Illegitimate exercise of the city’s police power?

Minnesota Reports

Unpublished

V.F.W. OF THE U.S. v. CITY OF ST. LOUIS PARK, A06-355
(Minn.App. 12-26-2006) St. Louis Park Post No. 5632,
Veterans of Foreign Wars of the United States,
Incorporated, et al., Plaintiffs, Clear Channel Outdoor,
Inc., a Delaware corporation, Appellant, ASK Property
Management, Inc., et al., Plaintiffs, v.City of St. Louis
Park, Respondent. No. A06-355. Minnesota Court of
Appeals. Filed December 26, 2006.

[EDITOR’S NOTE: This case is unpublished as indicated by the
issuing court.] This opinion will be unpublished and may not
be cited except as provided by Minn. Stat. §
480A.08, subd. 3 (2004).

Appeal from the District Court, Hennepin County, File No.
27-CV-03-007593.

Marvin A. Liszt, David K. Nightingale, Bernick & Lifson
(for appellant).

Thomas M. Scott, Campbell Knutson (for respondent).

Considered and decided by WRIGHT, Presiding Judge; RANDALL,
Judge; and HALBROOKS, Judge.

UNPUBLISHED OPINION.

WRIGHT, Judge.

In this appeal from the district court’s entry of summary
judgment in favor of respondent-city on appellant’s
challenge to respondent’s grant of a conditional use permit
requiring that appellant’s billboard be removed, appellant
argues that respondent (1) misinterpreted and misapplied
its ordinance; (2) acted unreasonably, arbitrarily, and
capriciously by neglecting to issue proper findings
supporting its decision; and (3) violated appellant’s
constitutional rights. We affirm.

FACTS

This matter is before us for a second time. In an earlier
decision, we affirmed in part and remanded the district
court’s December 8, 2003 order granting summary judgment in
favor of respondent City of St. Louis Park on all claims
brought by appellant Clear Channel Outdoor, Inc. The facts
underlying this matter are set forth in St. Louis Park Post
No. 5632 v. City of St. Louis Park, 687 N.W.2d 405, 406-07
(Minn.App. 2004), review denied (Minn. Dec. 14, 2004). In
that decision we held that summary judgment was properly
granted to the city on Clear Channel’s claim that it was
entitled to just compensation under the Minnesota Outdoor
Advertising Control Act, Minn. Stat. § 173.17(c)
(2002), but we remanded to the district court to address the
propriety of summary judgment on Clear Channel’s remaining
claims. St. Louis Park Post No. 5632, 687 N.W.2d at 410.

On remand, the district court granted the city’s motion for
summary judgment on December 23, 2005, and dismissed Clear
Channel’s remaining claims. The district court held that
the city did not act unreasonably, arbitrarily, or
capriciously when it granted the conditional use permit
(CUP) to plaintiff ASK Property Management, Inc., on the
condition that Clear Channel’s billboard be removed because
the city properly applied its ordinance in doing so. The
district court also held that, under the law of the case
established in our earlier decision, Clear Channel was not
entitled to just compensation on its due-process or takings
claims. This appeal followed.

DECISION

On appeal from summary judgment, we determine whether any
genuine issues of material fact exist and whether the
district court erred as a matter of law. State by Cooper v.
French, 460 N.W.2d 2, 4 (Minn. 1990). In doing so, we view
the evidence in the light most favorable to the party
against whom summary judgment was granted. Fabio v.
Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Summary judgment
is appropriate when a party fails to make a showing
sufficient to establish the existence of an element
essential to the party’s case, Bersch v. Rgnonti & Assocs.,
Inc., 584 N.W.2d 783, 786 (Minn.App. 1998), review denied
(Minn. Dec. 15, 1998), or when “the record taken as a whole
could not lead a rational trier of fact to find for the
nonmoving party,” DLH, Inc. v. Russ, 566 N.W.2d 60, 69
(Minn. 1997) (quoting Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356
(1986)).

I.

Clear Channel argues that the district court erred by
granting summary judgment in favor of the city because the
city misinterpreted and misapplied its ordinance when it
conditioned its approval of the CUP on the removal of Clear
Channel’s billboard.

A.

The interpretation of a local zoning ordinance presents a
question of law, which we review de novo. Clear Channel
Outdoor Adver., Inc. v. City of St. Paul, 675 N.W.2d 343,
346 (Minn.App. 2004). We construe the language of a zoning
ordinance according to its plain and ordinary meaning and
in favor of the property owner. Id. In doing so, we also
consider the ordinance’s underlying policy goals. Id.

