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15-6051-16937-BA |
STATE
OF
OFFICE OF ADMINISTRATIVE HEARINGS
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In Re Petition for Incorporation of and Petition by |
ORDER
DENYING MOTION TO DISMISS |
Appearances: John J. Steffenhagen, Larkin Hoffman Daly
& Lindgren, Ltd., 1500
On March 10, 2006, the Township filed a Motion to Invalidate the City’s Annexation Petition and supporting documentation. On March 17, 2006, the City filed its Response, objecting to the Township’s Motion. On April 4, 2006, oral argument was held by telephone.
IT IS HEREBY ORDERED:
1. The Township’s Motion to Invalidate the City’s Annexation Petition is DENIED.
2. The hearing on the City’s Annexation Petition will be held as scheduled in conjunction with the Township’s Petition for Municipal Incorporation.
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Dated this |
10th |
day of |
April |
2006. |
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/s/ Beverly Jones Heydinger |
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BEVERLY JONES HEYDINGER |
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Administrative Law Judge |
MEMORANDUM
Introduction
Property owners
in
The Township contends that the City’s resolution in support of the petition for annexation is invalid because Dick Tschida, a member of the Forest Lake City Council, should have disqualified himself from voting because he owns commercial property in the Freeway District, and signed the petition in support of annexation. Mr. Tschida’s vote was needed to pass the resolution at the October City Council meeting. Since Mr. Tschida had a personal interest in the outcome of the vote, the Township contends that he should not have participated in it. The Township also contends that a vote taken at the November City Council meeting, when an additional city council member voted in support of the petition for annexation, was tainted because the vote was taken when one of the opponents of the petition for annexation had left the meeting.
The City denies that Mr. Tschida was required to abstain from voting because he owns property in the affected area, and also denies that there was any irregularity in the voting at the November City Council meeting.
Each side has submitted affidavits with accompanying documents. There is no dispute about the facts set forth below, which are largely set forth in the City’s public records or filings by the City and Township with the Office of Boundary Adjustments.
Summary of the Facts
On August 8, 2005, a majority of property owners of property located in a portion of the Township that abuts Interstate 35 (Freeway District) presented a Petition for Annexation to the Forest Lake City Council (City Council), requesting that the Freeway District be annexed to the City. The Petition stated that the signatories favored annexation in order to reduce their property taxes by about 15%, to obtain water at lower cost than provided by the Township, and to obtain additional service at lower cost than the Township could provide. The signators requested a resolution from the City supporting the annexation.
Dick Tschida, a member of the City Council, was one of the 22 property owners within the Freeway District who signed the Petition.[1]
On
August 12, 2005, 292 property owners in the Township filed a Petition for
Municipal Incorporation with the Office of Boundary Adjustments for all of the
Town of
On September 12, 2005, the City Council voted to participate as a party in the Township’s incorporation proceedings. The vote was 3 to 1 in favor of participation; Mr. Tschida abstained from voting. Later at the same meeting, the City Council moved to adopt a resolution for annexation of the Freeway District to the City. The motion failed by a vote of 2 to 2; Mr. Tschida abstained. [3]
Pursuant to the City Council’s vote, the City gave notice of its intent to participate in the incorporation proceedings, and that incorporation would adversely affect the City’s interests.[4] An initial hearing on the incorporation petition was held on October 5, 2005, both the City and Township were represented, and the matter was continued to an indefinite future date.[5]
Following the
City’s vote not to petition for annexation, Mr. Tschida asked David Hebert, the
City Attorney, for an opinion about whether Mr. Tschida should be disqualified
from voting on resolutions pertaining to the
The City Council
met again on October 24, 2005. The Town
of
On October 26, 2005, the City filed its Petition for Annexation with the Office of Boundary Adjustments.
