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9. Zoning Ordinance maximum lot size for church developments at 15 acres I , ci i , CITYOF CHANHASSEN I . • ,,... , .:. , ,, , ,. . , . ., ,_ .,. ._ 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 I (612) 937-1900 • FAX (612) 937-5739 \_ � ) ( ) Action by Ctty Adm(nistratot MEMORANDUM Endorsed ✓ � I Mociiiit y TO: Don Ashworth, City Manager Reject; I FROM: Paul Krauss, Planning Director (3? Date ;ubmi ad to Ccmmssion r U° rf a.q/ DATE: January 16, 1990 Dete Cenci! I //t4/F6 SUBJ: Proposed Zoning Ordinance Amendment Pertaining to Maximum Lot Sizes for Churches IPROPOSAL/COMMENT During the review of the Temple of Eck proposal, the City Council I considered establishing a maximum size on churches that would be allowed by conditional use permits in the City. The reasons for considering the ordinance included a desire to impose a limit on I the physical and financial impacts of large scale church develop- ment with loss of property tax revenue being an issue. The Council discussed a 25 acre cap but ultimately settled on a 15 acre cap and asked staff to prepare a suitable ordinance to be Ibrought back through the Planning Commission in the usual manner. The Planning Commission reviewed this ordinance twice, first in I October and again in January. Staff prepared data indicating that the Temple of Eck site plan as currently drafted could range in size from 15 to 26 acres depending upon how a subdivision I around it is designed. The City Attorney also provided infor- mation regarding the tax exempt status of church property. In it there is a recent court decision that indicates that for property ,m to be tax exempt, it must first be owned $y �a chtirch but also I must be used for church purposes. Consequently, it could be concluded that property owned by a church but not used for churche purposes is subject to taxation. IDuring the first Planning Commission review, the Commissioners raised concerns regarding the intent of the ordinance and generally believed that if its major focus was to .minimize prop- I erty tax impacts , then it should be designed to apply to all nonprofit groups. They also generally concluded that they were philosophically opposed to any limitations on churches. For I their January meeting, the City Attorney prepared a revised ordi- nance that would apply the 15 acre limitation to all nonprofit use of property exclusive of public utilization. However, the I 11 Mr. Don Ashworth IIJanuary 16 , 1990 Page 2 ' City Attorney also pointed out a fundamental problem with this approach. The City Attorney indicated that it would be relati- vely easy for a church or other nonprofit institution to circum- vent the ordinance through the ownership of several adjoining parcels. Each would be tax exempt so long as they were put to some sort of related use. For example, a church could be on one ' lot with a church picnic area on another lot, and a church base- ball field on a third. As long as they were all used for 'church related activities you would have a 45 acre tax exempt site. At the second meeting on the ordinance, the Planning Commission again questioned the purpose and intent of such an ordinance. They voted unanimously to recommend denial of the ordinance and to have their concerns passed along to the City Council. Staff remains unsure as to how the Council wishes to proceed on this matter. The ordinance has been provided for your review ' along with minutes of the Planning Commission meetings and pre- vious staff reports. ' ATTACHMENTS 1 . Staff report and Planning Commission minutes of January 3, 1990 . 2 . Staff report and Planning Commission minutes of November 1, 1989. 3. Information from the City Attorney regarding the tax exempt status of churches. 1 1 I • 1. CITYOF CHANHASSEN ,,e, , . •. ,: i • 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937-1900 • FAX (612) 937-5739 ACNOR 6yF Y Administrator MEMORANDUM Endors, 'L___ Mode: Rcjectc TO: Planning Commission Det;s_-1_2AiXff: Dste Su5m;tted to Comm;s:ronl FROM: Paul Krauss, Planning Director DATE: December 27, 1989 ate Si ,`ed to Council SUBJ: Proposing Zoning Ordinance Pertaining to Maximum Lot Sizes for Churches On November 1, 1989, the Planning Commission reviewed the first 1 draft of an ordinance prepared by the City Attorney that is designed to limit the maximum size of churches to 15 acres . The Commission discussed the matter extensively, ultimately tabling the item for further study. A number of issues were raised by the Commission including: 1. A philosophical question as to whether or not this standard is appropriate. 2. Questions regarding modifications to conditional use stan- 1 dards pertaining to churches in general. 3 . The Commission questioned whether or not the intent of this 1 ordinance was to limit tax impact or limit religious institutions. r Believing that the tax impact issue was a key question, several of the Planning Commissioners suggested -t-hat the ordinance should apply to all tax exempt institutions and not just churches. Staff is in something of a quandary with this ordinance. As the Planning Commission is aware, the direction for this ordinance came from the City Council some time ago while they were reacting to the Temple of Eck issue. The City Attorney has provided a • revised draft of the ordinance that would apply to all tax exempt property except property owned by the governmental units. 1 Staff remains unsure as to the actual impact of this ordinance. The City Attorney has indicated that it would be relatively easy for a church or other non-profit institution to circumvent this ordinance by the ownership of several adjoining lots. Each would be tax exempt so long as they were put to some related use. For example, a church would be on one lot, with a picnic grounds on 1 1 II Planning Commission IIDecember 27, 1989 Page 2 ' the second and a baseball field on a third. As long as they were all used for church related activities you would have a 45 acre tax exempt site. Consequently, we are unsure as to whether or not this will achieve the goals set by the City Council. As I noted above, questions were raised regarding conditional use standards as they relate to churches. Commissioner Batzli raised ' two questions in particular. The existing CUP standards, Section 20-258, are as follows: IConditions for Churches - Generally 1. The site shall be located on a collector or arterial roadway as identified in the comprehensive plan or located so that access can be provided without conducting traffic through residential concentration. ' 2. The structure must be setback fifty ( 50) feet from all property lines. ' 3. Parking areas shall be setback twenty-five ( 25) feet from streets and thirty feet ( 30) from nonresidential property. ' 4 . No more than seventy ( 70) percent of the site is to be covered with impervious surface and the remainder is to be suitably landscaped in conformance with Article XXV. Commissioner Batzli questioned whether or not the "structure" must be setback from all property lines pertained to buildings, retaining walls, fences, and other such items that are defined by the ordinance. Staff believes that this could be corrected by revising the standard to read "a church building and other accessory buildings must be setback 50 feet from all property lines" . Batzli also raised the question regarding the 70% of ' site coverage allowed with impervious surfaces. As currently drafted, the ordinance applies to the gross acreage of the site and does not exclude wetlands or other unbuildab1e areas. Should the Planning Commission wish to revise this, they should direct staff accordingly. With that, staff again offers this ordinance up for Planning Commission review. 1 1 Planning Commission Meeting January 3, 1990 - Page 24 II Ellson moved, Erhart seconded that the Planning Commission recommend II approval of Subdivision Request #89-23 as shown on the plat dated December 29, 1989 and subject to the following conditions: 1. Lot 2 be shown as Outlot A on the final plat. ' 2. The north 20 feet of Outlot A is dedicated as a trail easement. 3. The property cannot be further subdivided or any new residences be II built on the site. All voted in favor and the motion carried. , ;yE0ZONING ORDINANCE TO AMEND THE CITY CODE WITH REGARD TO ESTABLISH THE MAXIMUM LOT SIZE FOR CHURCH DEVELOPMENTS AT 15 ACRES. Paul Krauss presented the staff report on this item. I Conrad: So basically you're saying that somebody could come in, subdivide a parcel and basically get around the ordinance that way? Krauss: Yes, that's correct. In fact there was a related question. If you recall we processed a conditional use permit or a site plan for a church in the Frontier building. The City Council didn't have a problem II with the church going in there but they were concerned what would happen if a church purchased the building and made it tax exempt. Roger basically said there' s absolutely nothing you can do about that. Whether or not a II church is occupying the property, they could purchase it and put some kind of a function in it and make the whole thing tax exempt. There' s virtually nothing a community can do to stop it. The practicality of it is is that it's not going to happen very much because it's expensive property but that's the question that he left us with. Conrad: So what we've got on the books here is an ordinance that can't really, or we've got a proposal of an ordinance that really doesn't achieve II what the City Council intended. There' s a way to get around it. . Would it accomplish anything? The way I read it right now, it's probably more restrictive in other areas because we went from church to, didn't he draft II the ordinance to really say any tax exempt which actually in concept I'm more in favor of than signifying church but I don't know if it harms the City more in terms of restricting something that we may want. I Wildermuth: I don't know if it's a problem of adjacent parcels is such a big issue. Do you think it is? , Ellson: I wonder if there'd even be another church that would come in. We all know it's an afterthought kind of thing to what's been happening and II it's a way to show the citizens that they're trying to put something in to prevent it from happening again. Batzli : It's not a knee jerk reaction is it? I 1 IIPlanning Commission Meeting January 3, 1990 - Page 25 Ellson: I'm just wondering the probability of it. Batzli : Well if they really wanted why anted to limit it, why don t they do what they did with contractor 's yards. Ellson: Located it within each other and things like that? I Batzli : Yeah. Make them have to be within 15 miles of 'each other or something. Erhart: Eliminate churches. That' s what we did with contractor's yards. Emmings: That's where I thought it was going. It's kind of a bold proposal . 