the Grays Bay property.  Relators argue, among other things, that Locust Hills's plans will adversely affect their ability to use and enjoy the lake and will result in adverse environmental impacts on the lake. 

            The board conducted a public hearing on August 9, 2006.  Notice of the hearing was mailed to property owners located within 350 feet of the project and published in a local newspaper.  Initially, LMCD staff presented to the board its overall review of the applications and relevant code provisions.  Staff noted that the applications met the general rule for multiple dock license applications of no more than one watercraft for each 50 feet of continuous 929.4-foot-elevation shoreline.  But staff observed that a large portion of shoreline within the lagoon area of the Grays Bay property has limited navigability.  Staff concluded that the Grays Bay property was environmentally sensitive and had not been historically dredged and, therefore, the site plan was excessive as proposed.   Staff recommended that the board should consider reducing the amount of usable shoreline for BSU calculations.  Staff also questioned whether motorized watercraft storage was appropriate for the Inlet property, arguing that "this area is a[s] sensitive, if not more sensitive [than] the lagoon area." 

Locust Hills's representatives testified in support of both applications.  Residents and interested parties testified largely in opposition to the applications.  Relators did not participate in that hearing.  During the public hearing, some board members discussed the sensitive nature of the Inlet property and that it might be appropriate to approve the Grays Bay application but deny the Inlet application.  After a recess, a Locust Hills representative stated that it would withdraw its Inlet application if the Grays Bay application was approved.  The board then adopted a motion to direct its attorney to draft findings of fact approving the Grays Bay application and tabled further discussion of the Inlet application. 

            Locust Hills's applications were again considered by the board at its next meeting.  Relators and several others were allowed to testify in opposition to the project.  The board then considered a motion to approve the Grays Bay application, which resulted in a tied vote.  Subsequently, a board member requested that Locust Hills consider amending its application to reduce the size of some of the proposed slips and boats within the five docks.  Following a brief recess, Locust Hills agreed to reduce the ten slips and boats from 40 feet to 36 feet.  The board then adopted a motion to grant the Grays Bay application as amended and adopted findings and a memorandum setting forth its reasons for granting the application.  This certiorari appeal followed.

            Locust Hills renewed its dock license in 2007.  Relators also seek certiorari review of that decision.

 

D E C I S I O N

I.

             Respondents argue that relators lack standing to bring this certiorari appeal, that relators have failed to exhaust their administrative remedies, and that the appeal is moot.  The issues of standing and mootness may be raised at any time.  Stansell v. City of Northfield, 618 N.W.2d 814, 818 (Minn. App. 2000) (regarding standing), review denied (Minn. Jan. 26, 2001); Kahn v. Griffin, 701 N.W.2d 815, 821 (Minn. 2005) (an appeal may be dismissed if an event occurs rendering the cause of action moot).  The issues of standing, exhaustion of administrative remedies, and mootness are questions of law, which we review de novo.  Schiff v. Griffin, 639 N.W.2d 56, 59 (Minn. App. 2002) (standing is a question of law); Zaluckyj v. Rice Creek Watershed Dist., 639 N.W.2d 70, 74 (Minn. App. 2002) (exhaustion of administrative remedies is a legal issue), review denied (Minn. Apr. 16, 2002); Isaacs v. Am. Iron & Steel Co., 690 N.W.2d 373, 376 (Minn. App. 2004) (mootness is a question of law), review denied (Minn. Apr. 4, 2005).    

            A.        Standing

            Respondents argue that relators lack standing to bring this appeal and, therefore, urge dismissal of this appeal.  "Standing may be conferred by statute or it may exist by reason of judicial recognition of a particular relationship between a person and an actionable controversy."  In re Sandy Pappas Senate Comm., 488 N.W.2d 795, 797 (Minn. 1992) (citation omitted).  There are no statutes that confer standing on relators.  Consequently, we look to whether relators have standing under common law. 

 

To have standing for certiorari review,

a person must assert more than dissatisfaction with an agency's interpretation of statutes: the person must articulate with a degree of clarity some legally cognizable interest of his which has sustained injury in fact by the agency actioni.e., that he has in fact sustained injury to some interest which differs from injury to the interests of other citizens generally.

 

Id.  "A party must have more than an abstract concern and the injury must not be merely speculative."  State v. Knutson, 523 N.W.2d 909, 911 (Minn. App. 1994) (citation omitted), review denied (Minn. Jan. 13, 1995).  Standing requires a showing of either actual injury-in-fact, or injury that is reasonably likely to occur.  See In re Application of Crown Coco, Inc., 458 N.W.2d 132, 135 (Minn. App. 1990) ("Economic injury or the prospect of economic injury may be sufficient to establish standing."). 

