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Woodbury appeals court ruling on impact fees

Developer Martin Harstad plans to build a 183 single-family home development on a farm site south of Bailey Road. Woodbury wanted him to pay about $1.3 million for nearby road projects, but a Washington County District Judge ruled last month the fee was “unlawful and unenforceable” after Harstad filed a lawsuit. The city is appealing the ruling. (Bulletin Photo by Youssef Rddad)

The city of Woodbury is appealing a court ruling that found the city’s practice of imposing fees on developers for future roadway construction illegal.

In a request the city filed Wednesday, attorneys are asking the Minnesota Court of Appeals to hear if the practice of charging developers fees for public roads and other infrastructure is illegal and whether state laws authorize cities to negotiate such fees.

The appeal is based on a lawsuit filed by Martin Harstad, a New Brighton-based developer, who the city asked to pay roughly $1.3 million of road fees for his 183-residential neighborhood development named Bailey Park. Located south of Bailey Road and west of Radio Drive, the fees would have been used to fund nearby road infrastructure such as traffic signals and roundabouts to accommodate any increase in traffic.

The civil suit, filed January in Washington County District Court, argued the fees were illegal. District Judge Richard Ilka determined the fee is an impact fee and is “unlawful and unenforceable.” Impact fees typically go to fund construction for public infrastructure that's needed as a result of new development.

Experts generally believe the practice can help alleviate the economic burden of funding such projects for cities with growing populations.

Woodbury City Administrator Clinton Gridley said in a statement Dec. 1 that taxpayers shouldn’t be obligated to pay for roads needed to serve developers.

“This is why we negotiate roadway financial participation with developers to pay their fair share,” he said.

Similar cases have raised legal challenges against impact fees in Minnesota.

In 2012, a Ramsey County District Court struck down a Roseville ordinance allowing the city to charge developers an impact fee exceeding the city’s authority.

The Minnesota Supreme Court also heard arguments in the late 1990s when the City of Eagan imposed a road unit connection charge on a developer. Harstad’s attorneys have argued that Woodbury’s fees mirror those in Eagan, which the state’s highest court affirmed were unlawful.

The Court of Appeals hasn’t announced a date for oral arguments for Woodbury’s appeal.

The court releases its opinions within 90 days of the hearing.

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