1 Batzli : I backed off . I Conrad : It' s an ordinance that the City Council initiated. Is there any direction right now on this? Should we vote on it as presented? The one thing that didn' t happen I noticed. When it first hit us and we sent it II back, there were some conditions for other modifications for the ordinance. Basically some setbacks and what have you. Those were not incorporated into the new ordinance but still those conditions were thought to be appropriate Paul? IIKrauss : The conditions that I think you're referring to are the CUP conditions that apply to churches and they were not changed. ' Conrad: Yeah, these are existing okay. Krauss: They weren' t new conditions being applied under this ordinance. IConrad: Any direction? Anybody have a feeling on this one? Steve. I Emmings: I think the motivation for this is totally improper, that being the Eckankar Church. I think the goal was appropriate. That is not winding up with a lot of land off the tax roU.se I don't think this does I it and I don' t see how it can be done. Brian or someone brought up the Campfire girls. What if they came out here you know and they wanted to have, Camp Tanadoona wasn't there and the Campfire organization came out and said we want to do something at Tanadoona, we'd all be supportive of II that. • Wildermuth: No. I don't think so. In this stage of Chanhassen's development I would rather see some revenue producing for that property. Emmings: So I don't think we necessarily want to restrict ownership of land by tax exempt organizations here. This ordinance won't do it. IEllson: Maybe it's an attempt to show those that we're concerned that their concerns were at least addressed. Maybe it's not powerful but it' s ' an attempt. We listened to them and I think that' s what the City Council had. You know they were in front of all those people either not voting or 1 Planning Commission Meeting January 3, 1990 - Page 26 II saying that they' ll do whatever they can to prevent it again where we all know legally they could probably do it if push came to shove. This is at least our attempt to say that we listened to the people who were trying to do something to answer that. But again, if the Campfire girls came in or something like that, they'd probably still be able to get it. Emmings: Except to the extent that I suppose to some extent the market is going to limit this stuff because as land prices go up in Chanhassen, ' organizations that want large tracts of land to do things on axe going to have to go further away from the city so I think we're probably kind of protected by the increased property values out here. I Wildermuth: Does any other municipality have anything like this? Krauss: Roger did some research on that and he was not able to find any other community that did it. Wildermuth: Maybe there's a message there. ' Ellson: Well you wonder if somebody was shopping for land and they saw that we had this and another city didn't, would it just deter him from even applying or would they say we can fight this, let' s go at it? If you look 11 at it that way, are we accomplishing what some of those people wanted. Meaning some wouldn' t even maybe attempt because they think we' re trying to prevent it so in that aspect it would probably work for what some people wanted to do. Emmings: Yeah, but you're assuming that those people are undesireable. . . '_ Ellson: Right. Absolutely. I 'm just saying that the people, and I don't even agree that it' s probably a majority, want to see the City doing something and we' re here to probably represent them. So is the City Council and so they're saying okay, we' ll try to answer your concern or at least an attempt. If it. works either slightly, then it's a try I guess. I think the City Council wants something. I Conrad: We don't have to go along with it. Ellson: No, absolutely. I'm just saying I think something's going to come II out just because they promised they're going to do something. Conrad: Yeah. And it's an issue that do we want to take this one on ourselves or just pass it to them one way or another and let them deal with it so they can feel comfortable because it was their 's initially. Tim, you wanted to direct us some way I know. ' Erhart: I'd rather comment on the issue at hand. It appears to me, correct me if I 'm wrong, it appears to me there's already some mechanism for the City to establish what portion of a piece of property owned by a church is taxed and which isn't taxed. You kind of have to read that between the lines here but it appears to me that it isn' t clear that the Eck property is going to be totally tax free and that some mechanism already exists to tax portions of that property without this ordinance. IIPlanning Commission Meeting January 3, 1990 - Page 27 11 Krauss: Roger had a memo that was given out last summer that got at that. I forget the exact wording of it but basically the tax exempt institution has to use the property for a related use for it to become tax exempt. If ' they are holding property as a speculative commodity or if they're renting it out to somebody else, yes. There' s very good grounds for that being put back on the tax rolls. Erhart: Is there any precedent for that? Krauss: Apparently so. There's been some cases been decided. Erhart: The fact that there already is a mechanism, it may not be a perfect one. In looking at this, I think the merit of it, the potential ' merits of it are so outweighed by the potential problems. Those which we can anticipate here starting this thing, plus those which we can' t anticipate. I sense there' s all kinds of problems this ordinance could bring that we can't even anticipate. One of them that just came up and that is just the sense that we're trying to prohibit people like Campfire Girls or someone to come into the City. I mean it could be interpretted that way. I just don't think the value is there that supports recommending II this to the Council . Conrad: Any comments over here? IIBatzli : I agree. I don' t think that this ordinance does it. I think the interesting anomaly that we're now faced with in the City is that if in fact a church can get around an ordinance like this by purchasing 4 IIadjacent lots, the interesting thing is then if in the County's eys since they're adjacent lots, they'd be given a single tax identification number. If they were given a single tax identification number, it would be an ' interesting apportionment of the use of the lot and the concurrence on the ownership which is apparently the test for tax exemption. Because according to Roger , when,- the same owner owns two adjacent parcels, they're ' given one tax ID number so in fact the church, regardless of the use, it seems under that definition, would be given a single tax ID number and all four lots would then become tax exempt. Now -the law says that the church would have the burden of proof of non-taxation but if you give them a II single tax ID number, it seems like the City would have the burden of proof to come back and indicate that no, you're using that as a ballfield and that's really not a related use to why you're a tax exempt organization for instance for a church. It's interesting that we're going to find ourselves in that type of situation if that is the law. But I don't think this does • what we're trying to do and I don't know that it's proper that we do it in the first place so I would definitely vote against it.' ' Conrad: That's interesting. If they bought fours a 9 g parcels, adjacent parcels and put a church on one and the other three had activities that really IIweren' t related to the church. Batzli : Well for tax exempt status they do have to be related. 1 Planning Commission Meeting January 3, 1990 - Page 28 II Conrad: Then they would literally have to structure it so those other three parcels had an activity related to the church and I don't think they II could do that very easily. I don' t think you could run a ballfield and substantiate that that is. . . Ellson: For the social clubs of your church. I think they could and I I think they could have a school and a little nursery school thing. Emmings: Promoting fellowship of church members in an atmosphere of 1 Christian bliss. Ellson: That's right. The devils against the saints. I think they could II real easily. Because retreats and things like that. That's also church oriented. Conrad: But they would literally have to structure those four parcels to , physically be used for a special purpose that they can somehow document related to the church. I don't know that the ordinance wouldn' t do something. Jim, what was your direction on this? ' Wildermuth: Well I think the situation is a dilemma as to the appropriateness of restricting churches in general on the one hand and the tax revenue issue on the other hand. It seems to me a way could be found if we were really serious and intent on restricting tax exempt land use. I think we could find a way to do it. I • Conrad: Joan? Ahrens: Well you know as an outsider to this, this whole issue that you've I been discussing for quite a while, I read through this package a couple days ago and I was kind of shocked to tell you the truth that so much time was being spent on an issue that I considered to be one that the City II should not be spending so much time on. I was trying to tame my language down there but I think that it's interesting that the ordinance was written by Roger to address all tax exempt organizations and most of the discussion even here is about churches. It's obviously a knee jerk reaction to the Eckankar Church. I don' t think that we should, I hate -to see an ordinance that tries to limit all tax exempt organizat"i`bna' from, or try to "limit them to certain acreage in our community. I think there will situations that arise where people will want that kind of development and then we'll have II to go back and change the ordinance. I think also, to create an ordinance that is hard to enforce or impossible to enforce because they can buy adjacent parcels, is kind of a ridiculous exercise. Why pass an ordinance