            Relators claim, among other things, that the new docks and the increased boat traffic will aesthetically diminish their view and recreational enjoyment of the lake and will negatively affect the value and marketability of their property.  Respondents argue that relators' claimed injuries are speculative and do not satisfy the requirements of standing.  Specifically, respondents argue that relators must show that they have already sustained injury.  We disagree with respondents. 

Here, the multiple dock license authorizes the construction, operation, and maintenance of five docks that will provide space for 44 boats.  On this record, relators have alleged sufficient injury caused by the docks and additional boat traffic that is reasonably likely to occur. 

 

B.        Exhaustion of Administrative Remedies

            Respondents argue that even if relators may suffer harm as a result of the decision, they did not exhaust their administrative remedies and, therefore, their certiorari review must be dismissed.  In general, before judicial review of an agency decision can be permitted, appropriate administrative remedies must be exhausted.  City of Richfield v. Local No. 1215, Int'l Assoc. of Fire Fighters, 276 N.W.2d 42, 51 (Minn. 1979). 

            Respondents first argue that because relators failed to participate in the public hearing on August 9, they are precluded from bringing this writ of certiorari.  Relators argue that they testified at the next board meeting on August 23 and, therefore, participated in the proceeding.

            We agree with respondents that the meeting on August 23 was not a noticed public hearing.  But the board allowed members of the public, including relators, to testify before making its decision on respondent's applications.  We conclude that relators' testimony, although limited in its scope, was sufficient to satisfy the requirement that relators present their position to the board before challenging the decision on appeal.    

            Respondents next argue that relators failed to challenge the board's 2007 decision to renew Locust Hills's multiple dock license and, therefore, this certiorari review must be dismissed.  We disagree.  Under the code, the renewal of a multiple dock license does not require a public hearing and is placed on the board's consent agenda.  LMCD Code § 2.03, subd. 14 (2006).  In short, the code does not set forth a procedure to contest an application to renew a multiple dock license.  Relators presented to the board their objections to respondent's applications and, therefore, exhausted their administrative remedies before bringing this appeal.

            C.        Mootness

            Respondents argue that relators' certiorari appeal of the board's decision should be dismissed as moot because Locust Hills's application was for a 2006 dock license that has expired.  LMCD Code § 1.06, subd. 6 (2006).  But the 2007 dock license is a renewal of the 2006 dock license and is expressly conditioned on the 2006 dock license's conditions.  LMCD Code § 2.03, subd. 14.  If the 2006 dock license is invalidated, the 2007 license and its conditions would require additional review by the LMCD.  We,  therefore, conclude that relators' certiorari review is not moot and should not be dismissed. 

II.

            Relators contend that the LMCD decision granting Locust Hills's Grays Bay application is based on errors of law and is arbitrary and capricious and not supported by substantial evidence.  Initially, we conclude that the LMCD decision to grant the application is a quasi-judicial proceeding.  See Handicraft Block Ltd. P'ship v. City of Minneapolis, 611 N.W.2d 16, 20 (Minn. 2000) (listing the indicia of quasi-judicial action as "(1) investigation into a disputed claim and weighing of evidentiary facts; (2) application of those facts to a prescribed standard; and (3) a binding decision regarding the disputed claim") (quotation omitted).    

"When an agency performs a quasi-judicial function, we apply the substantial-evidence test to determine whether the decision is supported by legally sufficient reasons and factually supported in the record."  Watab Twp. Citizen Alliance v. Benton County Bd. of Comm'rs, 728 N.W.2d 82, 93-94 (Minn. App. 2007), review denied (Minn. May 15, 2007).  "A decision is supported by substantial evidence when it is supported by (1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more than any evidence; or (5) the evidence considered in its entirety."  Minn. Ctr. for Envtl. Advocacy v. Minn. Pollution Control Agency, 644 N.W.2d 457, 464 (Minn. 2002).  Appellate courts "retain the authority to review de novo errors of law which arise when an agency decision is based upon the meaning of words in a statute."  In re Denial of Eller Media Co.'s Applications for Outdoor Adver. Device Permits in the City of Mounds View (Eller Media), 664 N.W.2d 1, 7 (Minn. 2003).     

Essentially, relators make three arguments.  We turn now to those arguments.