On November 1, 2005, the Township filed a Verified Complaint with the District Court in Anoka County asking the Court to order the City to refrain from proceeding with its Petition for Annexation because one of the City Council members, Mr. Tschida, should not have voted on the resolution to support the Petition for Annexation because of his ownership of land in the Freeway District. The City opposed the motion. In an Order dated November 16, 2005, the Honorable Michael J. Roith, Judge of District Court, ordered the parties to stipulate that the Office of Administrative Hearings had jurisdiction to consider the validity of the City’s annexation petition.[9]
The City Council met on November 28, 2005. In advance, an agenda was mailed to the members, along with a packet of material. In addition, additional material was placed at each member’s seat prior to the meeting, and also placed on a table for the public. Included on the agenda, under the Administrator’s Report, was “Resolution 11-28-05 – Amending Annexation Resolution Adopted 1/24/05.”[10] The Amended Annexation Resolution was included in the materials distributed to the council members prior to the meeting.[11]
At around 9:00
p.m., two hours after the commencement of the City Council meeting, Council
Member Young left the meeting. The other
four members remained. The Resolution
Amending Annexation Resolution had not been addressed by the time she left.[12] Over an
hour later, a motion was made and seconded by Council Members Ashbach and Smith
respectively to allow Judy Bell to reconsider her prior “no” vote on the
annexation petition. All four members
present, including Ms. Bell and Mr. Tschida, voted in favor of the motion. Ms. Bell then moved to adopt Resolution
11-28-05, to petition for Annexation of certain portions of
On November 30, 2005, the City served and filed a Motion to Vacate or, in the alternative, to amend the prior order of the District Court.[14] On December 21, 2005, the City’s motion was dismissed without a determination on the merits, and on January 9, 2006, the District Court issued an amended Temporary Restraining Order, providing that if the Office of Administrative Hearings declined to honor the stipulation and refused to consider the Township’s arguments that the City’s petition was improperly presented, the District Court would conduct a hearing to consider the Township’s position and the City’s motion to dismiss.[15]
The Second Prehearing Order issued on February 13, 2006 in this case directed the Township to file a motion no later than March 15, 2006 if it intended to challenge the validity of the City’s Annexation Petition.
Analysis
The burden is on the Township to show that the Resolution for Annexation filed by the City was improperly passed. Actions taken at a duly noticed meeting by the elected members are presumed to be valid. In this case, the Township alleges that the City’s vote on October 24, 2005 to annex the Freeway District should be nullified because Mr. Tschida owned a piece of property in the land subject to the resolution. In addition, the Township alleges that the vote on November 28, 2005 allowing Council Member Bull to change her vote on the Resolution, and the subsequent vote on the Amended Resolution were also invalid because Council Member Young was not present when the vote was taken and had not received a copy of the proposed resolution in the packet of materials mailed to her prior to that meeting. It is acknowledged that the Amended Resolution was on the agenda, and that a copy of the Amended Resolution was placed at Ms. Young’s seat and available for her review for the two hours that she was in attendance at the November 28th council meeting.
There is no bright line test for when an elected official should abstain from voting because of a conflict of interest. Each case must be reviewed on the facts presented. However, some factors to be considered have been set forth by the Supreme Court. Those factors are:
(1) the nature of the decision being made;
(2) the nature of the official’s pecuniary interest in the matter;
(3) the number of officials making the decision who are interested;
(4) the need, if any, to have interested persons make the decision;
(5) the other means available, if any, such as the opportunity for review, that serve to insure that the official will not act arbitrarily to further their selfish interests.[16]
In reviewing the facts and applying the factors, the critical question is whether the public official participated in a decision-making capacity in a matter in which that official had a direct interest so that it would appear that it was an arbitrary reflection of his or her own selfish interests.[17]
In cases where the public official had a pecuniary, individual interest that was directly affected by the vote, the Supreme Court has disapproved of that official’s participation. For example, in E.T.O., Inc. v. Town of Marion,[18] the town board had the authority to issue a liquor license. The public official whose vote was challenged owned property directly across the street from the bar seeking the license, and publicly claimed that his property’s value would be reduced by $100,000 if the liquor license was issued. The public official was elected to his position on the town board based largely on his opposition to the liquor license. The Supreme Court found that the public official’s interest was personal, direct and substantial, and that the decision to issue a license was adjudicative in nature. Moreover, there was no need for the official to take part in the vote for the town board to take action.
