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1k. Approve Modified Development Contract-National Weather ServiceI 1 CITY OF ) k CHANHASSEN 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937 -1900 • FAX (612) 937 -5739 TO: Mayor and City Council FROM: Don Ashworth, City Manager DATE: June 13, 1994 SUBJ: Approve Modified Development Contract - National Weather Service As the council is aware, the original development contract was entered into between the Weather Service and the City of Chanhassen in mid -1993. Bids received for the actual construction were perceived to be too high by the Weather Service and a decision was made to re -bid the project. Although this decision was seen as being positive for the Weather Service, it did create a dilemma as to whether or not dates /fees established within the development contract would govern or whether current schedules would prevail. The attached amendment to the development contract was prepared by the City Attorney's office after extensive negotiations with the Weather Service. Approval is recommended. MEMORANDUM FIRST AMENDMENT TO DEVELOPMENT CONTRACT /PUD AGREEMENT I CHANHASSEN BUSINESS CENTER -PHASE ' AGREEMENT dated , 1994, by, between, and among the CITY OF CHANHASSEN, a Minnesota municipal corporation ( "City ") and AUDUBON 92 PARTNERSHIP, a Minnesota general partnership ( "Developer "), and CHANHASSEN VENTURE, LTD., an Illinois corporation ( "Owner "). ' WHEREAS, there exists that certain Development Contract /PUD Agreement (the "Development Contract ") relating to CHANHASSEN BUSINESS CENTER - PHASE I, between the City of Chanhassen and Audubon 92 Partnership, dated July 9, 1993, ' and recorded in the Office of the Carver County Registrar of Titles on September 3, 1993, as Document No. T79910 relating to the plat of "CHANHASSEN BUSINESS CENTER "; and ' WHEREAS, Chanhassen Venture, Ltd. is the purchaser of Lot 1, Block 2, CHANHASSEN BUSINESS CENTER ( "subject property "); and WHEREAS, the parties wish to establish the park dedication fee for the subject ' property. NOW, THEREFORE, in consideration of their mutual covenants the parties agree ' as follows: ' 1. The park dedication fee for the subject property is $37,000. The fee is payable at the time a building permit is issued for the subject property. ' 2. If the park dedication fee for the subject property is not paid on or before January 1, 1995, the fee shall be recalculated based upon the park fees then required by City ordinance and resolution. ' 15450 06/03/94 CHANHASSEN BUSINESS CENTER - PHASEI 3. The development contract shall remain in full force and effect except as specifically amended herein. CITY OF CHANHASSEN BY: Donald J. Chmiel, Mayor (SEAL) STATE OF MINNESOTA ) ( ss. COUNTY OF CARVER ) Its The foregoing instrument was acknowledged before me this day of 1994, by the of the City of Chanhassen, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City Council. NOTARY PUBLIC AND Don Ashworth, City Manager AUDOBON 92 PARTNERSHIP W Its CHANHASSEN VENTURE, LTD. 15450 CHANHASSEN BUSINESS 06/03/94 2 CENTER - PHASE I STATE OF MINNESOTA ) ( ss. COUNTY OF ) The foregoing instrument was acknowledged before me this , 1994, by the of Audobon 92 Partnership, a , on behalf of the NC<ARY PUBLIC STATE OF MINNESOTA ) ( ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 1994, by the of Chanhassen Venture, Ltd., an Illinois corporation, on behalf of the corporation. NOTARY PUBLIC DRAFTED BY: Campbell, Knutson, Scott & Fuchs, P.A. 317 Eagandale Office Center 1380 Corporate Center Curve Eagan, Minnesota 55121 (612) 452 -5000 RNK:srn day of 15450 CHANHASSEN BUSINESS 06/03/94 3 CENTER - PHASE I CAN IPF)ELL, KNUT SCOTT & FUC'1T P.A. Thouu.i I. C,w)1 -I - ,il 1 N. }.nut. G. Fuch, Lnnr R. AV'.11 Fllwit B. Eynm J) E! 1) A. hin_rr �n,lrc,t Nict),m,11 1'o,h1cr I F.,y (( CONFIDENTIAL ATTORNEY /CLIENT PRIVILEGE June 3, 1994 CHANHASSEN CITY COUNCIL Donald J. Chmiel, Mayor Mike Mason, Councilmember Richard Wing, Councilmember Colleen Dockendorf, Councilmember Mark Senn, Councilmember RE: Weather Station Park Fees Dear Mayor and Councilmembers: 4- G The developer of the Chanhassen Business Center plat is disputing the City's park dedication fees for the weather station lot. The City approved the plat in July 1993. At that