Court of Appeals affirms ruling on City Center bond issuance

Construction of the Forest Lake City Center progresses Tuesday afternoon. Work was 9 percent done as of Dec. 31. (Photo by Clint Riese)
Construction of the Forest Lake City Center progresses Tuesday afternoon. Work was 9 percent done as of Dec. 31. (Photo by Clint Riese)

Court sides with city; appellants’ attorney expects to appeal to Minnesota Supreme Court


Clint Riese
News Editor

The Minnesota Court of Appeals has affirmed a district court’s ruling that the issuance of revenue bonds to fund construction of the Forest Lake City Center was done in a legal manner and did not require a public election.

Though City Center construction is progressing, its run through the courts may not yet be done. In the wake of Monday’s ruling, the lawyer for the appellants said he expects his clients to have him ask the Minnesota Supreme Court to take up the case.

The decision penned by Judge Margaret H. Chutich and filed Monday rejects an appeal of the March 2013 decision by Washington County District Court Judge John C. Hoffman to grant summary judgement to the lawsuit’s defendants, the city of Forest Lake and the Forest Lake Economic Development Authority. The Court of Appeals opinion came one day short of a year after the city was served with a summons and complaint asking the court to enforce a petition for a referendum on the bond issuance.

In district court, the plaintiffs – Lakes Area Business Association, Cameron and Cassandra Piper, and William Anderson – accused the defendants of circumventing the law by using lease revenue bonds instead of general obligation bonds in an effort to avoid a referendum.

Hoffman ruled the use of lease revenue bonds was legal. In this week’s decision, the Court of Appeals agreed.

Court’s ruling

Judges Chutich, John R. Rodenberg and Michelle A. Larkin heard oral arguments Nov. 13 and had until Feb. 11 to issue a ruling.

Based off the findings of the district court, the appeals court judges analyzed two issues they found to be at the heart of the case: Whether the election requirements of section 475.521 of Minnesota Statutes applies to the local issuance of revenue bonds, and whether the local economic development authority had the power to issue revenue bonds without an election under section 469.103.

Appellants argued the district court incorrectly applied the law because section 475.521 exclusively applies to bonds issued for capital improvements, which by definition include construction of a city hall and public safety facility.

However, the three-judge panel noted that section 475.521 applies to municipalities, not economic development authorities.

“First, even assuming that the redevelopment project is a ‘capital improvement’ within the meaning of the statute …, the plain language of section 475.521 establishes that it does not apply to the entity that actually issued the bonds here: the Forest Lake Authority,” Chutich wrote in the panel’s opinion.

The court also deemed it was within the authority’s right to issue revenue bonds without an election. The statute outlining economic development authorities’ power to issue general-obligation bonds states these bonds must be secured by the full faith, credit and resources of the issuing authority’s city, and therefore are governed by the provisions of chapter 475.

“No such limiting language applies to an economic development authority’s issuance of revenue bonds,” Chutich wrote. “If the Legislature had wanted the provisions of chapter 475 to cover revenue bonds issued under section 469.103, it certainly could have included a similar statement in the statutory provisions authorizing the issuance of revenue bonds.”

Chutich concluded the analysis by writing that the appellants’ “policy concern” should be addressed to the Legislature, since the statutes are clear. Earlier in the 14-page ruling, she wrote that when language is unambiguous, “the letter of the law shall not be disregarded under the pretext of pursuing the spirit.” She also quoted a 1963 Minnesota Supreme Court ruling, stating that changes to a statute must come from the Legislature, “for the courts cannot supply that which the Legislature purposefully omits or inadvertently overlooks.”

Further appeal possible

The appellants’ attorney, Frederic Knaak, on Monday afternoon said he had already heard that day from several contacts inside the Legislature who said their intent is not for the law to be interpreted how it has been by the district and appeals courts.

“Really, the question is whether we can persuade the Supreme Court to take this on, because we really think the city is getting away with something,” he said.

The court accepts review in about one in eight cases that petition to it. In May, it rejected the appellants’ petition for accelerated review, sending the case to the Court of Appeals.

In updating the City Council Monday night, City Administrator Aaron Parrish said the bill for the case’s defense is about $46,000 to date, and he does not expect the cost to increase significantly unless the case is heard by the Supreme Court. The city will be responsible for 15 percent of the legal fees, with the League of Minnesota Cities picking up the rest.

  • Foodonastick

    Strike Two

    • Guest

      It doesn’t matter what the pitch count is if you hit a homerun on the third pitch.

      • Foodonastick

        Or, you’ve gone through two thirds of a season without a hit, a score or a win

        • Guest

          I like this analogy. The team that wins the world series is the world champion, not the team that has the most wins.

          • Foodonastick

            Except in sports you and your gang wouldn’t be in the playoffs
            I expect the sports books would have you at a minimum of 100 to 1
            At those odds I still wouldn’t bet a cent on your chances to prevail

          • Guest

            I’ll leave you to the odds making – I have more important things to do.

          • Foodonastick

            Like what, maybe another lawsuit? Just thinking, how about against the school levy vote since it is a special election rather than waiting until November

            By the way, if the odds were 100 to 1 that the MN Supreme Court upholds the lower courts ruling, would you take the bet?