The ordinance at issue provides that, when a CUP
application is submitted for a multitenant building and
there are no proposed exterior modifications resulting in
an increase to the building’s floor area, height, or
density, the city may issue the CUP provided that “[a]ny
nonconformities existing on the site shall be brought into
greater or complete compliance . . . to the extent
reasonable and possible.” St. Louis Park, Minn., City Code
§ 36-404(6)(b)(2) (2006).

It is undisputed that the CUP application at issue here
relates to a multitenant building in which exterior
modifications that would change the building’s area,
height, or density are not proposed. It is also undisputed
that the presence of a billboard on the property
constitutes a nonconforming use. The city granted the CUP
subject to several conditions, including a requirement to
bring the site into greater compliance with the city’s
zoning ordinance by removing the billboard. The city’s
actions reflect an interpretation of section
36-404(6)(b)(2) that is consistent with the plain and
ordinary meaning of its terms. The city’s interpretation of
section 36-404(6)(b)(2) also is consistent with the city
code’s stated policy goal of eliminating “all nonconforming
uses and certain other nonconformities by . . .
[e]ncouraging the elimination of nonconformities or
minimizing their impact on adjacent properties [and] . . .
[r]equiring certain nonconformities either to comply . . .
or terminate.” St. Louis Park, Minn., City Code §
36-402(4), (5) (2006). Thus, we reject Clear Channel’s
contention that summary judgment was improper because the
city misinterpreted its ordinance.

B.

Clear Channel also argues that the city abused its
discretion by acting unreasonably, arbitrarily, and
capriciously when it applied section 36-404(6)(b) so as to
condition approval of the CUP on the removal of a
nonconforming use that does not bear on or impact the use
proposed by the CUP. In a related argument, Clear Channel
maintains that the city’s application of section
36-404(6)(b)(2) constitutes an illegitimate exercise of the
city’s police power.

We give great deference to a city’s land-use decisions.
SuperAmerica Group, Inc. v. City of Little Canada, 539
N.W.2d 264, 266 (Minn.App. 1995), review denied (Minn. Jan.
5, 1996); see also Schwardt v. County of Watonwan, 656
N.W.2d 383, 389 n. 4 (Minn. 2003) (holding that CUP
approvals are given “a more deferential standard of review
than CUP denials”). We review zoning decisions that require
discretion and judgment, such as the decision to issue a
CUP, to determine whether the city acted arbitrarily,
capriciously, or unreasonably, and whether the evidence
reasonably supports the decision made. Clear Channel
Outdoor Adver., Inc., 675 N.W.2d at 346. A city’s action
pursuant to its own ordinance is reasonable and not
arbitrary or capricious when the action bears a reasonable
relationship to the purpose of the ordinance. Id.

Here, the purpose of the ordinance is to eliminate
nonconforming uses. St. Louis Park, Minn., City Code
§ 36-404(6)(b)(2) (stating that a CUP may be issued
only if nonconformities existing on the site are brought
into “greater or complete compliance”). Granting the CUP on
the condition that the nonconforming billboard be removed
bears a reasonable relationship to that purpose. It also
bears a reasonable relationship to related policies in the
city’s code. See St. Louis Park, Minn., City Code §§
36-362(e)(6) (stating that billboards are
prohibited signs),-402(5) (stating city’s policy goal of
eliminating or minimizing nonconformities by requiring
nonconformities to comply or terminate),-365 (2006)
(stating that city may “attach such conditions to any [CUP]
as shall be determined to be necessary or convenient to
better accomplish the intent of the comprehensive plan and
this chapter and to minimize the impact of the use on
adjacent properties”). Because the city acted pursuant to
its own ordinance and its action bears a reasonable
relationship to the ordinance’s purpose, conditioning its
approval of the CUP application on eliminating a
nonconforming use was not arbitrary or capricious.