time the park fees for the lot were $30.000. Effective January 1, 1994, the fees increased by 50% to $45,000. The fees are due when a building permit is issued. The developer argues that the weather station shouldn't have to pay any park fees because it is an agency of the United States government and is therefore exempt. Enclosed is a letter from the developer's attorney detailing their position. To settle the dispute they have agreed to pay $37,000. This is $7,000 more than the City would have received if they had obtained a building permit last year as they had planned. Although I think we would have a good chance of winning a lawsuit, the cost to defend would exceed the extra fee we might receive. I recommend accepting $37,000. The enclosed development contract amendment would carry this out. If you have any questions, please call before the City Council meeting because it is difficult to discuss this in a public meeting. Very truly RNK: srn Enclosures cc: Don Ashworth SELL, KNUTSON, SCOTT CHS, P.A. . Knutson L u Suite 317 L- a��ai��l��lc ��tti�c C� ntrr 1 3 h Ct,r ��,rar� C�ntrr Curse E,win, A1N 771 Z 1 } 1 1 JAMES P LARKIN LARKIN, HOFFMAN, DALY & LINDGREN, LTD. DANIEL L. BOWLES ROBERT L HOFFMAN TIMOTHY J. McMANUS JACK F. DALY A T T O R N E Y S AT LAW TIMOTHY J. KEANE D. KENNETH LINDGREN ALAN M. ANDERSON GERALD H. FRIEDELL DONNA L. ROBACK ALLAN E. MULLIGAN MICHAEL W. SCHLEY JAMES C. ERICKSON LISA A. GRAY EDWARD J. DRISCOLL 1500 NORWEST FINANCIAL CENTER GARY A. RENNEKE GENE N. FULLER CHRISTOPHER J. HARRISTHAL JOHN D. FULLMER 7900 XERXES AVENUE SOUTH MICHAEL A. ROBERTSON ROBERT E. BOYLE BRUCE J. DOUG LAS FRANK I. HARVEY BLOOMINGTON, MINNESOTA 55431 -1194 SHANNON K. McCAMBRIDGE CHARLES S. MODELL WILLIAM C. GRIFFITH, JR, CHRISTOPHER J. DIETZEN TELEPHONE (61 2) 835 -3800 JOHN J. STEFFENHAGEN JOHN R. BEATTIE FAX 896 DANIEL W. VOSS LINDA H. FISHER (612) -3333 JOHN R. HILL THOMAS P. STOLTMAN PETER J. COYLE MICHAEL C. JACKMAN MICHAEL J. SMITH JOHN E. DIEHL VILIS R. INDE JON S. SWIERZEWSKI DWIGHT N. HOLMBO THOMAS J. FLYNN ANDREW F. PERRIN•• JAMES P. QUINN ANN M. MEYER TODD I. FREEMAN FREDERICK K. HAUSER III PETER K. BECK MARY E. VOS JERO ME H. KAHNKE LARRY D. MARTIN GERALD L. BECK JANE E. BREMER JOHN S. LUNDQUIST RENEE L. TOENGES DAYLE NO LAN - MARCY R. KREISMAN THOMAS B. HUMPHREY. JR. MARIEL E. PIILOLA JOHN A. COTTER' BEATRICE A. ROTHWEILER OF COUNSEL PAUL B. PLUNKETT WENDELL R. ANDERSON ALAN L. KILDOW JOSEPH GITIS KATHLEEN M. NEWMAN MARK A. RURIK MICHAEL B. LESARON GREGORY E. KORSTAD *ALSO ADMITTED IN WISCONSIN C. E "E - APPLICATIOA' FOR MINNESOTA LICENSE CURRENTL Y PENDING April 14, 1994 Mr. Roger N. Knutson Campbell, Knutson, Scott & Fuchs P.A. 1380 Corporate Center Suite 317 Eagan, Minnesota 55121 Re: Chanhassen Business Center -- United States Weather Service Project Dear Roger: The purpose of this letter is to again request on behalf of Chanhassen Business Center (CBC) that the City of Chanhassen not impose the effect of Resolution 94 -10 increasing the park dedication fees as it relates to the National Oceanic and Atmospheric Administration Weather Service (Weather Service) facility to be constructed on Lot 1, Block 2, in the Chanhassen Business Center (the Property). Specifically, we request that the park dedication fee be charged on the basis of the fee in effect prior to January 10, 1994 ($3,000.00 /acre or $30,000.00) rather than the fee subsequently - stablished by the City of Chanhassen ($4,500.00 /acre or $45,000.00). In the event the City of Chanhassen does not agree to take those steps necessary to establish the park dedication fee at $3,000.00 per acre for the Weather Service project, we are prepared to seek on behalf of CBC, Bloomington Venture, and the Weather Service a declaratory judgment in federal district court to challenge all or a portion of the park dedication fee on the following basis: 1. The City's Article VI, Clause; and 2. The City of resolution impose the authority to impose the fee is preempted under Section 2 of the U.S. Constitution, the Supremacy Chanhassen, in amending its fee schedule by rather than ordinance, lacks the authority to fee pursuant to Minn. Stat. § 462.358. LARKIN, HOFFMAN, DALY & LINDGREN, LTD. I Mr. Roger N. Knutson discussion of concerns by the federal government and