II that they can get around so easily by just buying up adjacent parcels and I think they could build a ballfield on the end of one and,say it was a church purpose. I'm in favor of the ordinance. ' I Conrad: Yeah, to summarize. I think the Eckankar property posed a particular problem and in my mind it possibly took some economically valuable land for city use and their expansion for the business district, it took it out of circulation at least temporarily. Therefore the reaction to not letting that happen again, in my mind taking out farmland that we really haven't proposed to be part of a new commercial direction or I IIPlanning Commission Meeting January 3, 1990 - Page 29 { II whatever , that would not bother me at all to take out land that is in a commercial area and restricts the financial viability of Chanhassen I think is a problem and I thought there was merit to looking at this . As I look at it right now, I 'm not sure, I don't know that there's another Eckankar ' property around here that's going to have that kind of impact. If some church bought it and I don't know that it would restrict some of the directions that Chanhassen would go in in terms of taking out commercial property that we wanted to be commercial. I think right now the land value will restrict a whole lot of that but you know, Eckankar could, buy additional property. That's the bottom line. They may want to do that which is their right and for speculation purposes. IBatzli : What's stopping them from buying the TH 212/TH 101 interchange? ' Conrad : Yeah. They literally could do that. However , I see the alternatives . I see the ordinance as something that I 'm just really not a supporter of the ordinance as drafted. I 'm not comfortable with it and I although it was our direction to staff to liberalize it in terms of not just saying churches. We told staff that we're really uncomfortable. It seems like we' re singling them out. We directed staff to come back with basically a broader category but then you look at the broader category and I I guess when I see it on paper I 'm just as uncomfortable as I was when I saw it limited to churches. My general feeling is to pass this along to City Council and let them deal with this because it's something that I II - guess I can't champion right now. Ellson: What would we have to do? All of us deny it or what would we have to do in order to pass it on? 11 Conrad : We'd vote on it. We can vote on the ordinance as ro osed. P P IIBatzli : Are you looking for. . . Conrad : I'm looking form motion to vote on the ordinance. Batzli moved, seconded Ellson c ded that the PlanRing TComr►xssion recommend to deny of Zoning Ordinance Amendment to amend the City Code with regard to II establishing the maximum lot size for church developments at 15 acres. All voted in favor and the motion carried unanimously. 1 Conrad: Reason for the denial. I guess if we can summarize would be the ordinance will not achieve the desireable result. Any other reasons? IIBatzli: Well I think that several commissioners expressed that they didn't know if the, well , the result of improving the tax base of Chanhassen is a goal that I think all of us would agree is a positive and good purpose but Iwe' re not sure that this weighed and balance of that was a desireable goal. Conrad: Do we see more negatives coming out of this ordinance than positives? Is that anything? Any other reasons? I II Planning Commission Meeting January 3, 1990 - Page 30 - II Ellson: I think we' ve summed them up fairly well . They've got the Minutes II also. Conrad: It' s nice to summarize. 1 Emmings: I think we all have, or at least some of us have kind of a queezy feeling that this is probably improper in some way. It just doesn't feel good. 1 Conrad: Are we concerned with the overall. Ellson: Ethics I guess behind it. It doesn't seem right to be able to do 1 that. Conrad: By expanding it to all tax exempt, does that make us more 1 uncomfortable than we were when we were simply dealing with churches? Emmings: Just as uncomfortable, yeah. 1 Batzli : I think last time at least I expressed that I was uncomfortable. Whether it was for just churches or all tax exempt but given the choice of two lesser evils, I would rather not just single out churches. Conrad: Okay. Maybe we could try to summarize that. Make some kind of sense out of it for the City Council . ZONING ORDINANCE AMENDMENT TO AMEND THE CITY CODE, DIVISION 6, SITE PLAN REVIEW TO REVISE THE PROCEDURE, EXPAND ON DEVELOPMENT STANDARDS AND REQUIRE FINANCIAL GUARANTEES FOR LANDSCAPING AND OTHER SITE IMPROVEMENTS. Paul Krauss presented the staff report on this item. 1 Conrad: Okay, Tim I 'm going to start down at your end. We've got, it's changed a little bit from the last time we saw it. Do ,you have any specifics? - � Erhart: I notice I didn' t have any comments from the last comments, 1 additions or involved in the last meeting. I probably won't have a lot this time. I do have one question on your item 4 there where you say non-agricultural metal buildings are prohibited in the ordinance. What does that mean specifically Paul? Krauss: Specifically the ordinance is intended • to ,prohibit the development II of primarily metal buildings in all non-agricultural districts. For example you can' t throw up a metal warehouse. Erhart: I understand that but does that say that? Non-agricultural metal II buildings? Why don't we just say metal buildings are prohibited in the ordinance? 1 II �� ;t C II . CITY OF - 4,.._ II , A:T . . CHANHASSEN 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 II (612) 937-1900 IMEMORANDUM y TO: Planning Commission G IIFROM: Paul Krauss, Director of Planning L" : DATE: October 3 , 1989 IISUBJ: Proposal Revision to the Zoning Ordinance to Establish the Maximum Size of a Church Site at 15 Acres IIDISCUSSION ' During the review of the Temple of Eck, the City Council con- sidered establishing a maximum size on churches that would be allowed by conditional use permit in the City. The primary reasons for requesting the ordinance are to limit the physical 1 and financial impacts of large scale church development. Loss of property tax revenues was discussed. A memo from the City Attorny outlining a recent court case is attached. The court' s ruling II indicates that churches may only qualify for tax exempt status on that portion of their property that is acturally being used for church purposes. Thus the fear that large tracts of church owned property would be removed from the tax rolls may be unfounded. IThe City Council discussed a 25 acre site size limitation but ultimately settled on a 15 acre cap. III have worked on a number of church sites over the years, including one that had a capacity of 90D4.members and the site area was below the proposed 15 acre cap. I believe it is therefore IIreasonable to assume that the ordinance will not impede most "normal" church development. I The impact of the ordinance on the Eckankar site was discussed with the City Attorney. The church owns approximately 175 acres but the church building and related development occupy only a II small portion of the property. The ordinance is -sttuctured so that it will not apply to the existing development. However, if and when they request a subdivision of the property to further I develop it, the size of the church site would be limited to 15 acres . This could pose a problem. The Temple is a very large facility that could exceed the 15 acre standard. A lot drawn to encompass the facility could range up to 26 acres in size if it is 11 to have frontage on Powers Boulevard. The smallest possible site II - 1 Planning Commission - October 3, 1989 Page 2 is approximately 13 acres and would leave a private driveway as 1 the sole access. Whether or not a lot area variance will be required will probably be determined by the internal street layout of any proposed development on the balance of the site. A copy of the proposed ordinance was sent to Peter Beck, the attorney who represented the church during the approval process. He did not voice any concerns regarding it. STAFF RECOMMENDATION Staff recommends that the Planning Commission approve the ordi- nance amendment. 1 1 1 1 1 1 1 i i 1 1 I . LAW OFFICES ' GRANNIS, GRANNIS, FARRELL & KNUTSON DAVID L. GRANNIS- 1874-1961 PROFESSIONAL ASSOCIATION TELECOPIER: DAVID L. GRANNIS,JR. - 1910-1980 POST OFFICE Box 57 (612)455-2359 VANCE B. GRANNIS 403 NORWEST BANK BUILDING ELLIOTT B. KNETSCH VANCE B. GRANNIS,JR.* 161 NORTH CONCORD EXCHANGE MICHAEL J. MAYER PATRICK A. FARRELL SOUTH ST. PAUL, MINNESOTA 55075 ' DAVID L. GRANNIS,III ROGER N. KNUTSON TELEPHONE(612)455-1661 DAVID L. HARMEYER •ALSOADMIITEDTO July 25, 1 989 PMCTICE IN WISCONSIN Ms. Jo Ann Olsen Chanhassen City Hall ' 690 Coulter Drive, Box 147 Chanhassen, Minnesota 55317 ' RE: Churches Dear Jo Ann: ' Enclosed is the revised ordinance which reduces the maximum lot size from 25 feet to 15 feet. If you have any questions, please call. Very truly yours, ' GRAN GRA ' S, FARRELL lippoodowm, - BY: 1 RNK:srn Roue . Knutson Enclosure �. cc: Don Ashworth 1 1 1 1 1 JUL ' 6 1989 ' CITY. OF CHANHASSEN 1 CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 20 OF THE CHANHASSEN CITY CODE, THE ZONING ORDINANCE, CONCERNING CHURCHES The City Council of the City of Chanhassen ordains: , . I Section 1. Section 20-258 of the Chanhassen City Code is amended to read: ' Sec. 20-258. Churches--Generally. (1) The site shall be located on a collector or arterial , roadway as identified in the comprehensive plan or located so that access can be provided without conducting traffic through residential concentration. , (2) The structure must be set back fifty (50) feet from all property lines. , (3) Parking areas shall be set back twenty-five (25) feet from streets and nonresidential property and thirty (30) feet from residential property. (4) No more than seventy (70) percent of the site is to be covered with impervious surface and the remainder is to be suitably landscaped in conformance with article XXV. (5) The maximum lot size is fifteen (15) acres. ' Section 2. This ordinance shall be effective immediately upon its passage and publication, but shall not apply to churches which have applied for a building permit or which have received City Council approval before its effective, date. PASSED AND ADOPTED by the Chanhassen City Council this day of , 1989. • ATTEST: . r ' Don Ashworth, Clerk/Manager Donald J. Chmiel, Mayor 1 (Published in the