Court Awards More Than $1 Million in Damages From City Land Use Decisions That Violated Church’s Constitutional Rights
Landowners challenging land use decisions generally have an uphill battle. Government subdivisions are accorded broad discretion by courts, such that prevailing in an action challenging a zoning decision requires compelling evidence of arbitrary government action. However, a recent decision of a federal district court in Minnesota, Riverside Church v. City of St. Michael, counsels that churches and religious institutions have a powerful tool that can flip the general rule upside down and place a heavy burden of proof on the government.1
Specifically, churches and religious institutions may assert that an adverse land use decision violates the guarantees of free speech and assembly contained in the First Amendment to the United States Constitution. Among other thing, unconstitutional land use decisions may entitle churches to recover substantial damages resulting from the government’s wrongful conduct. Riverside Church is an instructive example of when churches may prevail on First Amendment claims and the types of damages they may be awarded.
During the course of litigation, Riverside asserted that the city’s zoning ordinance unjustifiably treated religious uses and secular uses differently. The court ruled that, to survive constitutional scrutiny, the city needed to prove that the ordinance was “‘narrowly tailored to serve a significant governmental interest’ and [must also] ‘leave open ample alternative channels for communication of the information.’”2
After a three-week bench trial, the court determined the city had failed to demonstrate its ordinance was narrowly tailored. At the time the city council denied Riverside’s application, it could have imposed a less restrictive alternative. Specifically, it could have allowed Riverside to use the theater subject to conditions regulating traffic. Accordingly, the city’s former prohibition on collective religious worship in the B-1 zoning district was held unconstitutional.
The court awarded Riverside approximately $1.25 million, the increase in the contract price between the Aug. 2014 purchase agreement and the March 2015 option agreement. In addition, Riverside was awarded the holding costs it paid when it terminated the Aug. 2014 purchase agreement as well as fees associated with its application to the city.
Riverside Church illustrates that constitutional claims can be a powerful remedy when government subdivisions make it difficult for churches and religions institutions to locate in a community. In these constitutional cases, courts will inquire whether there were less restrictive means that the government could have used to advance its interests. This opens the door for churches and religious institutions to argue that government subdivisions have an affirmative obligation to revise their land use ordinances to reduce burdens uniquely imposed upon them.
About the Issues
Riverside has held services in a building in Big Lake, Minnesota since 1973. Due to remarkable growth in attendance over the years, the church began examining optimal sites for a second worship location.
In early 2014, Riverside identified the former Cinemagic Theater building in St. Michael as a possible satellite location where services occurring in Big Lake could be replayed by video. Cinemagic occupied the space between 2006 and 2010. Under the St. Michael zoning ordinance, the theater was zoned B-1 (a business zone). In 2014, the city did not permit “collective religious worship” in any of its business zones. On the other hand, “[t]heaters (not outdoor drive-in)” was expressly designated as a permitted use in this zone.
The theater was put up for sale in April 2014. Riverside received an opportunity to purchase the property for $1.75 million, plus closing costs, conditioned upon the closing occurring by April 23, 2014. In a meeting between Riverside and the city on April 14, the city instructed Riverside that the theater could not be used to simulcast worship services, even though the city understood that Riverside’s proposed use was similar to the operation of a movie theater (and even though use as a movie theater remained a permitted use). Accordingly, Riverside did not purchase the theatre.
In July 2014, at the invitation of the city, the church submitted an application requesting an amendment to the zoning ordinance to make “assemblies, religious institutions, and places of worship” permitted uses in the B-1 district. On Aug. 19, 2014, Riverside entered into a purchase agreement for the theater for $2,273,000, contingent upon Riverside securing the city’s approval by the closing in Dec. 2014.
The city considered Riverside’s application for approximately five months. During this time, Riverside informed the city of its three-phase development plan. The upper limits of the third phase projected attendance levels of 1,200 or higher. The city, ostensibly concerned about traffic issues, commissioned a traffic study. The study concluded that once attendance levels reached the phase three peak, the nearby intersection would not function properly. Yet, the engineer conducting the study acknowledged that, if and when Riverside did get to 1,200 attendees, a new study would need to be conducted in order to assess safety hazards based upon actual conditions then existing.
In November 2014, the City Planning Commission recommended that Riverside’s application to amend the zoning ordinance be denied. Shortly thereafter, the matter came before the St. Michael City Council. Rather than accept the commission’s recommendation, the council adopted a moratorium barring all new assembly uses. The city formally denied Riverside’s application on November 25, 2014. Therefore, Riverside permitted its Aug. 2014 purchase agreement to terminate, becoming responsible for more than $60,000 in holding costs under that agreement.
The church had a final opportunity to purchase the theater pursuant to an option executed in March 2015. By this time, the purchase price of the theater had increased by approximately $1.25 million to over $3.5 million. Of note, Riverside filed suit against the city in federal court on March 23, 2015. Only about two weeks later, the city amended its zoning ordinance to permit religious assemblies as a conditional use in the B-1 zoning district. By April 21, 2015, the city had issued Riverside a conditional use permit (CUP) allowing it to use the theater. The CUP evidently contained no conditions addressing the concerns the city had claimed when it denied Riverside’s 2014 application. Nevertheless, this proved to be too little, too late for Riverside, which was ultimately unable to purchase the property.
Churches and religious institutions facing land use permitting obstacles created by local governments should consult with counsel to learn their rights. Larkin Hoffman’s real estate litigation practice is experienced in land use law and is passionate about vindicating landowners’ property rights.
1 No. 15-1575, 2017 WL 2226553 (D. Minn. May 22, 2017), as amended and superseded by 2017 WL 3503847 and 2017 WL 3521719.
2 See Riverside Church v. City of St. Michael, 205 F.Supp.3d 1014, 1038-1039 (D. Minn. 2016) (citation omitted).