In support of its argument that the city’s application of
section 36-404(6)(b)(2) is not a legitimate exercise of the
city’s police power, Clear Channel cites Dolan v. City of
Tigard, 512 U.S. 374, 114 S. Ct. 2309 (1994). In Dolan, the
City of Tigard required a property owner to give up her
constitutional right to receive just compensation upon the
city’s taking of her property in exchange for the issuance
of a building permit. Id. at 385-86, 114 S. Ct. at 2317.
The Dolan Court noted that, “[u]nder the well-settled
doctrine of ‘unconstitutional conditions,’ the government
may not require a person to give up a constitutional right
. . . in exchange for a discretionary benefit conferred by
the government where the benefit sought has little or no
relationship to the property.” Id. at 385, 114 S. Ct. at
2317.

But Dolan is inapposite. Here, the city did not require
Clear Channel to give up a constitutional right. As we held
in our earlier decision, Clear Channel’s only
constitutionally protected property interest is its
interest in its lease with the VFW.[fn1] St. Louis Park Post
No. 5632, 687 N.W.2d at 408. When it granted the CUP on the
condition that the billboard be removed, the city did not
require Clear Channel to give up that interest. Rather,

[i]f the landowner chooses to forgo property development,
the billboard may remain under the terms of the lease for
so long as the landowner wishes. If the landowner chooses
to develop the property before the lease expires, Clear
Channel may leverage whatever remedies state law provides
[against the VFW, the lessor,] if the landowner’s
decision amounts to a breach of the billboard lease.

Id. Thus, if Clear Channel ultimately is required to remove
the billboard before the lease expires, it will be the
lessor, not the city, that requires Clear Channel to do so.
As such, the city’s grant of the CUP on the condition that
the nonconforming use be removed is not unreasonable,
arbitrary, or capricious. Nor does it constitute an
illegitimate exercise of the city’s police power.

II.

Clear Channel also argues that the city acted arbitrarily
and capriciously by neglecting to issue findings that
support its decision to grant the CUP subject to the
billboard’s removal.

We review the grant of a CUP to determine whether the
city’s reasons for granting the CUP are sufficient to allow
judicial review. Sunrise Lake Ass’n, Inc. v. Chisago County
Bd. of Comm’rs, 633 N.W.2d 59, 61 (Minn.App. 2001).
Generally, a city is not required to prepare formal
findings of fact, but it must, at a minimum, “have the
reasons for its decision recorded or reduced to writing and
in more than just a conclusory fashion.” White Bear Rod &
Gun Club v. City of Hugo, 388 N.W.2d 739, 742 (Minn. 1986)
(quotation omitted). But St. Louis Park, Minn., City Code
§ 36-365(b), requires the city to prepare formal
findings addressing eight specific factors before issuing a
CUP.

The city approved the CUP in Resolution No. 02-078, which
incorporates by reference a planning commission report that
analyzed the CUP application. In support of the first
factor in section 36-365(b), which requires the city to
find whether the CUP is consistent with and supportive of
the principles, goals, and objectives of the city’s
comprehensive plan, the city found that “the proposed office
use is in harmony with the general purpose and intent of
the Zoning Ordinance and the Comprehensive Plan.”
Addressing the second factor, whether the CUP is
detrimental to the health, safety, morals, and general
welfare of the community, the city found that

[t]his proposal is not detrimental to the health, safety
and general welfare of the community. Staff does not
foresee any traffic concerns with the applicant’s request.
In fact, traffic generated by office uses should be
minimal and less offensive to the area compared with the
possible types of truck traffic that can be associated
with other industrial uses, and which can generate noxious
odors and noise.

With respect to the third factor, whether the CUP is
consistent with the intent and purpose of the city’s zoning
code and the zoning district in which the conditional use
is located, the city found that the CUP “is consistent with
the goals and objectives of the . . . zoning district.
Although this property is zoned and guided industrial, [an]
office [use] is allowed.” The fourth factor requires the
city to determine whether the CUP will have undue adverse
impacts on governmental facilities, services, or
improvements. Regarding this factor, the city found that
closing an access point to a city street was necessary
because traffic through that location would have an undue,
adverse impact on the street. As to the fifth factor,
whether the CUP will have an undue, adverse impact on the
use and enjoyment of properties in close proximity to the
conditional use, the city found that the proposed use will
not seriously depreciate surrounding property values and
that “[t]he office use will have a minimal impact and thus
be a good mix with the surrounding residential and other
uses.” The city also considered the sixth factor, whether
the CUP should be subject to certain design and landscape
plans. In doing so, the city conditioned the issuance of
the CUP on approval of the landscape plan by the zoning
administrator. The city did not address the seventh factor,
whether the CUP should be subject to approval of drainage
and utility plans, because the proposed use would not
change the building’s drainage and utility requirements.
Regarding the final factor, whether the CUP should be
subject to additional conditions necessary to protect the
general welfare, public safety, and neighborhood character,
the city imposed several conditions, including removal of
the billboard.[fn2]