April 14, 1994 Bloomington Page 2 Department of Commerce and Weather Service met with representatives of Background the City of On January 7, 1992, the United States Department of Commerce entered into an "Assignable Option to Purchase Real Property" (the Option agreed to credit the development of the Weather Service Agreement) to acquire that property within the City of Chanhassen Facility for subsequently platted as Lot 1, Block 2, Chanhassen Business Center. The Option Agreement required the division of the Property and the ' installation of public improvements. The Department of Commerce trail fee in entered into the Option Agreement for the purpose of constructing and operating a regional office of the National Oceanic and Atmospheric , Administration (hereinafter the Weather Service Facility). to be paid Subsequently, representatives and consultants for the Weather Service and CBC sought and secured a planned unit development (PUD) approval understood to be $30,000.00 or $3,000.00 per acre. in December 1992. The Option Agreement provided that the United ' States Government may assign its interest to a third party to ' construct the Weather Service Facility. If the option were assigned, CBC endeavored to complete those tasks necessary to close the U.S. Government would then lease and operate the Weather Service the Option Facility. After much discussion of concerns by the federal government and Bloomington Venture, representatives of CBC, Bloomington Venture, the Department of Commerce and Weather Service met with representatives of the City of Chanhassen on July 27, 1993. At that time, the City of Chanhassen agreed to credit the development of the Weather Service ' Facility for the construction of a public trail system. The City of Chanhassen acknowledged and credited the trail portion of the park and trail fee in the amount of $15,000.00 ($1,500.00 /acre x 10 acres). Pursuant to those discussions with the City, the park dedication fee to be paid at the time of the construction of the Weather Service Facility was understood to be $30,000.00 or $3,000.00 per acre. Throughout the autumn and winter, the Weather Service, Bloomington ' Venture and CBC endeavored to complete those tasks necessary to close the Option Agreement. On January 10, 1994, the City of Chanhassen amended by Resolution 94 -10 its park dedication fee schedule ' increasing the commercial /industrial park dedication fee from $3,000.00 to $4,500.00 per acre. On February 24, 1994, the federal government, Bloomington Venture, and CBC closed on the sale of the Property. DISCUSSION ' Federal Preemption of Local Zoning Regulations Supremacy Clause United States Constitution, Article VI, Clause 2 ' provides: "this Constitution, and the Laws of the United , States which shall be made in Pursuance thereof; I LARKIN, HOFFMAN, DALY & LINDGREN, LTD. Mr. Roger N. Knutson April 14, 1994 Page 3 ' and all Treaties made, or which shall be made, under the Authority of the United States, shall be ' the supreme Law of the Land; and the Judges in every State shall be bound thereby, and any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." The Supremacy Clause is the basis for the doctrine of federal preemption of conflicting state and local laws. In United States v. ' City of Pittsburg, Cal. 661 F.2d 783 (9th Cir. 1981), the Postal Service challenged a local trespass ordinance that explicitly required postal letter carriers to obtain the express consent of residents ' before crossing their lawns in the course of mail of delivery. The Ninth Circuit Court of Appeals found that the "ordinance interferes with postal carriers' federal duty to deliver the mail efficiently and is therefore unconstitutional." Id. at 786. The Court stated that 11 [1]ocal law will be found to be preempted by federal law whenever the 'challenged state statute stands as an obstacle to the accomplishments and execution of the full purposes and objectives of Congress. '' Id. at 785 (quoting Perez v. Campbell 402 U.S. 637, 649, 91 S. Ct. 1704, 1711, 29 L. Ed. 2d 233 (1971). See also Rust v. Johnson 597 F.2d 174, 179 (9th Cir.), cert. denied 444 U.S. 964, 100 S. Ct. 450, 62 L. Ed. 2d 376 (1979) (local government cannot override federal interest even though local government was engaged in valid state function). The validity of the City's fee assessed against the Weather Service turns on the doctrine of federal preemption. This doctrine stands for the proposition that federal land uses are not subject to state or local laws, including zoning regulations, because of the superiority of the national government over the states and their political subdivisions. 