Chanhassen Villager on , 1989. ) I CAMPBELL, KNUTSON, SCOTT & FUCHS, P.A. ' Attorneys at Law Thomas J. Campbell Roger N. Knutson (612) 456-9539 Thomas M. Scott Facsimile (612) 456-9542 Gary G. Fuchs James R. Walston ' Elliott B. Knetsch Dennis J. Unger November 22, 1989 1 Mr. Paul Krauss ' Chanhassen City Hall 690 Coulter Drive, Box 147 Chanhassen, Minnesota 55317 RE: Maximum Lot Sizes Dear Paul: Enclosed is the revised maximum lot size ordinance you requested. As we discussed, the ordinance does not prevent a tax exempt organization from owning an unlimited amount of land. A church could, for example, own ten ( 10 ) contiguous 15 (fifteen) acre lots. The only effect the ordinance would have is that if one or more of the lots is left idle and not used for a church purpose, then that lot would not be exempt from the payment of real property taxes. Church property is only tax exempt if it is owned by a church and used for church purposes. How much extra tax revenue will be generated as a result of this ordinance is an unknown. There are certain obvious problems with applying the ordinance to all tax exempt uses. A church is a specific use and a judgment can be made about how much land is needed for the use. ' Tax exempt uses, however, can be anything from a church to a girl scout camp to a publishing house. Fifteen ( 15) acres may not be a reasonable limitation on the size of all such uses. There is no reported case law in Minnesota on this issue. If you want me to ' thoroughly research the subject in other jurisdictions, please let me know. Ver ly yours, CAMPBELL NUTSON, SCOTT & HS, P.A. 1 ' ger N. Knutson RNK:srn Enclosure Yankee Square Office III • Suite 202 • 3460 Washington Drive • Eagan, MN 5. J 27 1939 CITY OF CHANHASSEN II CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 20 OF THE CHANHASSEN , CITY CODE, THE ZONING ORDINANCE, CONCERNING LOT SIZES THE CITY COUNCIL OF THE CITY OF CHANHASSEN ORDAINS: Section 1. Section 20-1 of the Chanhassen City Code is amended by adding the following definition: "Governmental Unit" means the Federal government or any instrumentality thereof, the State of Minnesota or any instrumentality thereof, a County, City, Town, School District and any other political subdivision. Section 2. The Chanhassen City Code is amended by adding 1 Section 20-920 to read: 20-920. Maximum Lot Size. I The maximum lot size for all uses of property exempt from the payment of real property taxes, except property owned by a governmental unit. is 15 (fifteen) acres. Section 3. This ordinance shall be effective immediately upon its passage and publication, but shall not apply to uses for which approval has been given by the City prior to the effective date of this ordinance. PASSED AND ADQPTED by the Chanhassen City Council this day of , 1989. , ATTEST; Don Ashworth, Clerk/Manager Donald J. Chmiel, Mayor ' (Published in the Chanhassen Villager on , 1989. ) 1 I IPlanning Commission Meeting November 1, 1989 - Page 12 Krauss : At this point in time Mr. Chairman, the only way to get additional ' building back there is to come back and ask for additional variances. The way things are structured right now and that's certainly nothing that you have to automatically have to approve. IConrad : I think it's imporant and obvious things change and Planning Commissions and Councils change but I think it has to be a real clear message that , at least as I voted in favor of this, it was pretty much with ' the assumption that that back parcel would not be changed. Now you may . sell and that's obviously your right and that future developer or whatever could do whatever but I just don't, I would not be of mind to allow any ' increase traffic on the current one driveway going back but there' s really no way to enforce that posture to my knowledge. Anyway, any other comments? ' PUBLIC HEARING: ZONING ORDINANCE AMENDMENT TO AMEND THE CITY CODE WITH REGARD TO ' ESTABLISHING THE MAXIMUM LOT SIZE FOR CHURCH DEVELOPMENT AT 15 ACRES. Paul Krauss presented the staff report. ' Conrad: It's a public hearing. It was published. Peter Beck obviously knows that this is an item. I kind of thought he'd be here. Wildermuth: It didn' t give any reaction to it which I 'm surprised at. Conrad : And he is still under retainer? ' Olsen: I showed him the ordinance when Roger first had drafted it when it had 25 acres. When he was still involved with Eckankar , with the ' development contract and such and that didn' t concern them. Conrad : So the public notice was sent to Peter or was it sent to Eckankar or how? ' Krauss : I think it was sent to Peter . ' Conrad: And we would send it to him versus the property owners? Olsen: It just was given to him because he happened to be in the office ' the day I received it actually. Conrad: Are we comfortable that that's. . . IIKrauss: Legal notice is published in the official 'newspaper. Conrad: And there is no other policy stating that we individually identify ' those that are impacted by the Ordinance? Olsen: We've done it in the past. Planning Commission Meeting November 1, 1989 - Page 13 II Erhart: There' s some other churches that own property in this city. There's the, what is it? Krauss: There' s the church that owns the property down by the apartment building that's up for sale right now. ' Olsen: Lakeview. &imings: And Westside Baptist has that piece out on TH 41. , Erhart: But that's not down here. Krauss : But there' s no church building on there. Erhart: No, but they would be impacted by such an ordinance. , Olsen: Westside Baptist already has approval . Well we could do that. We can notify them. Wildermuth: If we passed this , would we have to grant a variance to those people? Krauss: Well it's a matter of conjucture. You don' t have to. If you want II to see the rest of the property develop, you may. There's different ways of subdividing that property up and if there was an -internal street built on their property to serve the church and to serve whatever development might be proposed, then the probability of it is that the site could be less than 15 acres. If they want to plat out a large enough piece of ground possibly for expansion or whatver but to get their site extended out to the street that exists now, we think it would be something in the order of about 25-26 acres . Erhart: Paul , would this have any immediate tax impact on the Eck ' property? Krauss: No. According to the information we've received from the City Attorney, it shouldn't have any at all. According to Roger , churches are entitled to a tax exemption for property that- they're using for church purposes. 1 Erhart: I know but if we' re defining that now to be 15 acres instead of 174, isn't that the intent of this ordinance? , Krauss: I don' t believe that it would have any impact on that. Olsen: The intent was that another church couldn't come in and buy another II 100 acres and possibly got that whole 100 acres tax exempt. I think we're finding that even if they have 100 acres, that that would not all become tax exempt anyway. Erhart: But that's exactly what these guys have done. They've come in and bought 174 acres. 11 ' Planning Commission Meeting November 1, 1989 - Page 14 Olsen: It' s not determined that that 174 acres will not be taxed . Erhart: Okay. So the object of the ordinance then is what? 1 Krauss: Presumably to put an upper cap on the magnitude of the church development that you might see in the community. Conrad : To restrict the non-taxable. 1 • Krauss: That would be the net effect. If the church site was 15 acres, that would be what it would be taxed on. Erhart: Okay, you're saying if someone came in with just a huge church. Wildermuth: Even a small church on a very large parcel . . .it says a church on church property. Erhart: What portion of the Eck property now is exempt from tax? 1 Olsen: I don't know that that's been determined. Batzli : It' s all being taxed right now. Erhart: Wouldn't they come in and apply for tax exemption for the whole thing? Wildermuth: Not until they get a structure built and start holding services. Olsen: They're going to try but it' s not sure if they' ll get it. Erhart: Then at least this would give us some basis to argue for not giving exemption for more than 15 acres so it is, what we're trying to do. Olsen: Carver County the taxes. ' Krauss : It' s also a question of, I don't think anything like this has ever been tested. Emmings: Why wouldn' t it be grandfathered? Why wouldn' t they, or would that be their argument that they're grandfathered in because this ordinance ' was passed after their approval . Krauss : Well yeah but they wouldn' t be grandfathered in because they're coming in for subdivision presumably after this ordinance. ' Emmings: I see. When you came in for subdivision is when this would apply? Okay. Krauss : I mean if you had an existing church site that was 20 acres, you would be grandfathered in, yes. 1 Erhart: Are we still in the public hearing? I Planning Commission Meeting November 1, 1989 - Page 15 Conrad: We still are. ' Wildermuth: . . .right now because when they do come in for building their structure, for a building permit. I Olsen: It's already out. Krauss: It's already issued. I Olsen: They're constructing. Wildermuth: They've already started? Olsen: Yes . I Wildermuth: Steve, I think you' re probably right. They probably will be grandfathered in. Emmings: I don' t know. What they're talking about is when they come in. . . Wildermuth: Until they subdivide. i Conrad: They're grandfathered in. If they ever subdivide. This is still a public hearing so any comments city council members? 