These extensive findings satisfy both the city’s general
obligation to set forth in more than a conclusory fashion
written reasons for granting the CUP and section
36-365(b)’s specific requirement to address the eight
factors. See, e.g., Citizens for a Balanced City v.
Plymouth Congregational Church, 672 N.W.2d 13, 23
(Minn.App. 2003) (holding that city’s findings were
sufficient because they incorporated by reference planning
department’s findings, which detail the basis for each
finding required by city code). Because these findings are
sufficient to support the city’s decision to grant the CUP
subject to certain conditions, including removal of the
billboard, Clear Channel’s challenge on this ground fails.

III.

Clear Channel also contends that summary judgment was
improperly granted because the city violated Clear
Channel’s constitutional right to procedural due process of
law when it took Clear Channel’s property without paying
just compensation.

A.

We review de novo whether a party was afforded procedural
due process of law. Comm’r of Natural Res. v. Nicollet
County Pub. Water/Wetlands Hearing Unit, 633 N.W.2d 25, 29
(Minn.App. 2001), review denied (Minn. Nov. 13, 2001).
Procedural due process of law requires the deprivation of
one’s property interest to be preceded by notice and an
opportunity to be heard. Id. We, therefore, begin our
analysis by determining whether Clear Channel possessed a
compensable property interest subject to deprivation by the
city’s action. CUP Foods, Inc. v. City of Minneapolis, 633
N.W.2d 557, 562 (Minn.App. 2001), review denied (Minn. Nov.
13, 2001).

In our earlier decision, we held that Clear Channel’s
property interest is in its billboard lease with the VFW.
St. Louis Park Post No. 5632, 687 N.W.2d at 408. Based on
the doctrine of law of the case, our earlier holding will
not be reexamined in a subsequent appeal. Westbrook State
Bank v. Johnson, 407 N.W.2d 688, 689 (Minn.App. 1987).
Clear Channel now claims that it has a compensable property
interest in the billboard itself. This argument is
unavailing.

When a lease “unequivocally describes the designated
structure as personal property,” the lessee does not have a
compensable property interest in the designated structure.
In re Minneapolis Cmty. Dev. Agency, 417 N.W.2d 127, 130
(Minn.App. 1987) (holding that billboard is personal
property because billboard owner’s lease with owner of
property on which billboard was located contained clause
stating that lease automatically terminates at condemnation
or on sale or development of property), review denied
(Minn. Feb. 24, 1998). Here, the lease states that “[a]ll .
. . structures, displays, . . . equipment and other
materials placed upon the Property by Lessee . . . shall be
and remain Lessee’s exclusive personal property, and may be
removed by Lessee at any time prior to . . . termination of
this Lease.” The lease also contains a clause that allows
Clear Channel to relocate the billboard to another part of
the property under certain circumstances. Finally, the
lease contains a clause giving the lessor, the VFW, the
right to “terminate this Lease early for the Sale and/or
Re-development of the Property requiring the removal of the
Lessee’s [billboard] from site.” Because the Clear
Channel/VFW lease unequivocally describes the billboard as
personal property, Clear Channel does not have a
compensable property interest in the billboard itself.

We next consider whether the city deprived Clear Channel of
its property interest in the lease with the VFW in
violation of Clear Channel’s right to procedural due
process of law. As we held in our earlier decision, the
lease was not altered by the city’s grant of the CUP
conditioned on removal of the billboard. St. Louis Park Post
No. 5632, 687 N.W.2d at 408. Indeed, Clear Channel admits
that its interest in the lease remains intact after the
city’s action, stating in its appellate brief: “The lease
between Clear Channel and the VFW has not been altered,”
and “[t]he lease is in full force and effect.” See Wehner
v. Wehner, 374 N.W.2d 569, 571 (Minn.App. 1985) (holding
that statements of fact made in briefs are taken as binding
admissions). Because Clear Channel has not been deprived of
its property interest in its lease with the VFW, its claim
of a procedural-due-process violation necessarily
fails.[fn3] Summary judgment on this ground was properly
granted.

B.

