Frank Kottschade may not be a household name, but it should be. In 2001 he set out to build some townhouses in Rochester, Minnesota, only to run into the familiar municipal buzz saw. When he applied for the necessary permits to do so, the city decided to extort some goodies by imposing eight conditions whose impact was to transform a well designed project into an economic impossibility. They reduced the number of units from 104 to 26, and then, as an afterthought, added two more conditions, including a requirement that Kottschade dedicate two ponds to the city to create a 40-acre lake.
Kottschade sued in federal court, hoping to rectify the absurd rule of the Williamson County case in which the U.S. Supreme Court formulated a rule requiring property owners complaining of takings (and no one else) to “ripen” their inverse condemnation cases by suing in state courts first. Kottschade’s good fight is memorialized by the U.S. Court of Appeals opinion (319 F.3d 1038) which recognized the anomalous nature of the Williamson County rule, but reasoned that inasmuch as the Supreme Court created the intellectual mess, it was up to that court to clean it up. But notwithstanding that four Supreme Court Justices had earlier indicated in a concurring opinion in the San Remo Hotel case that Williamson County should be reconsidered, certiorari was denied.
So it was off to state court where the trial court found some cockamamie reason to rule against Kottschade. But at this point the Minnesota Court of Appeals reversed (see 760 N.W.2d 342) and remanded the case for a trial on the merits. Now, faced with the reality of having to defend its plainly confiscatory regulations in court, the city threw in the towel and settled, the Rochester Post-Bulletin reports. See Jeffrey Pieters, City, Developer Settle Dispute that Started in 2001, March 2, 2009.
The reported terms of the settlement are as follows: $3.06 millions in cash, a $600,000 payment from the League of Minnesota Cities (the city’s insurer), a waiver of the city’s sewer, water, storm water, park and building permit fees, estimated to be worth $1.28 million, and a city payment of up to $675,000 to help build a frontage road on Kottschade’s property. Kottschade will pay the city $1.72 million for a transportation assessment. Bottom line: Kottschade will receive $3.9 million in net damages.
And guess what? Several city officials are now reported as noting that Kottschade’s development “holds the potential to create jobs and expand the city’s tax base.”