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Major Victory for Minnesota Builders and Developers

Last week's Minnesota Supreme Court decision that City of Woodbury cannot charge the Bailey Park developer for road improvements beyond his planned 183-home subdivision creates a landmark precedent for all Minnesota builders.




"The win is a huge and resounding victory for affordable housing throughout the state," said Minnesota Construction Law Services Attorney Bill Gschwind. "Fundamentally, it tells cities that they cannot force builders to pay fees that are not directly related to the projects being built."



"If our builder clients feel cities are imposing unfair fees, they may be right. With our firm's expanded litigation services and the new Supreme Court decision, Minnesota Construction Law Services is poised to help them understand the law, grow their businesses and create affordable housing," he added.


This is literally the end of the legal road for Martin M. Harstad, et al. v. City of Woodbury. But Gschwind warns that the state legislature could address development fees in the next session if municipalities seek to claw back revenue from builders and developers for public infrastructure improvements.


Gschwind chairs the Builders Association of the Twin Cities' Regulatory Committee and serves on its Advocacy Committee. Although acknowledging that the ruling will impact municipal budgets and taxes to fund public works projects, it is a milestone for maintaining affordable housing.  Harstad had estimated the $1.3 million Woodbury fee would have added about $7,000 to the cost of each home. 


"Contractors should stay informed and understand that these legal issues affect them," Gschwind said. "Join BATC, join NARI, join ABC. Get involved in the organizations committed to improving the industry at the capitol."


Harstad had sued the city in 2016, claiming its Major Roadway Assessment (MRA) fees for traffic-related improvements violated state law.  The Washington County Court sided with the developer and the Court of Appeals upheld a lower court's ruling last September. The Minnesota Supreme Court accepted the city's petition for review in November after the League of Minnesota Cities filed a friend of the court brief supporting Woodbury. BATC Housing First Minnesota filed its own friend of the court brief in February supporting Harstad.


The City had maintained the housing community was "premature" because the traffic it generated would exceed its five-year master plan for development. As such, it attempted to shift the burden of road improvements to Harstad. The Supreme Court heard the case in May and announced its decision on Aug. 15.


"City growth is the responsibility of all of its citizens, not just the developers," Gschwind said. "When a city needs to make improvements not directly tied to the development, the cost should be shared by the city and its citizens. Harstad makes that clear. If the citizens of Woodbury want road improvements, they all have to step up and pay for it."

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