Clear Channel also argues that the city unlawfully took
Clear Channel’s property without just compensation, in
violation of the United States and Minnesota constitutions.

Private property cannot be taken for public use without
just compensation. U.S. Const. amend. V; Minn. Const. art.
1, § 13. A regulatory taking occurs when a
governmental body conditions a discretionary benefit on
compliance with an unconstitutional regulation. Naegele
Outdoor Adver. Co. of Minneapolis v. City of Lakeville, 532
N.W.2d 249, 252 (Minn.App. 1995), review denied (Minn. July
20, 1995). In Naegele Outdoor Adver. Co., we considered
facts similar to those presented here to evaluate
appellant-lessee’s takings claim. There, the lessee argued
that the respondent-city’s ordinance requiring removal of
nonconforming billboards as a condition of plat or
planned-unit development approval constituted an
unconstitutional regulatory taking of private property. Id.
at 252-53. But like Clear Channel’s leasehold interest, the
lessee’s property interest in the lease was not altered by
the ordinance because the ordinance permitted the
nonconforming billboard to remain so long as the lessor
desired and permitted that land use. Id. at 253. Because
the lessee’s property interest had not been altered, we
held that a taking had not occurred. Id. We also concluded
that, even if a taking had occurred, the lessee did not have
a compensable interest in the property because, under the
lease, the lessee agreed to terminate its leasehold
interest on the property owners’ development of the land.
Id.

As in Naegele Outdoor Adver. Co., Clear Channel’s leasehold
interest was not altered by the city’s action of granting
the CUP on the condition that the billboard be removed.
Clear Channel’s leasehold interest can be altered only by
an early termination or breach of the lease by the lessor,
the VFW. As such, Clear Channel’s property interest was not
taken without just compensation. Moreover, like the lessee
in Naegele Outdoor Adver. Co., Clear Channel does not have
a compensable interest in the property because Clear
Channel agreed to terminate its leasehold rights upon the
VFW’s notice of early termination of the lease. Therefore,
Clear Channel’s takings claim also fails.

Because there are no genuine issues of material fact, and
because the district court did not err as a matter of law
when it dismissed Clear Channel’s challenge to the city’s
grant of the CUP on the condition that the billboard be
removed, we affirm.

Affirmed.

[fn1] The record establishes that Clear Channel’s lease with
the VFW expired on August 24, 2006. However, during oral
argument, Clear Channel’s counsel advised us that the lease
had been renewed, which prevents this appeal from being
rendered moot. See Mut. Serv. Cas. Ins. Co. v. Midway
Massage, Inc., 695 N.W.2d 138, 141 (Minn.App. 2005)
(holding that appeal may be dismissed as moot if, pending
the appeal, an event occurs that makes a decision on the
merits unnecessary or an award of effective relief
impossible), review denied (Minn. June 14, 2005).

[fn2] Clear Channel argues that this requirement requires
the city to make a specific finding that the condition is
necessary to protect the general welfare, public safety,
and neighborhood character. But section 36-365(b)(8) does
not contain such a requirement. Rather, it requires a
finding as to whether the CUP shall be “subject to the
imposition of additional conditions as part of the [CUP
if], in the opinion of the city council, such additional
conditions are necessary to protect the general welfare,
public safety and neighborhood character.” St. Louis Park,
Minn., City Code § 36-365(b)(8) (emphasis added).

[fn3] Clear Channel also argues that the city denied Clear
Channel due process of law when the city failed to comply
with its own procedural mandates. St. Louis Park, Minn.
City Code § 36-33(1) (2006) requires the city to
hold a public hearing regarding all CUP applications and to
give notice of these hearings “to each owner of the
affected property.” But Clear Channel does not own
“affected property.” As we have concluded, the city’s
decision to grant with conditions the CUP does not affect
Clear Channel’s property interest in its lease with the VFW.
And whether the city’s decision to grant the CUP
conditioned on the removal of the billboard results in any
effect on Clear Channel’s leasehold interest rests within
the exclusive control of the property owner. St. Louis Park
Post No. 5632, 687 N.W.2d at 408 (holding that if property
owner forgoes development under the CUP, billboard may
remain, but that if property owner begins development and
that development results in the removal of the billboard,
Clear Channel’s remedy is in contract against lessor-VFW
for breach of billboard lease). Because the city’s CUP
decision does not affect Clear Channel’s property, Clear
Channel was not entitled to notice under the city’s
ordinance.