1 Councilman Boyt : I do have a comment. I'm against this. I think this is, I said it at the Council meeting, I think this is a bad move for the City to make. I personally don' t think the city should be in the business of telling churches how big they should be. The tax impact as I think you noticed during the Eckankar situation is actually a plus in terms of expenses. They have this land sitting vacant than to have individual homes I go on it. But the bigger issue for me is I don't believe the City should be in the business of limiting the size of churches. Batzli : Can I ask one question Bill? How does that square with your ' argument of not allowing churches in the CBD and taking them off the tax roll in that case? Councilman Boyt: I think that's a good question. In the central business I district we're talking about property that is definitely a revenue generator for the City. If you were talking, I think there's a good zoning II reason to say that churches don't belong in the central business district. The land is simply too valueable but I wouldn't say that about the residential single family. Wildermuth: The same thing's going to apply to that property along TH 5 though or along the Boulevard. Councilman Boyt: I don't disagree with that. I'm also not in favor of going in and removing churches that already in the central business district. I mean they're there. I wouldn' t encourage more to be there. I II - Planning Commission Meeting November 1, 1989 - Page 16 I/ Wildermuth: I don' t think there'd be any legal way to do it even if you wanted to. ' Councilman Boyt : I don' t know. That' s a ood point to think through.P gh. Does it make a difference not having them in the zone at all versus controlling the size and I do think the City has the ability and should use it to determine where businesses should be with the zoning ordinance. I 'm just not comfortable with limiting the size. I don' t particularly want Chanhassen to be the first suburb in the country to do that. Certainly the first suburb in Minnesota. Conrad : How did you conclude Bill that it's saving us money? Councilman Boyt: Well they're not putting any tax demand on the City. Conrad : So you make an assumption that there would be smaller , cheaper houses going in? ' Councilman Boyt : If they build houses that are above the City average, it' s my understanding that it would probably generate income for the City so that' s possible. The tax argument may not hold a lot of water . I guess I just base mine more on the concern that I don't want to be telling ' churches how big they can be. Conrad: Don, any comments on this one? Mayor Chmiel : No. I guess I look at it from the aspect of looking at what we have in town presently such as St. Hubert's- and the local churches. ' Neither of those exceed 15 acres. I think what I was looking at was that we not have that much acreage available such as the Temple of Eck is looking at. Them putting in their church and trying to have it totally exempt, that's not going to happen. At least. . .County Attorney's office ' but I think we should have some limitations as to what can be within the community as far as taking the total amount of tax off of the rolls for the properties . I think that' s somewhat of a concern that I have basically. II what I see too is we have a lot of things within our city that are all tax exempt. Many of the things like the Arboretum. Parks.. There's a lot of land that's. . .so my major concern is potential of having a restriction Batzli moved , Wildermuth seconded to close the public hearing. All voted in favor and the motion carried. The public hearing was closed. • Conrad : Tim, we' ll start down at your end. What do you think about what's proposed? I Erhart: This was initiated in Council? How long ago was that or is it just that it came in conjunction with the public hearings for Eck? And the IAttorney has , according to your report here, reviewed it all? Olsen: He wrote the ordinance. I I Planning Commission Meeting II November 1, 1989 - Page 17 II Erhart: Yeah but he's satisfied that there's precedent? I have a hard time reading these things. There's two ways to look at this thing. One that's from the tax standpoint. The other one is from a standpoint, are we trying to prevent some church organization from coming in and doing a great big development? For what reason would a church want to use more than 15 I acres for a church? Would it be a conference center then also? Krauss: Presumably a church with an affiliated school could take up that much property. A church with some other facility, be it a carp or whatever. I 've worked on a number of churches over the years and I 've never seen one bigger than 15 acres. Including one that relocated out of Hopkins into Minnetonka, that old Apostolic Lutheran which had a congregation of upwards to 1,100. They were on a considerably smaller site Ill than that. Conrad: We' re really restricting a campus type of environment. The question is, do you want to extract that or do you want to. . . Erhart: There' s two questions I think. It' s an offsetting question. I think what we're trying to do is strengthen our tax position with this ordinance. The offset, what does it do if someone comes in and says I want to build a church campus, a legitimate church campus. I guess my reaction II is, they come along and we can always review the ordinance at that time so I guess if we' re strengthening our position with regard to taxes, I have no problem with the ordinance and it seems to me that if 15 acres makes sense, I give them what we have here today. Lastly, I guess we probably ought to go out and give this to the existing church owners in the City that have more than 15 acres. I know they're going to tell us, they're all going to tell you, even the church I go to, they're going to say we don' t want any restrictions we don' t need but we ought to probably do that but I guess I 'd support the ordinance. This issue is a big one. Conrad: Steve, you've got to have some interesting opinions. Emmings: I don' t have any opinions. I agree with the general notion that we don't want a lot of land off the tax rolls for churches and I think we II want to allow people to build their churches ,ancl 15 acres seems Like a lot to me. I probably would have picked a smaller number but I just wonder if let's say that you have some clever church person come in and they buy a 45 acre parcel and they subdivide it into 3 15 acre lots and they put their church on one. They put their church school on the next one and they put a church camp on the next one. Aren't they now all exempt? All three of them. Wildermuth: No. Emming: Why? Wildermuth: Because if they meet the State requirements for the test, at least one of the factors for the test, they have to conduct church services II on the site. Emmings: I don't think so. 1 • I Planning Commission Meeting November 1, 1989 - Page 18 ' Olsen: Church purposes. Krauss : Church purposes and one of the questions. . . ' Emmings: Now wait a minute. I don't get the exemption just because I 'm a church. I get it because I 'm for a whole bunch of reasons. There are a whole bunch of non-profit organizations that get tax exemption for the various reasons. I think that it wouldn' t be too hard to get around this. Now I don't know if that's. . .by Roger. This only deals with churches. it doesn' t deal with the other activities of religious organizations and I ' think I could put together 45 acres like I said and I don't think you could tax me. I don' t know. Maybe I 'm wrong or maybe if we thought about it more, we could think of a better example that would do what I 'm suggesting could be done but like Tim, I'm in favor of attempting to limit this. I don't think this does it and I wish maybe you'd get some comments from Roger on that before it gets to City Council . I 'm going to vote for it hoping that it will do something but I don't see how it will work. ' Erhart: If I could comment. I think in your example there, it seemed to understand that we have an ordinance that says that two pieces of property that are under the same owner , two contiguous pieces of property under the same ownership is treated as one parcel in the city which I don' t agree with that but that' s the ordinance. I don' t agree with it but that is the ordinance. It may apply there. Emmings: But I guess the point is, if I have a 15 acre limit on one activity and it may be that I have a 15 acre limit on my church and have all my other activities on a 30 acre parcel next door and since it isn' t specifically a church, maybe my non-profit charitable status will get me tax exemption on the 30 acre parcel . Wildermuth: Well yeah it will . Under the State Subdivision. . .exempt property, all acadamies, colleges, universities. . . Emmings: So it seems very easy to get around to me. It does not seem effective to me but Roger's probably thought this through and would know better than I for sure but that's the only comment I''ve got. Oh, I 've got ' one other comment. Sorry. I 'm not concerned about what Bill 's concerned about. About telling churches how big they can be because I think number one, it's hard to imagine a church wanting more than 15 acres. With 70% ' coverage, that means a church that's 10 acres. That's a big church. That's almost a Cub or a Fleet Farm so I 'm not concerned about it and if this would work, you still wouldn't be limiting their size. You'd say, but you're only going to get exemption on 15 acres and the pest are going to Ihave to pay taxes on. That doesn' t bother me at all . Batzli : I don't like this ordinance. I don't like it before or after the I amendment. They've deleted one portion of the ordinance which appeared to determine whether this section applied to churches both within and outside of the MUSA line and I would clarify that by adding something to the start of this such as the following applies to all churches since the next IIsection applies to those churches outside the MUSA line. I don' t think I Planning Commission Meeting November 1, 1989 - Page 19 residential concentration is defined anywhere. The structure must be set back 50 feet. Well, what structure are we talking about? Are we talking about the church which is a defined definition or what are we talking about II when we say structure? Are we talking about developed or undeveloped non- residential property? Are we talking about net or gross maximum lot size? II If we're going to change the ordinance, I 'd like to see us change the whole ordinance and make it a working ordinance. I don't think this is it. I don't even like the principle of limiting the maximum lot size of churches. I So I 'm going to vote against it. Wildermuth: I don' t see that this ordinance really. . .so basically I 'm in favor of it although I think Brian's comments and the ordinance itself are I very worth while. It seems like there should be more. . . Better definitions to put some teeth into it. Conrad : I don' t have too much of a concern with the ordinance. The things j that I think it would restrict are the campus uses. I guess I 'm not real interested in encouraging, I don't see a net benefit for those campus uses. The trade off is being more acreage closer to town possibly or for development and for taxes. I do have a question though. Do we want this