In other instances, where the public official’s vote was not adjudicative, and his interest was the same as other landowners whose land would be affected by the vote, the Supreme Court has not invalidated the decision. For example, in Lenz v. Coon Creek Watershed District, a member of the county board was among the individuals who petitioned to improve a drain channel, and some managers of the watershed district who voted to approve the project were also affected landowners. Although the role of the watershed managers in that case can be distinguished in part from the instant case because managers of the watershed district were required by statute to own land within the watershed district, that requirement did not apply to the member of the county board. Similar to the action taken in this case, the county commissioners petitioned the watershed district to consider the project, and the county commissioner who signed the petition took part in the vote. However, the vote was not determinative of the matter, but simply referred the petition for hearing. A hearing was held at which proponents and opponents had the opportunity to present evidence in support of or opposition to the proposed project. In Lenz, as in this case, the final decision was based on the evidence presented at the hearing and not on the resolution to initiate the proceeding.
The Supreme Court also held that it was permissible for a local board member to vote on approval of a road that would run adjacent to his property.[19] An Opinion of the Attorney General issued in 1978 differentiates between a sale, lease or contract with a public officer, and votes involving zoning or other ordinances that affect the health, safety and welfare of the citizenry. That opinion states:
It is significant to note that, by virtue of required residence in the city, council members are affected, to their benefits or detriments, by many exercises of the local police power including zoning. To hold that a city council is powerless to act whenever an ordinance will affect the individual interests of any member would render the police power wholly ineffectual in many situations.[20]
Although the Attorney General stated that the city council should not be prevented from acting when a member’s property could be affected, the interested member should refrain from voting on the matter if he had a “substantial self-interest.”
Application of the Five Factors to these Facts
The case presented here is much closer to the facts in Lenz than those presented in E.T.O. Although Mr. Tschida does own property in the affected area, he is but one landowner among many, and his proportional interest is relatively small. Most important, however, a vote on the resolution is not determinative of the annexation, but only allows the proceeding to go forward. Moreover, in deciding this case, the administrative law judge, who has no interest in the property, must be guided by a number of statutory factors in determining whether annexation is appropriate. Mr. Tschida’s particular interest has no bearing on the outcome.
The Nature of the Decision Being Made:
The vote by the City Council on the resolution in support of the Petition for Annexation was not adjudicative. An annexation petition initiates a process; it does not determine rights or interests. Admittedly, the annexation petition could not go forward absent the resolution, but there is still full opportunity for all affected parties to present evidence in support of or in opposition to annexation. One could argue that only by voting for the resolution will all interests have the opportunity to present evidence and to be heard. The vote simply allowed the adjudicative process to go forward. This vote is quite unlike the vote of the town board member in E.T.O. In that case, the board’s vote to grant or deny a license ended the matter. This factor does not support disqualification.
Pecuniary Interest:
In this case,
Mr. Tschida signed a petition in which he acknowledged that he was a landowner
in the Freeway District, and that it would benefit him to have the property
annexed to
Number of Persons Making the Decision Who Are Interested:
Mr. Tschida was the only council member who owned land in the Freeway District. There were four other City Council members who did not sign the petition or own land in the Freeway District, and no claim that any one of those four should have been disqualified. Mr. Tschida could have disqualified himself and the four remaining council members could have discussed and voted upon the matter, as they did at the September City Council meeting. The facts related to this factor favor disqualification.
The Need, if Any, to Have Interested Persons Make the Decision:
Mr. Tschida’s vote was not needed in order for the council to act. The City argues that Mr. Tschida’s vote was needed to pass the resolution. However that is not the correct analysis. The proper question is whether his vote was necessary in order for the council to take up the resolution, and it was not. The facts related to this factor favor disqualification.
The Other Means Available, If
Any, Such as the
As stated above, the resolution to support the Petition for Annexation begins a process. By statute, once accepted by the staff of the Office of Boundary Adjustments, the matter is heard by the Office of Administrative Hearings, an office independent from both the City and Township. Both an evidentiary hearing and a public hearing are held, and the administrative law judge’s decision is guided by statutory criteria. The criteria cover a broad range of factors that go well beyond any personal interest of one landowner. The factors include the fiscal impact on the subject area and adjacent units of government, delivery of services and which governmental unit can best provide them, and many others. In addition, the decision of the administrative law judge is reviewable on appeal.[21] The facts related to this factor do not support disqualification.
