Judge rules in favor of city in municipal campus lawsuit

The vacant Northland Mall will be demolished this spring to pave the way for construction of a public safety and city hall facility. Meanwhile, related litigation may continue if a lawsuit outcome is appealed. (Photo by Kat Ladwig)
The vacant Northland Mall will be demolished this spring to pave the way for construction of a public safety and city hall facility. Meanwhile, related litigation may continue if a lawsuit outcome is appealed. (Photo by Kat Ladwig)

He also leaves door open for appeal, which plaintiffs vow


Clint Riese
News Editor

Twenty days after taking the case under advisement, 10th Judicial District Judge John C. Hoffman last Thursday granted judgement to the defendants in the lawsuit brought by three citizens and the Lakes Area Business Association regarding the issuance of bonds to fund the creation of a municipal campus at the site of Northland Mall.

The city of Forest Lake and its Economic Development Authority were accused of circumventing the law by using lease revenue bonds instead of general obligation bonds in an effort to avoid a referendum. However, Hoffman ruled that it was indeed within the city’s rights to use a lease-purchase agreement to finance the project.

“It appears to this court that the legislature has allowed elected public officials to make their best judgements to do the work of the public and not be second-guessed along the way,” Hoffman wrote in his 12-page memorandum of law accompanying his order of summary judgement. “Rarely is there unanimity in any of these types of determinations.”

Judge’s Findings

Hoffman chose to declare summary judgment – ending the case, pending possible appeal – even though the defense had not formally requested it. The two hearings regarded the defense’s motion for a surety bond. By acting as he did, Hoffman demonstrated he found no need for a trial through which to sort out disputed facts.

Hoffman devoted nearly two pages of his memorandum to explaining his authority to grant summary judgment at such a point in the case. Though the matter came to him based on the bond motion, Hoffman said the parties in their oral arguments and written filings established the central theme of the case: whether the city could build the public safety and city hall facility without first getting permission from residents. After reviewing statutes referenced in each parties’ memorandum, he found the defendants entitled to having their rights declared.

A crux of the disagreement between the parties boiled down to interpretation of state statutes regarding whether a public referendum is necessary when municipalities issue bonds for capital improvements.

Separate statutes state that counties (373.40) and cities (475.521) are not subject to election requirements under a different statute (475.58), which details when elections are necessary to authorize obligations.

The language in 475.58, though, muddies the water. It contains an exception for county capital improvement plans under 373.40, but does not list city capital improvement plans as exempt. Attorney Fritz Knaak argued that because no exception for cities exists, the purchase of land for, and erection of, a city hall is a capital improvement requiring an election.

Hoffman, however, found the similarity between statutes 373.40 and 475.521 as evidence that the correct interpretation of the law is that capital improvement projects for cities are not subject to elections.

“Both sections exempt capital improvement bonds from the election requirement in section 475.58,” Hoffman wrote. “This point is persuasive to the court.”

Further complicating the case, legislation was introduced Feb. 28 proposing the requirement of a reverse referendum before a municipality could enter into the type of lease that exists between the city of Forest Lake and its EDA. Both parties provided Hoffman with new assertions based on this state Capitol activity while he had the matter under advisement.

The defense claimed the need for such legislation proved that the statutes do not require an election.

The plaintiffs felt the legislation would expressly prohibit the type of conduct currently being engaged in by the defendants and offered to ask the author of House File 1049 to testify regarding the intent of the statutes currently in place.

“The court declines such an offer to open the record and notes that while such comments may be enlightening they are inadmissible for the purposes of construing a statute,” Hoffman wrote. “Suffice it to say that the arguments establish what the court has concluded: that there is no clear prohibition in the current statutes if the statutes must be changed legislatively.”

Though Hoffman ruled against the plaintiffs, he denied a motion by the defense to require the plaintiffs to post a surety bond.

“Basically the defendants have prevailed on the merits involving a pure legal issue which is now ripe for appellate review,” Hoffman wrote. “This court does not deem it prudent to potentially impair plaintiffs’ ability to seek appellate review of a purely legal determination by this court.”

The plaintiffs have 60 days from last Thursday to appeal.

Parties React

City Administrator Aaron Parrish and Mayor Chris Johnson at Monday night’s EDA and council meetings expressed pleasure with the ruling.

“When we only made the request for the bond, the court went a significant step farther and essentially threw the case out,” Johnson told the council. “I think that was reflective of the fact that, in my opinion, this really was a frivolous case.”

The mayor also said he regarded the case more as a public relations ploy than a good-faith lawsuit.

“I think the court saw that accordingly and handled it as decisively as I have ever seen,” Johnson said. “I think that’s really good news for the city and the EDA, and it’s really good to have the result.”

Meanwhile, plaintiff Cameron Piper found encouraging the judge’s decision not to require the posting of a surety bond.

“We’re really excited by what came out, actually,” he said on Tuesday. “Not requiring the surety bond was a huge win by the plaintiffs. What it means, in reality, is as this plays out, it allows us to appeal the case on its merits.”

Piper was not surprised by the ruling, which he refused to call a win for the defense.

“He essentially entered a default ruling,” Piper said. “He wasn’t going to stick his neck out and do anything out of the ordinary. He essentially punted, kicked it up to the next level.

“Ultimately, I think what he did was not put any thought into it and rule ‘What always has been done is what will continue.’”

Piper and the rest of the plaintiffs – Cassandra Piper, William Anderson and the Lakes Area Business Association – plan to appeal the case as soon as their fundraising efforts allow, he said.

“I have not talked to anybody who is not willing to appeal at this point,” Piper said.