In 1989, the Minnesota Court of Appeals issued its decision in Rowell v. Board of Adjustment of Moorhead. In this decision, the Court of Appeals adopted an interpretation of Minnesota’s municipal variance statute that provided a flexible, owner-friendly standard for cities to use when evaluating variance applications. Following the Rowell decision, business was good for those applying for variances. While not every variance was granted under the standard adopted in Rowell, the standard was sufficiently lenient that variances became a tool that owners and developers routinely used to obtain approvals for their projects and developments.
The game changed in June 2010, however, when the Minnesota Supreme Court issued its decision in Krummenacher v. City of Minnetonka. In Krummenacher, the Supreme Court rejected the variance standard that the Court of Appeals had announced more than twenty years earlier in Rowell. Instead, the Krummenacher Court strictly applied the statutory language in Minn. Stat. § 462.357, and held that cities could grant variances only upon a showing of “undue hardship,” which the Supreme Court made clear was an exacting standard. The Minnesota Supreme Court noted it knew that the Krummenacher decision would make it difficult for municipalities to grant variances, but the Supreme Court punted the problem to the Minnesota Legislature for a fix.
Following the Supreme Court’s issuance of the Krummenacher decision, Minnesota cities were effectively out of the variance business altogether because owners and developers recognized that it was nearly impossible to show “undue hardship” for most variances. So, from the very beginning of the recent legislative session, the real estate community went to work on seeking a legislative fix to this situation. After several months of negotiations and maneuvering, on May 5, 2011, Governor Dayton signed Chapter 19 into law, which legislation made several changes to the municipal and county variance statutes. The are the three most significant of these changes.
1. Variances may be granted with a showing of “practical difficulties.”
The Legislature’s most important change to the municipal variance statute was that it fixed the specific problem created by the Krummenacher decision. The legislature removed the “undue hardship” standard from Minn. Stat. § 462.357 and replaced it with a new standard that now allows an applicant to receive a variance if it can demonstrate that there are “practical difficulties” that prevent the applicant from complying with the applicable zoning ordinance. To show “practical difficulties,” an applicant must show three things: (1) the owner proposes to use the property in a reasonable manner; (2) the owner’s plight is due to circumstances unique to the property that were not created by the owner; and (3) the requested variance will not alter the essential character of the locality. This new three-prong “practical difficulties” standard is substantially more lenient than the “undue hardship” standard it replaced. In practice, owners and developers should find this new standard providing nearly the same flexibility that they enjoyed with variance applications prior to June 2010.
2. Conditions in variances must be related and proportional to the impact created by the variance.
Over the years, many cities have inserted conditions in variances to exact various concessions from and to impose restrictions on owners and developers. Occasionally these conditions have had little to do with the variance itself. The legislature attempted to address this issue in its revision of Minn. Stat. § 462.357. Under the revised statute, any condition that a city now includes in a variance must be directly related to and must bear a rough proportionality to the impact created by the variance. Although this statutory change is really only a formal statement of what Minnesota law already requires when cities are creating and imposing conditions in variances, owners and developers will now be able to point to this language if a city goes too far with the conditions it attempts to impose as part of its approval of a variance.
3. The requirements for obtaining a variance from a city and a county are now virtually identical.
Variance applications in Minnesota cities and counties have long been governed by different statutes: Minn. Stat. § 462.357 for cities and § 394.27 for counties. The language of these statutes have long differed, which has resulted occasionally in different outcomes in cities and counties for nearly identical variance applications. The divide between the outcomes in cities and counties became greater in 2008 with the Minnesota Supreme Court’s decision in In re Stadsvold. In that decision, the Supreme Court interpreted Minn. Stat. § 394.27 to require a different showing for variances than was required under the Rowell standard, which was the standard that most cities were then using. Then, when the Supreme Court rendered its decision in Krummenacher in June 2010, the differences between cities and counties was only amplified further. Fortunately, the Minnesota Legislature brought an end to this confusion with its recent legislation. Following the statutory amendments, the substantive provisions of these two statutes are now essentially the same. Variance applications in cities and counties will now be processed under the same standards, and owners and developers will (hopefully) now see a greater similarity between the outcomes achieved on variance applications in cities and counties.
All of the changes to Minn. Stat. §§ 462.357 and 394.27 discussed in this article became effective on May 6, 2011. The long-awaited legislative relief to the problems created by the Supreme Court’s decision in Krummenacher has arrived. While it is still to be seen exactly how cities and counties will deal with these legislative changes, there is no question that these revisions will provide more clarity to an area of law that has long been plagued by an uncertain legal landscape.