Minnesota Supreme Court to Hear Impact Fees Case

Review Follows Court of Appeals Win for Industry

The Minnesota Supreme Court announced on Nov. 28 that it will review the Harstad v. Woodbury
case. Woodbury appealed the Sept. 18 Court of Appeals decision upholding a district court’s ruling that Woodbury’s Major Roadway Assessment (MRA) fees violate state law.

In the Court of Appeals' opinion, Judge Diane Bratvold said Woodbury "lacks express or implied authority" to impose its MRA fee. This published opinion and decision by the court upheld the long-held belief that cities cannot impose additional taxes or fees upon developers in order to pay for transit-related improvements outside of signed development agreements.

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Twin Cities’ developer Martin Harstad sued the city of Woodbury in 2016, contending the city’s MRA fees, which are used to pay for traffic- related improvements throughout the city, were not permitted under state law. The Court of Appeals upheld a lower court’s ruling that these fees are unlawful.

For his 183-home Bailey Park project, Harstad was asked to pay $1.3 million in MRA fees on top of paying for all the development’s transportation-related infrastructure.

In November 2016, the district court sided with Harstad, saying the MRA fees were illegal. In his decision, Judge Richard Ilkka called the longtime practice “unlawful and unenforceable.”

Rochester-area developer Frank Kottschade, Housing First Minnesota and the National Association of Home Builders filed a friend-ofthe- court brief in support of Harstad for the Court of Appeals decision, citing a similar case between the city of Eagan and Country Joe Homes in the 1990s.

The Minnesota Supreme Court has not yet set a hearing date for the case.