            A.        Ordinance Violations

            Relators contend that in granting the applications, the board violated the code.  Relators argue that the board impermissibly "transferred" shoreline from the Inlet property to the Grays Bay property for purposes of calculating boat storage density.  Relators rely on LMCD Code section 2.02, subdivision 5, which provides that "[t]he Board may authorize shoreline from one or more sites (the ‘transferor sites') to be counted as part of another site (the ‘transferee site') for the purpose of computing permissible boat storage density," provided that certain conditions are satisfied.  LMCD Code § 2.02, subd. 5 (2006). 

            Essentially relators argue that Locust Hills needed to transfer shoreline to the Grays Bay property in order to reach its desired boat density of 44 BSUs for the Grays Bay application.  Locust Hills counters that the board did not use the Inlet property shoreline in computing boat storage density.  Here, the board found that "the storage of 44 watercraft at the subject property is reasonable," and concluded that the Grays Bay application "would not qualify for transfer of shoreline density from the [Inlet property] under section 2.02, subdivision 5."  Thus, the board did not transfer boat storage density. 

            Relators next argue that the board improperly credited Locust Hills with the withdrawal of its Inlet application.  But the board found that Locust Hills's agreement to withdraw its Inlet application upon approval of the Grays Bay application is a net benefit to the lake.  It reasoned:

The greater benefit, however, is that it preserves approximately 6,400 [feet] (over one mile) of shoreline that is navigable and available for use and enjoyment of the public with small boats for fishing, sight-seeing, bird watching, canoeing, kayaking, and the like, in a relatively natural stateat least in a state that does not include the storage of motorized watercraft. 

 

            We agree.  Locust Hills's agreement to withdraw its Inlet application provides a benefit to the public in eliminating a dock and slips at that location.  Under the code, the board has the right to consider the net effect of the project on "the natural beauty of the Lake" and the "quality of the water of the Lake and the ecology of the Lake."  LMCD Code § 2.03, subd. 3(a)(6), (7) (2006).  We conclude that the board properly applied the code. 

            Relators next argue that the Inlet application involves a "watercourse" that is outside the jurisdiction of the LMCD and, therefore, it was error for the board to consider the withdrawal of the Inlet application.  Under the code, the board may consider "[w]hether the proposed facility will affect the quality of the water of the Lake and the ecology of the Lake."  LMCD Code § 2.03, subd. 3(a)(7). 

            Here, the board reasoned that the inlet is a waterway connected to the lake and that "[p]rotecting this shoreline, much of which is a high quality wetland, from use for storage of motorized watercraft will minimize the impact on vegetation, fisheries, ducks and shore birds, and will promote the health and bio-diversity of the plant and animal communities of the undisturbed shoreline."  We conclude that the board properly considered the withdrawal of the Inlet application.

B.        The Hearings

            Relators argue that the board erred in the manner in which it conducted the public meetings.  First, relators contend that the board erred by not requiring Locust Hills to submit a new application or hold a new public hearing for its amended application.  The original application has five docks which contain a total of 44 BSUs or slips for the boats.  Locust Hills agreed to amend its application to reduce the size of ten slips and boats from 40 feet to 36 feet in length. 

             The code provides that "[a]ny change in slip size, boat storage units, ownership, length, width, height . . . of a structure or launching ramp requiring a license under this section requires the issuance of a new license therefor[e]."  LMCD Code § 2.03, subd. 7 (2006).  But a new license shall be issued without a public hearing provided that, among other things, "there is no substantial change in the slip size, length, width, height or location of the dock," and "the change will not adversely affect nearby properties, navigation, safety or the environment."  Id., subd. 7 (d), (e). 

            Relators contend that the amendment to the Grays Bay application was "substantial" and required a new license and public hearing.  We disagree.  First, the amendment reduced the length of ten of the 44 BSUs by four feet and, therefore, was an overall reduction in the impact of the project.  Second, a new hearing on the amendment would not have resulted in additional persons receiving notice of the hearing.  On this record, relators are unable to show prejudice.

            Relators next argue that board members engaged in "exclusive negotiations" with Locust Hills during a recess.   But relators fail to present any evidence of "exclusive negotiations" between board members and representatives of Locust Hills.  Rather, the record reflects that representatives of Locust Hills conferred among themselves to consider the proposal that Locust Hills amend its application to reduce the size of ten slips and boats.  After the recess, Locust Hills indicated on the record that it would agree to reduce the size of ten slips and boats from 40 feet to 36 feet.  Relators concede that the board did not violate the Minnesota Open Meeting Law, Minn. Stat. §§ 13D.01-.07 (2006).  Consequently, relators' argument of improper conduct lacks merit.

