Court of Appeals Throws Out Illegal Development Fees

The Minnesota Court of Appeals: Woodbury Major Roadway Fee is Illegal

Twin Cities developer Martin Harstad won a major victory at the Minnesota Court of Appeals on Sept. 18. Harstad sued the City of Woodbury, contending the city’s Major Roadway Assessment (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 the court's opinion, Judge Diane Bratvold said Woodbury "lacks express or implied authority" to impose its MRA fee. The court's ruling upholds the standard that cities cannot impose additional taxes or fees upon developers in order to pay for transit-related improvements outside of signed development agreements.

This is a win for homeowners and home affordability in Minnesota. This decision provides much-needed clarity for cities- traffic impact fees, which add to the home affordability crisis, are not legal and cannot be charged to homeowners.
— David Siegel, Executive Director of Housing First Minnesota
Left to right: David Siegel, Housing First Minnesota; Jim Yarosh, Siegel Brill; Rob Stefanowicz, Larkin Hoffman; Martin Harstad; Peter Coyle, Larkin Hoffman; Gary A. Van Cleave, Larkin Hoffman; Frank Kottschade, Bob Michels, Michels Homes, Outside of the Chambers of the Minnesota Court of Appeals Following the June Hearing.

Left to right: David Siegel, Housing First Minnesota; Jim Yarosh, Siegel Brill; Rob Stefanowicz, Larkin Hoffman; Martin Harstad; Peter Coyle, Larkin Hoffman; Gary A. Van Cleave, Larkin Hoffman; Frank Kottschade, Bob Michels, Michels Homes, Outside of the Chambers of the Minnesota Court of Appeals Following the June Hearing.

The court’s ruling upholds the standard that cities cannot impose additional taxes or fees upon developers in order to pay for transit-related improvements outside of signed development agreements. 

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, the Builders Association of the Twin Cities and the National Association of Home Builders filed a friend-of-the-court brief in support of Harstad, citing a similar case between the City of Eagan and Country Joe Homes in the 1990s.

Woodbury, which was aided by the League of Minnesota Cities, now has 30 days to appeal this decision to the Minnesota Supreme Court.

Harstad at a Glance.JPG