6 Rohan, Zoning and Land Use Controls § 40.03[l][a] (1994). See U nited States v. Chest 144 F.2d 415 (3d Cir. 1944). ' Taken with the "old and well known rule that statutes which in g eneral terms divest preexisting rights or privileges will not be applied to ' the sovereign without a clear expression or implication to that effect," this principal of immunity means that where "Congress does not affirmatively declare its instrumentalities or properties subject to the regulation, the federal function must be left free of regulation." State of Minnesota v. Hoffman 543 F.2d 1198, 1206 (8th Cir. 1976) (emphasis added). Because of the fundamental importance of the principle shielding federal installations and activities from ' regulation by the states, an authorization of state regulation is found only when and to the extent there is a clear congressional mandate, specific congressional action makes this authorization of ' state regulation clear and unambiguous. Hancock v. Train 426 U.S. 167, 178 (1976). Finally, "it is well established that the doctrine LARKIN, HOFFMAN, DALY & LINDGREN, LTD. I Mr. Roger N. Knutson April 14, 1994 Page 4 of federal supremacy protects legitimate activities of the United ' P Y P g States government from regulation by state and local authorities," Township of Middletown v. Northeast Regional Office, U.S. Postal ' Serv. 601 F. Supp. 125 (D.N.J. 1985) (citing Mayo v. United States 319 U.S. 441 (1943)), and that "federal facilities and operations are generally exempt from local zoning regulations." 4 Rathkopf, The Law of Zoning and Planning § 53.10 (1994). See also Town of Oronoco v. City Rochester 197 N.W.2d 426, 429 (Minn. 1972). Our situation is like Mayo where the United States, under the ' direction of the Secretary of Agriculture, purchased fertilizer from a vendor in Florida. At the time, Florida had a statute which required purchasers of fertilizer to pay an inspection fee on all purchases. , Mayo 319 U.S. at 1139. The United States, however, failed to pay the inspection fee, so Florida put a "stop sale" on the distribution of fertilizer to the United States. Plaintiff argued that neither the Constitution nor any federal statute exempted the United States from paying the inspection fee, and therefore, the state was not preempted by the federal government. Id. The Supreme Court disagreed, however, stating that although it lies within congressional power to authorize regulation, including taxation by the state of federal instrumentalities, no such permission was granted. Id. at 1140. The court ruled that the inspection fee was prohibited by the supremacy clause because it was money exactions, the payment of which, if ' enforceable, would be required before executing a function of the government. Id. , A clear enunciation of this principal was articulated by the court in the case of Middletown There the court held: Turning now to the applicability of local zoning regulations to the Postal Service, it is well established that the doctrine of federal supremacy protects the legitimate activities of the United States Government from ' regulation by state and local authorities. See, e.g. Mayo v. United States 319 U.S. 414, 63 S.Ct. 1137, 87 L.Ed.1504 (1943). The effect of this principle, which derives from ' the Supremacy Clause, Article VI, Clause 2 of the Constitution, is that unless Congress clearly and affirmatively declares that federal instrumentalities shall be subject to state regulation, the federal function must ' be left free of such regulation. Hancock v. Train 426 U.S.167, 96 S.Ct. 2006, 48 L.Ed.2d 555 (1976). In the case at bar, the Township of Middletown has not brought to this court's attention any evidence of congressional intent to subject federal instrumentalities such as the Postal Service to local zoning regulations. I LARKIN, HOFFMAN, DALY & LINDGREN, LTD. Mr. Roger N. Knutson April 14, 1994 Page 5 Middletown at 127. Further, the government is generally not deprived of immunity from zoning because it uses the land in question as a lessee from a private owner. 