to be a blanket, across the board restriction by all zoning districts or are there exceptions? , Wildermuth: That' s a good point. Conrad: Supposed agriculture. Is there a case to be made out in the agricultural district to put a church out there or would we never, well we did allow a church outside the MUSA line. Batzli: On TH 41 there? Conrad: On 41. ' Erhart: Even there it' s less desireable to have bigger churches. You just don't have the services. Conrad: So is that a case where it would never happen? I can make a real good case for the Eckankar property. It really is taking out some land that I think should be used for other things in the long run and I think II it's real unfortunate that, it's going to force us to develop other lands earlier than they should. Therefore, I think it' s really unfortunate that that's happening yet if there's an agricultural area that a church wants to II move out on, I'm not sure that I care. Batzli : I don't think that owning a lot of property necessarily means that the church is big either. I think that's a mistaken assumption. A church may want to build on 200 acres and only have a 5 acre spot that's really landscaped and developed and has a church on it. They may want to be isolated. , Erhart: Yeah, but that's zoned. I I MPlanning Commission Meeting November 1, 1989 - Page 20 Conrad : It's still not taxable but the agricultural taxes are significantly lower. Wildermuth: They can still own the property. . . ' Conrad: Yeah, if they subdivided it. I don't know. Councilman Boyt: The question I 'd like to ask, in listening to your discussion about why you support this, it seems as though it's tax related so why isn' t the ordinance aimed at all tax exempt organizations? Why are we signaling out churches? ' Emmings: Wait now. Didn' t the impulse for this thing come from the City Council? Maybe you could fill us in? Councilman Boyt : No I can' t. Emmings : I can' t either . My initial reaction to this was that this was ' retaliatory because members of the City Council who, it had that appearance at least that it was retaliatory in some ways because people on City Council were opposed to that church for whatever reason. This came out ' immediately thereafter and just the timing of it made it look that way and I didn' t like it for that reason but nevertheless it fits with my own instincts that tell me that that churches shouldn' t own big pieces of land that are tax exempt. So I agree with you to some extent. That would be better to have it broader . Erhart : The difference I think though is that the other exempt parcels, ' arboretums, universities, parks are public owned land where this is private owned property. I think that' s the difference. That's why you 'wouldn' t apply this to those. ' Emmings: But are there other privately owned tax exempt? Batzli : Camp Tanadoona.R ' Emmings: The campfire girls. Conrad: They're not tax exempt are they? Emmings: Oh yeah. ' Batzli: They're non-profit. Emmings: Sure. They're tax exempt. They couldn't survive there. They can't survive as it is. Erhart: The other question I had is why are we writing this Section 2 that I says this ordinance shall be effective immediately upon it's passage and publication but shall not apply to churches which have applied for building permit or which have received City Council approval before it's effective date? Why does that have to be in there at all? I Planning Commission Meeting November 1, 1989 - Page 21 Olsen: To grandfather in existing uses. To grandfather in the Eckankar . I Erhart: Why do we want to do that? If we have to do that, why have the ordinance? The probability of having another church coming in with 200 acres. ' Krauss: Any time you adopt an ordinance that has a standard different than something that's in the ground, it's automatically grandfathered in. Erhart: Yeah, so I 'm just saying why do we have to make it. . . Olsen: We probably don't because they already have their building permit now. Emmings: Are we really talking about churches or are we really talking about maybe privately owned tax exempt activities? Batzli : I'd feel much better about it if it was that rather than just churches. Conrad: You feel we' re treating churches unfairly? Signaling them out? Emmings: Yeah. Batzli : If you' re really doing it for the tax base, I would make it broader . Emmings: That would be consistent. , Wildermuth: Cover all the tax exempt organizations. Erhart: Privately owned tax exempt uses. Conrad: I ' ll go back to, my opinion. I feel that the Eckankar, because of it's proximity to downtown Chan is a real problem. I don' t have the same problem if it was located 2 miles west. Then I don't really care even though I 'm putting maybe off a problem to the- future. I think my concern is inappropriate use close to where we're encouraging development. Erhart: The way to look at it Ladd, if it's outside the MUSA line they' re probably not paying that much tax for farmland anyway. With green acres it's pretty reasonable. Then at that point when that land gets in the MUSA line and that area gets developed and the tax rate goes up, then in • fact we want this kind of ordinance to sort of automatically take effect, which it will. 1 Wildermuth: I guess I would be in favor of giving this back to Roger and having him look at extending this. . .impact on property. We're talking about. . .rather than just single family churches. Conrad: What kind of impact on Roger's time would that be, and staff time? Krauss: I don' t think it's terribly significant. , I I ' Planning Commission Meeting November 1, 1989 - Page 22 I I Conrad: This is not a real high priority for me right now but if it' s not a major review and cost. Olsen: We can do that. I Conrad: And you'd want to just look to private ownership but what would you be telling them to do? To review it? To draft and ordinance that I would encourage all of that and then if that went to City Council and they weren't happy, they could keep the part that they wanted couldn' t they? I Erhart: Additionally, just to find out if there's some problem we don' t perceive at this point with expanding this to privately owned non tax paying organizations. Maybe there' s something we' re not thinking about. IBatzli : The more I think about it, I just don't like the idea at all. I mean I don' t know that if Camp Tanadoona wasn' t there and it came in tomorrow, I wouldn't be in favor of them setting up a camp on the lake. IErhart: How many acres do they have? IConrad: It must be over 15. Emmings: Oh yeah . IErhart: I bet it's more like 80. Emmings: Oh yeah, I 'd say so. IErhart: Camp Tanadoona . How many acres do they own now? IOlsen: I 'd say almost 100. Emmings: That' s a big parcel . It goes all the way out to TH 5. ilOlsen: It's just like Zimmerman's property almost. Batzli : So I guess my earlier statement that- I'm not in favor of limiting I churches and I don't know that that really does it for me. Privately held non-profit. Emmings: Or maybe we should ask Roger too if there is anything to the idea I that if they're limited on one parcel, if they couldn't simply subdivide and have it on contiguous parcels. Krauss: We can get that clarified. Conrad: I think for sure Steve's comment is, I think we've got to research 0 that. I think Brian brought up some wording and things that I think we might as well improve it or at least send it along to City Council with a little bit improved wording if we go with either a positive or negative recommendation. i guess the other question is to research the other parts Ithat we've been talking about. I 'm not sure if that will, by including Planning Commission Meeting November 1, 1989 - Page 23 more. . .coverage that may take my vote away from a positive vote on this one but I don't know. Emmings: It's tough because what Brian says is right. What if the Campfire organization came in and said we want to put in a camp for kids I here and a conference center that's going to be tax exempt. I think we'd be all for it. I really do. Wildermuth: But not on a site like 175 acres. y ' Conrad: You wouldn't put it close to downtown. Emmings: You wouldn't want it close to downtown but how do you ever define I that? Conrad: I don' t know. I don' t know how to do that. ' Emmings: Eckankar, you're right. Eckankar is a simple example and there are a lot of hard ones . I think we should table it. 1 Batzli : You know that old legal maxim. Hard facts don't make good law. Conrad: Is there a motion? ' Wildermuth moved , Emmings seconded to table action on the Zoning Ordinance I Amendment to amend the City Code establishing maximum lot size for church development to 15 acres and referring the item to the City Attorney. All voted in favor and the motion carried. APPROVAL OF MINUTES: Batzli moved, Wildermuth seconded to approve the Minutes of the Planning Commission meeting dated October 18, 1989 as presented . All voted in favor and the motion carried. OPEN OP DISCUSSION AND CITY COUNCIL UPDATE: Erhart: What's Cenvesco going to do? What's their next move? Krauss: We're waiting for them to come back with a revised plan. The item was pulled at their request. ' Conrad: Pulled for what reason? Krauss: Cenvesco pulled it. If you read through ,the staff report, we raised a number of issues regarding the accuracy of the plan and various criteria. Apparently on the advice of Peter Beck who's been retained by the developer, they pulled for approximately 30 days. We asked for and received a letter stating that this delay is at their request. Erhart: This Peter Beck is the Attorney for Eck or is he Eck? • 1 LAW OFFICES ' GRANNIS, GRANNIS, FARRELL & KNUTSON DAVID L. GRANNIS- 1874-1961 PROFESSIONAL ASSOCIATION TELECOPIER: DAVID L.GRANNIS,JR. - 1910-1980 POST OFFICE Box 57 (612)455-2359 VANCE B. GRANNIS 403 NORWEST BANK BUILDING ELLIOTT B. KNETSCH VANCE B. GRANNIS,JR.* 161 NORTH CONCORD EXCHANGE MICHAEL J.MAYER PATRICK A. FARRELL SOUTH ST. PAUL, MINNESOTA 55075 DAVID L. GRANNIS,III •- ROGER N. KNUTSON TELEPHONE(612)455-1661 DAVID L. HARMEYER *Also' ADMITTED To PRACTICE P,.ACTICE IN WISCONSIN July 27, 1989 Ms. Jo Ann Olsen Chanhassen City Hall ' 690 Coulter Drive, Box 147 Chanhassen, Minnesota 55317 ' RE: Tax Exempt State of Churches Dear Jo Ann: ' Enclosed is a recent decision on the above matter. The decision states that to be tax exempt property ( 1 ) be owned by a church, (2 ) must be used for church purposes. Very truly yours, GRO-NIS, GRA , .S,---ARRELL & NUTSON ' .A. ' BY: '.