            C.        Arbitrary and Capricious

            Relators argue that the board's decision to grant the Grays Bay application was arbitrary and capricious and not supported by the record.  A decision is not arbitrary and capricious if the agency, presented with opposing points of view, reaches a reasoned decision that rejects one point of view.  See CUP Foods, Inc. v. City of Minneapolis, 633 N.W.2d 557, 565 (Minn. App. 2001), review denied (Minn. Nov. 13, 2001).  But an agency's decision is arbitrary and capricious if it reflects the agency's will and not its judgment.  In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 278 (Minn. 2001).  Put differently, "[w]e will not disturb an agency's decision as long as the agency's determination" is supported by substantial evidence.  Eller Media, 664 N.W.2d at 7.   

            Relators argue that the board ignored staff recommendations regarding the application of the code's "straight-line rule" and, therefore, its decision is arbitrary and capricious.  Generally, the code allows no more than one watercraft per fifty feet of shoreline.  LMCD Code § 2.02, subd. 1 (2006).  But in certain cases, the board may reduce the amount of shoreline for purposes of calculating boat density.  Id., subd. 7 (2006).  This adjustment is referred to as the "straight-line rule" and provides:

In any case in which the measured shoreline at a site exceeds 125% of the distance, measured on a straight line, between the two end points of the shoreline at the site, the Board may adjust the length of shoreline for which credit is given for purposes of computing the number of restricted watercraft . . . 

 

Id. 

 

            The LMCD staff recommended that the board apply the straight-line rule to the Grays Bay application because of the lagoon's sinuous shoreline, which would have significantly reduced the number of BSUs.  Relators contend that the board's decision not to apply the straight-line rule and reduce the number of boats allowed is arbitrary and capricious. 

            Initially, we observe that application of the straight-line rule is within the board's discretion.  See LMCD Code § 2.02, subd. 7 (providing that the board "may" adjust the length of shoreline considered).  The board declined to apply the straight-line rule on the ground that "nearly all of the shoreline on the subject property is currently accessible to motorized watercraft and suitable for the construction of dock facilities with little or no dredging or removal of emergent vegetation."  The board's decision is supported by the record. 

            Relators suggest that there is no evidence that the lagoon is accessible and, therefore, that the board should not have counted the lagoon as shoreline.  We disagree.  The record contains evidence that the lagoon is navigable by motorized watercraft, it is deep enough to support the proposed BSU structure, and that making the lagoon fully accessible requires dredging only five percent of the littoral area of the lagoon. 

            Relators next argue that the board failed to consider public safety and increased boat density when it granted the Grays Bay application and, therefore, that its decision is arbitrary and capricious.  We disagree.  The board discussed the impact of the proposed BSU structure on the lake, and concluded that it would have less impact here than elsewhere on the lake:  "The facility is in close proximity to Highway 101, most of the residential development on the Bay is removed from the proposed development by a substantial distance and Grays Bay is a quiet waters area on weekends and holidays under LMCD code section 3.02, subdivision 7."  We believe that the board implicitly considered the public safety impact of the project on the lake. 

            Relators contend that the board improperly considered property values and, therefore, that its decision is arbitrary and capricious.  LMCD Code section 2.03, subdivision 3(b), provides: "The use of multiple dock or mooring areas or launching ramps on the Lake for the purpose of increasing non-riparian property values is not a valid consideration in licensing such facilities."  LMCD Code § 2.03, subd. 3(b) (2006).

            Relators rely on one board member's comment that 44 boat slips, or one for each residence in the development, "should make one property as marketable as the other."  But a statement from one board member is not binding on the board, particularly when it is not given as a reason for granting the application. 

            We have carefully reviewed the record, and conclude that the board's decision followed the applicable provisions of the code and was lawful and proper.  The board considered the testimony presented by relators and other opponents of the applications before rejecting their arguments.  The board's findings and memorandum set forth legally sufficient reasons for granting the application that are factually supported by the record.  Accordingly, we conclude that the board's decision to grant the Grays Bay application is supported by substantial evidence and is not arbitrary and capricious.

III.

            Relators argue in their second certiorari appeal that the board's decision to grant the 2007 Locust Hills application is arbitrary and capricious for the same reasons that the board's decision to grant the 2006 application is arbitrary and capricious.  Because we conclude that the board's decision to grant the 2006 application was lawful and proper,

we likewise conclude that the board's decision to grant the 2007 application was also lawful and proper. 

            Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.