  • Foodonastick

    Two courts have now finalized their decisions in favor of the city but the losers apparently will appeal it to the Minnesota Supreme Court; at least after that appeal it should be 3 strikes and your out.

    If the Supreme Court hears the case or if they refuse to hear it, wouldn’t it be great if the losers had to reimburse all legal fees that were spent defending the city’s position – now that would be justice

    • Guest

      If we want to use sports analogies then you need to understand that this is a three period game and the last period is sudden death. It doesn’t matter what the score is going into the third period, it only matters who wins the third.

  • FLRanger

    The plaintiffs may like us to believe that they are merely trying to bring the city hall building to a referendum vote, but there are some plaintiffs who have made it clear they believe the new city hall is unnecessary and excessive.

    In the comment section of the January 15, 2014 FL Times article “City Center Reaching Skyward” Plaintiff Mr. Piper wrote “The Mayor chooses to spend close to $30,000,000.00, on an unnecessary municipal project”

    In addition, John Freed who identified himself as the Treasurer, Lakes Area Business Association
    in the November 26, 2013 FL Open Forum (Lakes Area Business Association is also a plaintiff in the lawsuit) said in the same (January 15, 2014 FL Times article “City Center Reaching Skyward” comment section) “The FL taxpayers, or which I am one, are allowing the city to waste a great deal more
    than their portion of the litigation costs on the excesses in this building.”

    So to be clear there is one plaintiff who says about the municipal project “The Mayor chooses to spend close to $30,000,000.00 on an unnecessary municipal project” and another who justifies the litigation cost because it outweighs the “excesses in this building”

    Yet they would like us believe this all about our right to vote on a project they apparently don’t want to see built.

    Partisan politics may not be the best way to make public policy and govern, but legislating through lawsuits is far worst. All that does is allow lawyers to enriched themselves while being paid by a small group of plaintiffs who are attempting to impose their will on the voting public by circumventing the election process through lawsuits. It is the voting public who elected our leaders to make decisions like building the new Forest Lake City Hall, these leaders should be allowed to do their job and if the voting public doesn’t like what they do, they will elect someone else in the next election.

    Our democracy may be flawed, but turning government over to lawyers and lawsuits is not the solution. The answer is to hold politicians accountable through the media, public pressure and ultimately the election process.
    It is our public election system that has helped make this country great and has served us well, legislating by lawsuit means only the people with the means to sue will be heard

    • Guest

      I have never kept my opinions on the Northland Mall Project a secret and if you knew Mr. Freed or attended any of the City Council meetings where this issue was discussed, I am certain that you would know his personal feelings on the matter as well. The principle aim of the lawsuit (which is free for anyone to read in the court pleadings) is to require The City to allow The Citizens to make the decision on a project of this magnitude. Something that shouldn’t be a problem for our elected officials if they truly were representing the will of the people. Why fear a vote if the project would most certainly pass? And if it wouldn’t pass, are our representatives truly representing us, or simply their will?
      I would like to dispense with this argument that I and my fellow plaintiffs are using the court system to write legislation. If I wanted to legislate, as you and others have submitted, then I would be using the courts to stop the project, which is my personal desire. Rather, we have spent many dollars and countless hours defending the right of the people to have a say in their local government. Now if I wanted to “enforce my will” or to “legislate” my opinions why would I be asking for a vote where the project could possibly pass? Wouldn’t I have crafted a legal fight that stopped the project, not potentially allowed it to continue?
      I also find it ironic that a select few writers in this forum continue to assert that we elect government officials to do whatever they want without check or balance on their power. Government without check on its power is by definition tyranny. Would these same people be so gung ho for this absolute power of the elected if it were their home or family being threatened – I think not. This argument is one used over time by people who support what the government is doing at the time and doesn’t want to see their ideas challenged by others who disagree.
      The right to petition our government for a redress of grievances is enshrined in the First Amendment of the United States Constitution. If our founders had intended for us to elect officials and then bow to their every whim, why would they give us such a powerful check in The Constitution? Why did Lincoln speak those famous words “a government of the people, by the people, and for the people”? Wouldn’t it be “a government of the elected, by the elected, and for the elected”?

      • Foodonastick

        Yes, yes, yes, you are the great defender of Mom, Apple Pie, the American Way and probably wrap yourself in the US Flag before bedtime.
        Yes, yes, yes, you’re motives are pure as the driven snow and you would have sued even if the city was doing a major project you agreed with
        Yes, yes, yes the lawsuit is only about standing up for the citizens of FL so they can vote against voter oppression, big evil government and this monstrosity of a building.
        Yes, yes, yes, you are of such a upstanding citizen of such outstanding character that all your personal objections to this project never came to mind during this long burdensome fight against tyranny that you and your army of a few have so unselfishly taken on.
        Yes, yes, yes, that there is such a ground swell of support for this lawsuit that the Council meeting has been jam packed (from the beginning of the project to currently) with the citizens of FL demanding to be heard and to stop this insanity (I know, I’ve been there).
        Yes, yes, yes, the sacrifices you and your army of a few are commendable and we all thank you for fighting for the principle that money and lawsuits matters, elections don’t.

        • Guest

          Classic liberal tact: When you can’t debate the topic, change the subject, deflect, or attack the person.