Additional Factors Applicable to this Case:
As the Supreme Court has stated, the facts of each case must be considered in determining whether to invalidate the interested person’s vote. One of the important facts here is that, in deciding whether to grant the incorporation, the governing statute directs the decision maker to specifically consider: the relationship and effect of the proposed action on the adjacent communities and whether necessary governmental services can best be provided by another type of boundary adjustment. In addition, the order may deny incorporation if the area would be better served by annexation to an adjacent municipality, or may alter the boundaries of the proposed incorporation to exclude property that may be better served by another unit of government.[22] Thus, by virtue of these statutory factors, and the City’s decision to oppose the Township’s incorporation, many of the issues that could be raised in annexation will be addressed in the incorporation proceeding, regardless of whether the Petition for Annexation is accepted. As stated above, filing the Petition does not resolve these questions, but merely offers a forum where they can be fully considered.
Another fact in this case is that Mr. Tschida abstained from voting until he obtained the opinion of the City Attorney that he was not barred from participating. Although the City Attorney may have mistakenly relied on the fact that Mr. Tschida had no financial interest in the Resolution, as discussed more fully above, the type of interest and its similarity to other landowners would not seem to be disqualifying. Mr. Tschida acted above board, and with due regard for appearances.
In addition, the resolution in support of annexation was passed again at the November City Council meeting. At that time, Mr. Tschida’s vote was not needed to pass the resolution. Although the Township attempts to portray the City Council’s vote on November 28, 2005 as illegal in some way, there is no evidence that anything inappropriate occurred, and there is no specific violation of law alleged. The motion to amend the prior resolution was on the agenda, a copy of the resolution was placed in front of each council member, including Ms. Young, prior to the start of the meeting, the vote to reconsider passed without opposition from any member present, including Ms. Bull who had previously voted against the resolution. Mr. Tschida neither moved nor seconded the motion to allow Ms. Bull to reconsider her vote. Regardless of the motives of the city council members involved, the vote on November 28, 2005 by three disinterested City Council members diminishes the likelihood that the City Council was inappropriately influenced by Mr. Tschida’s self-interest.
Although the Township has not specified what provision of the Minnesota Open Meeting Law was violated, if any, a review of Minnesota Statutes chapter 13D reveals no obvious violation. The City Council acted at a regularly scheduled meeting on an item that was included on the agenda and the materials were provided at the meeting to the council members and the public. Council Member Young had the agenda and the resolution in front of her for the two hours that she attended the meeting, the remaining members were present when the applicable motions were made, and the vote was recorded.
Thus, although the City might have avoided this protracted dispute if Mr. Tschida had refrained from voting, it does not appear on balance that his involvement in the Resolution to support the Petition for Annexation was an arbitrary reflection of Mr. Tschida’s own selfish interests. On balance, the factors do not favor invalidating the vote. Arguably, the public’s interest is best served by a full airing of both the request for incorporation and the petition for annexation so that all of the evidence bearing on the disputed area can be considered. Thus, the Petition is accepted, and both the Township’s request for incorporation, and the City’s petition for annexation will proceed to hearing as scheduled.
B.J.H.
[1] Steffenhagen Aff., Ex. B.
[2] Hood Aff., Ex. 2.
[3] Hood Aff., Ex. 3 at 4.
[4] Hood Aff., Ex. 4.
[5] Hood Aff., Ex. 5.
[6] Steffenhagen Aff., Ex. D.
[7] Steffenhagen Aff., Ex. F.
[8] Steffenhagen Aff., Ex. E.
[9] Steffenhagen Aff., Ex. G.
[10] Steffenhagen Aff., Ex. I; See also Hood Aff., Ex. 30 (Aff. of Charles P. Robinson, Exs.1 and 2).
[11] Steffenhagen Aff., Ex. J; See also Hood Aff., Ex. 33 (Aff. of Charles P. Robinson, para.11).
[12] Steffenhagen Aff., Ex. K, page 3.
[13] Steffenhagen, Ex. K.
[14] Hood Aff., Ex. 22.
[15] Hood Aff., Exs. 23 and 25.
[16] Lenz v. Coon Rapids Watershed Dist., 278
[17]
[18]
375 N.W.2d 815 (
[19] Webster v.
[20] Opin. Of Atty Gen’l, 59a-32, Sept. 11, 1978 (1978 Minn. AG LEXIS 13).
[21] See
[22]