•er N. Knutson RNK:srn Enclosure u � 1 •r ♦am.S..-L:V 11.) • JUL 311989 CITY OF CHAN HASsEA,r,r, •. N C • . Jr.i;: 01 r;r;:.;;::.c Paul W. Flower . II Attorney at Law % JUNTr OF CANVE!; • 418 Norwest Midland Bldg. _ • 401 Second Ave. South • - II Minneapolis, MN 55401 Clerk' s Notice of Filing, - • Entry or Docketing Jean. Shively - - I • Assistant Carver County Attorney • Carver County Assessor's Office Carver County Auditor's Office ' '. •• ' 1 In Re: Special Force Ministries vs. County of Carver File No. 88-23902 For the above entitled matter, you are notified that on April 4. 1989 , a Findings • I Order . I x Judgment - • .Other V I .. w _ - was duly I APR 0 4 1989 x Filed - • t. .�'..,pis r. `i=� ' I x Entered - " •• Docketed in the .amount of$ I Dated: April 4, 1989 N - • I • Copies attached - . ..- .• . • i Joyce A. VanEyll I Y Y • Court Administrator • By: k h %.1 r k ;.n`il •1 im�: A• ., . Deputy ' ,.� `Court Administration ,... Carver County Courthouse 600 East 4th Street I • Chaska, MN .,f 55318 Direct DialinE (612) 448-1201. Civil Division I 1143-1202 traffic Divizir . - 411$-1203 Vital Statistic I. 0 0 ISTATE OF MINNESOTA TAX COURT 1 COUNTY OF CARVER REGULAR DIVISION IISpecial Force Ministries, Petitioner, y 1 L FINDINGS OF FACT, ' Q•ST^'r;! C I F CONCLUSIONS OF LAW AND Vs. ORDER FOR JUDGMENT, MAR 2 4 198 9 AND JUDGMENT County of Carver, File No. 88-23902 ' i.fl v�,:�t'. Respondent. CAttti I Joyce A. VanE" Dated: March 20, 1989 .._ „dtNro- 1 ' The above-entitled matter came on for hearing before the Honorable Arthur C. Roemer, Judge of the Minnesota Tax Court, on October 25, 1988, at the Carver County District Courthouse in Chaska, Minnesota. Paul W. Flower, Attorney at Law, appeared for petitioner. Jean Shively, Assistant Carver County Attorney, appeared for Irespondent. The issue is whether the subject property is exempt from taxation Iin the January 2, 1987 assessment as either a church, church property or house of worship, or as an institution of purely public charity. IPost-trial briefs were filed by both parties. The Court, having heard and considered the evidence adduced at the - ' hearing and upon all of the files and records herein, now makes the Ifollowing: FINDINGS OF FACT x • ' 1. Petitioner has sufficient interest in the property to maintain .e this petition; all statutory and jurisdictional requirements have been Icomplied with, and the Court has jurisdiction over the subject matter • of the action and the parties hereto. 2. The petitioner is a non-profit Minnesota corporation having been incorporated on November 49, 197.6. , 3. Petitioner operates two facilities for mentally handicapped, persons; the subject facility and a larger facility in St. Bonifacious I in Hennepin County. - - 4. Tax exempt status for income tax purposes has been granted by the Internal Revenue Service and by the Minnesota Department of 1 Revenue. 5. The subject property consists of a residential lot and parcel , described as: Lot 3, Block 2, Schmittville Creek View Addn. , • I City of Waconia, Carver County, Minnesota; Parcel No. 07-6000090. 6. Petitioner purchased the subject property by contract for deed on February 4, 1983, which was renegotiated by a second contract for ' deed executed on September 30, 1986. The title was placed in Special Force Ministries, a corporation which is not a church, nor is it a subdivision, agency or instrumentality of a church. 7. Reverend Tom St. Angelo, a duly licensed minister in the Assembly of God Church, resides on the property with his wife. ' t Residents in the subject property also include three mentally handicapped persons who receive room and board and necessary clothing , • from the Reverend St. Angelo. - .. 8. All three residents pay $329 per month, which is the r ate established by state agencies. One of the residents makes an 1 additional contribution of $71 ($400 total) , another pays an additional $50 per month. 1 • -2- I. • - o ;:; 9 . Reverend St. Angelo does not conduct church services on the Iproperty but conducts a weekly evening Bible study attended by his Iwife, the three other residents in the subject property and other close associates. II10. Reverend St. Angelo is not required to live on the subject property by his church. I11. Petitioner admits the subject property is not used as a Ichurch or house of worship. 12. The attached Memorandum is hereby made a part of these IFindings of Fact. . • ICONCLUSIONS OF LAW I1. The subject property is not owned by a church and therefore does not qualify for an exemption as a church, church property or IIhouse of worship as provided in Minn. Stat. §. 272. 02, subd. 1 ( 5 ) . 2. The subject property is not an institution of purely public Icharity within the meaning of Minn. Stat. S 272.02, subd. 1 ( 6 ) . I3 . The assessment of the subject property as of January 2, 1987 . is hereby affirmed. . , , . ILET JUDGMENT BE ENTERED ACCORDINGLY. A STAY OF 15 DAYS IS HEREBY I ORDERED. �4. Of. MI��11,2, .` � 1�1`JJO� BY THE COURT, alitt& 0,,,- , 1.‘-*-6)-Y111%41 I �� �- -_:�i Arthur C. Roemer , Judge ' '° Minnesota Tax Court ,� �1 - '4- CO ' DATED: March 20, 1989 . ,• -3- 0 v JUDGMENT , hereby certify that the foregoing Conclusions of Law constitute the Judgment in this matter. Dated this 4th day of April, 1989, BY THE COURT: Joyce A. VanEyll Court Administrator 111 By: Deputy 1 1 MEMORANDUM Petitioner was incorporated as a non-profit organization on 111 November 9, 1978 ; organized exclusively for charitable and religious purposes according to its Amended Articles of Incorporation. Income tax exemption has been granted to petitioner by the Internal Revenue Service and by the Minnesota Department 'of Revenue. 1 Petitioner entered into a contract for deed on February 4, .1983 The terms were renegotiated for the purchase of the subject property. otiated g by a second -contract for deed dated September 30, 1986. Thomas N. , - St. Angelo, petitioner 's president, personally- guaranteed the debt. The property consists of a residential lot and a residential ' structure. Few details were introduced in the record regarding the property. The petitioner ' s president, Thomas N. St. :Angelo, Is a licensed ' minister, having been licensed to preach by the Minnesota District Council of the Assemblies of God, a Christian religious denomination. , His ministry license was temporarily suspended following conviction of a felony for criminal sexual conduc t with a facility resident. -4- • © 0 Reverend St. Angelo and his wife reside in the subject property, having been provided the use of said property for his ministerial services performed for Special Force Ministries. Also residing in the subject property are three mentally Ihandicapped adults. They are provided room, board and essentials by the corporation. All three residents pay $329 per month, which is the Ifee established by state agencies. One of the residents voluntarily II makes an additional payment of $71, totalling $400 . The corporation provides food, clothing, care and recreation for these three mentally ' handicapped residents. Admission to the subject property is restricted to mentally handicapped persons. Reverend St. Angelo received a salary of $500 per month and his wife was paid $175 per week. In addition, both receive room and IIboard. Reverend St. Angelo does not conduct church services on the Isubject property but conducts a weekly Wednesday evening Bible study attended by his wife, the three residents and other close associates. IReverend St. Angelo does conduct Sunday services several times a month at other locations . Reverend St. Angelo admits that the subject '_ property is not used as a church or house of worship. :. Petitioner filed an exemption request with Carver County in 1985 and again in g 1987. In 1985 exemption was requested as an institution IIof purely public charity. In 1987 exemption was requested as a church, church property or house of worship. At trial petitioner Irequests exemption under one or both grounds. ' The law governing exemptions provides as follows: 1 II 272.02 EXEMPT PROPERTY. Subdivision 1 . All property described in this section to the extent herein limited shall be exempt from taxation: (1) All public burying grounds; (2) All public schoolhouses; (3) All public hospitals; (4) All academies, colleges, and universities, and all seminaries of learning; (5) All churches, church property, and houses of worship; (6 ) Institutions of purely public charity except parcels of property containing structures and the structures assessed as class 7(a) , (b) , (c) , or (d) ; The courts have held that taxation is the general rule and exemptions are exceptions. Camping and Education Foundation v. State, , 282 Minn. 245, 164 N.W. 2d 369 (1969) ; Minn. Christian Business Men's Committee v. State, 228 Minn. 549, 38 N.W.2d 803 (1949 ) ; Share v. ' Commissioner of Revenue, 363 N.W. 47, 50 (Minn. 1985) . The Court in , the Christian Business Men's Committee case stated: Inasmuch as taxation is the rule and exemption ' is an exception in derogation of equal rights, there is a presumption that all property is • taxable. Therefore he who seeks tax exemption bears the burden of proof. Christian Business Men's Committee v. State, 228 Minn. at 555 [citing - State v. Bishop Seabury Mission, 90 Minn. 92, 95, 95 N.W.2d 882 •[1903) ; St. Peter 's Church v. County of Scott, 12 Minn. 280 (395) ; 11 Minn. L. Rev. 541, 549] . We- will first consider whether the property qualifies as church ' property. In order to become exempt as church property, there are two requirements: (1) owned b a church entity, and (2) used for a church q Y Y. ) purpose. The Minnesota Supreme Court stated in the Christian Business Men' s Committee case: I -6- 1 In order for any institution to qualify for tax ' exemption under Minn. Const. art. 9, 5 1 -- and M.S.A. 272 . 