6 Rohan, Zoning and Land Use Controls § 40.03[1][c]. See, e.g. Tim v. City of Long Branch 135 N.J.L. 549, 53 A.2d 164 (1947) (federal government as lessee of residence for conversion to apartments under Lanham Act to provide housing during war was entitled to immunity); McCallum v. Bryant 211 Ga. 98, 84 S.E.2d 39 (1954) ' (federal government entitled to immunity as lessee of office building owned by private lessor); Thanet Corp. v. Board of Adjustment of Princeton 104 N.J. Super. 180, 249 A.2d 31, aff'd 108 N.J. Super. ' 65, 260 A.2d 1 (1961) (where federal government entered into a lease to use land for a post office, such use was immune from zoning control even though the government did not own land). Zoning normally focuses on use, not ownership. Immunity should be granted where the use is carrying out a governmental or public function. The form of ownership in which the government occupies the property is not relevant to either standard zoning considerations or questions of immunity. 6 Rohan, Zoning and Land Use Controls § 40.03[1][c]. Here, the United States is required to pay $45,000 before it can execute its government function to develop and operate a weather forecasting station for the benefit and safety of the public. The City, by its fee, places a prohibition on the federal government. In its application, the fee is not intended simply to regulate the amount of land the government buys and develops. Without the fee, development of the land is not permitted even if the government is in compliance with all other zoning regulations. It is clear that the fee which the City requires is tantamount to prohibiting operation of the federal installation. ' Nowhere can it be found in U.S.C.S. or C.F.R., on its face or from legislative history, any clear and unambiguous declaration by congress that federal weather stations may not perform their activities unless they pay a park dedication fee. Nor can congressional intention to ' submit federal activity to city control be implied from legislative or case history. In absence of clear federal language to bind the United States to the City of Chanhassen's fee, the only conclusion is that ' with respect to subjecting federal weather operations to the City's dedication fee, the regulation does not satisfy the traditional requirement that such intention be evinced by satisfactory clarity. ' Through the $45,000 park dedication requirement, the City is attempting to subject federal land to municipal zoning regulations without the United States' express consent. The City's actions are clearly not permitted under the Supremacy Clause. Accordingly, the LARKIN, HOFFMAN, DALY 8L LINDGREN, LTD. Mr. Roger N. Knutson April 14, 1994 Page 6 Weather Service is not only not liable for the $45,000, but it is not liable for the $30,000 park dedication fee. Authority to Impose Fee Minnesota Statutes Section 462.358, Subd. 2b provides that a municipality may, through its subdivision regulations, require that a reasonable portion of a proposed subdivision be dedicated to the public for public use. The City of Chanhassen, in amending its dedication fee schedule, did so by adoption of a Resolution on January 10, 1994. The failure of the City to properly adopt a regulation to impose the fee in the first instance should invalidate the fee. There is a sound policy basis for requiring that the fee be adopted by ordinance. The fee affects property rights which in turn requires the application of principles of due process. Specifically, amendments to a zoning or subdivision ordinance can only be affected after notice, hearing, and publication. Such procedural safeguards are intended to assure affected property owners the opportunity to address the proposed amendments. Such safeguards are not afforded to property owners in the process of adoption of a resolution. We request that you respond to the above Should you have any questions relating to hesitate to contact me at 896 -3203. Sincerely Timothy J Keane, for LARKIN, HO FMAN, DALY & LINDGREN, Ltd. kw cc: Betty L. O'Shaughnessy Dennis Dirlam TJK:LEls A 1 by Wednesday, April 20, 1994. the foregoing, please do not 1