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Supreme Court agrees to hear Woodbury road fee case

The Minnesota Supreme Court will hear Woodbury's roadway case after an appellate court ruled the city cannot charge developers for public roads outside of their property. File photo

The Minnesota Supreme Court will hear a case over a method Woodbury and other Minnesota cities use to fund public roads and other infrastructure.

The state's highest court agreed earlier this week to hear arguments over cities' ability to charge developers for roads outside of their properties.

The legal battle stems from a 2016 lawsuit brought by New Brighton-based developer Martin Harstad, who sued Woodbury after it sought nearly $1.4 million for roadway improvements as a condition for his 183-home residential project.

The fee, which Woodbury calls a "Major Roadway Assessment," was tossed when a district court judge determined the fee was illegal and unenforceable. The Minnesota Court of Appeals upheld the lower court's decision earlier this fall.

Woodbury planned to use the fees for adding roundabouts, traffic signals and other infrastructure off-site from the proposed Bailey Park neighborhood in southern Woodbury.

A number of other cities charge developers similar roadway fees, a point some say may echo statewide.

In its petition to the Supreme Court, attorneys for Woodbury wrote the lower court's decision could raise further challenges on how cities fund projects.

The League of Minnesota Cities, who represents Woodbury and other cities across the state, filed legal briefings arguing taxpayers may need to shoulder the cost of new roads to support increased traffic.

The Builders Association of the Twin Cities and other observers wrote in competing court briefings that regulatory fees have driven up the cost of new homes and are contributing to housing unaffordability for some Minnesotans.

Similar practices of charging developers for what cities see as future infrastructure needs have been heard by courts in the past.

In 2013, a district judge struck down Roseville's fee on developers used to pay for roads outside of a new commercial development.

The Minnesota Supreme Court ruled that the City of Eagan's "road unit connection charge" was an illegal tax because the flat fees it charged developers weren't tied to specific services.

Harstad's attorneys have argued the details of the 1997 case, referred to as "Country Joe" after the developer who sued Eagan, applies to their own.

Woodbury, however, contends its roadway fees are different because they're negotiated between the city and developer and based on specific needs.

The city has collected about $5.4 million in such fees since 2012, according to a review of development agreements.

The Supreme Court will set a date for oral arguments for Woodbury's appeal at a later time.