02 enacted pursuant thereto -- there must be a concurrence of ownership of the property by an institution of the type prescribed by the ' constitution and a use of the property for the purpose for which such institution was organized. ' Christian Business Men' s Committee v. State, 228 Minn. at 554 [citing State v. Ritschel, 220 Minn. 578, 20 N.W. 2d 673 ; State v. Willmar IHospital , Inc. , 212 Minn. 38, 2 N.W.2d 564 ; 11 Minn. L. Rev. 541 ; 51 Am. Jur. , Taxation, S 539 . ] The testimony and exhibits established that the property is not ' owned by a church, nor does the church have any control over the activities conducted on the property. The Assemblies of God Church '. does recognize the activities as a home mission. Assemblies of God members and Churches are encouraged to contribute to home missions and Icontributions to the petitioner are considered to be amounts given to ' home missions. Reverend St. Angelo indicated that no worship for outside persons is conducted on the subject property. Petitioner Icontends the property is exempt as a parsonage. However, petitioner fails to meet the ownership requirement in that the subject property Iis not owned by a church. Since it fails to meet this prerequisite, 11it is not necessary to further explore whether the use of the property . ,qualLes it as a parsonage. Petitioner also contends that the property is exempt as an institution of purely public charity by reason of the charity provided Ito the three mentally handicapped residents of the home. The Irespondent contends, however, that no charity is provided since the residents each pay for their food, care and lodging. The fee being • IIthe same is charged elsewhere, $329 per month. • ', -7- © C7 1 Petitioner relies upon the case of Assembly Homes, Inc. v. Yellow Medicine County, 273 Minn. 197, 140 N.W.2d 336 1966) . In that case, Assembly Homes, Inc. , a non-profit corporation affiliated with the , Assemblies of God Church, operated five nursing homes, one of which was in Clarkfield, Minnesota. The exemption of the Clarkfield home , was at issue. All aged and ill persons including invalids were admitted, regardless of religious affiliation. Rates charged were similar to those in the state of Minnesota by other nursing homes. 1 Petitioner retained the right to discharge persons who refused to pay, but the president testified that if any applicant was unable to pay, , the home would admit the applicant. However, this policy was not incorporated into the corporate policy. In actual practice, arrange- ments for payment would be made with the county or the Veterans 1 Administration for those unable to pay. Three-fourths of the patients' fees were paid by county welfare or the Veterans ' Administration. A slight profit resulted in the year preceding the one at issue (1962) and in 1963, the year at issue ($7,854.43 & $51.61, respectively) . Donations of $5,448. 53 were received in 1963 ' on behalf of all five homes, none of which-vas- allocated to the-- Clarkfield home. Donations of $66.00 were made to the Clarkfield home in 1962. The District Court denied the exemption on the basis that there was no indication that charity had been dispensed at the Clarkfield home. The Supreme Court reversed, •hol.ding that based upon all the facts, the property fell within the definition of an institution of purely public charity. 1 Subsequent to the decision in the Assembly Homes case, the Minnesota Supreme Co urt, in the case of North Star Research Institute -8- 1 v. Hennepin County, 306 Minn. 1, 6, 236 N.W. 2d 754, 757 (1975 ) , 1 established a six factor test to be applied in determining whether property qualifies as an institution of purely public charity. We 1 will discuss the extent to which the subject property satisfies these six requirements. 1 . Whether the stated purpose of the undertaking is to be helpful to others without immediate ' expectation of material reward. The subject property is owned by a non-profit corporation. The Iarticles of incorporation indicate that it was incorporated for Icharitable purposes. Thomas St. Angelo was the incorporater, president and a director . The other board members, one or more of IIwhom are employees, are close associates of Mr. St. Angelo. Board meetings are not conducted on a regular basis. Both the Reverend 1 St. Angelo and his wife receive a salary for services performed for ' the corporation. While we are comfortable with the stated purpose of the corporation, we are uncomfortable with the financial arrangements IIand whether the expectation of material reward in the form of salary and free living quarters-is a motivating factor . ' Petitioner however Idoes satisfy this requirement. 2. Whether the entity involved is supported by ' donations and gifts in whole or in part. The petitioner in this case satisfies this requirement in that donations were received from two of the three residents,,._ from Rev. ISt. Angelo, and from the Assemblies of God Church. The Assemblies of ' God Church has classified Special Force Ministries (including the subject home ) as a home mission and encouraged contributions by its IImembers to home missions. Contributions of $60,055 were received from C C' ) 1 members of the Assemblies of God Church. However, the record does not disclose how much, if any, was allocated to the subject facility. 1 3. Whether the recipients of the charity are required to pay for the assistance received in whole or in part. The record is clear in this instance in that all three of the , ' Y recipients pay for the services provided. The payment for the services equals the standard fee established by the state of ' Minnesota. In the case of two of the residents, an additional payment is made, allegedly in the form of a contribution. The petitioner fails to satisfy this requirement. 1 4. Whether the income received from gifts and donations and charges to users produces a profit to II the charitable institution. This is an important factor. However, insufficient evidence was I introduced in order to make a determination as to whether a profit was produced from the subject facility. The petitioner has not proved 1 that it satisfies this test. 5. Whether the beneficiaries of the charity are 1 restricted or unrestricted and if restricted, whether the class of persons to whom the charity is made available is one having a reasonable relationship to the charitable objectives. The evidence indicates that admission to the home is restricted to mentally handicapped persons. It is open to all mentally handicapped persons, regardless of race, color or creed. What constitutes I mentally handicapped persons has not been defined. .Werare satisfied, however, that mentally handicapped persons constitute a class of persons for whom charity is appropriate, and that the three I individuals residing in the home are sufficiently handicapped so as to constitute an object of charity. , -10- - • - • o 0 6 . Whether dividends in form or substance or assets upon dissolution are available to private ; '- interests. The record is clear that upon dissolution, the assets of peti- tioner are transferable to another non-profit organization. The record is also clear that the Special Force Ministries has not declared any dividends for the benefit of any private individual . IHowever, we do have concern over whether the assets of the corporation Iare being distributed to Reverend St. Angelo and his wife (and one or more of the directors who are employees) in the form of salaries 1 and/or living expenses. If that is not now occurring, certainly the potential is there since Reverend St. Angelo is the founder, president Iand director, whose salary and benefits are set by a board of directors consisting of close associates, one or more of whom are employees. The Minnesota Supreme Court, in the North Star case, supra, indicated that it is not essential that every factor be present before Ian institution qualifies for exemption. This was repeated in the case ' of Mayo Foundation v. Commissioner of Revenue, 306 Minn. 25, 236 N.W. 2d 767 (1975 ) : _ � M ' The general language of our definitional statements and the identification of factors in our prior cases are only guides for analysis. Each I case must be decided on its own particular facts, and it is not essential that every factor mentioned in our decisions be present before an institution qualifies for exemption. ' 306 Minn. at 36. Being a non-profit corporation does not guarantee exemption from property taxes . Minn. State Bar Association v. Commissioner, 307 • II Minn. 389, 240 N.W. 2d 321 (1976 ) ; Camping and Education Foundation v. -11- • II State, 282 Minn. 245, 164 N.W. 2d 369 (1969 ) . Having a worthwhile objective does not of itself justify classifying an institution as a purely public charity. Share..v. Commissioner of Revenue, 363 N.W.' 47, 50 (Minn. 1985) . Nor does the fact that the petitioner has been granted an exemption from state and federal income tax have any , 3 Y significant bearing on .its exemption from property taxes. The only requirement that need be met to obtain income tax exemption is to 11 qualify as a non-profit corporation. However, this does not establish that the corporation is an institution of purely public charity. While this case bears some resemblance to the case of Assembly I Homes, Inc. , supra, the fiscal facts were fully presented in the • Assembly Homes case, but not here. In addition, ownership in the I Assembly Homes case was broad based, compared with Special Force Ministries where the directors and officers consist of the founder ' un er and close associates. We find there is greater similarity to the I philosophy expressed by the Minnesota Supreme Court in the case of Share v. Commissioner of Revenue, supra, in which a health maintenance organization which provided health care on a non-profit basis to a ' cross-section of the community but received the bulk of its support • from fees, provided no services to individuals who would otherwise , turn to the government for such aid and provided no services without charge, was not a purely public charity entitled to exemption. • As the Supreme Court noted in the Share case, the ,services provided were very commendable. Likewise, providin g a religious home g to mentally handicapped persons is very commendable. However, each of the three residents pay for their care. Since they pay in full for the room and board they receive, one might question what charity is I • -12- 1 1 . provided to them. And, if they are not the recipients of the charity, 1 who is? ' Petitioner also alleges discrimination on the basis that another facility for the handicapped in the county has been granted ' exemption. The facts regarding that facility, Mount Olivet Rolling . Acres, were not introduced since the exemption of that facility was ' not in issue. We are therefore unable to determine the extent of ' similarity, if any. Based upon the record as a whole, we find that the petitioner has 1 failed to prove that the subject property is used as an institution of purely public charity. ' A.C.R. • 1 1 1 1 1 r 1 I . -13-