Minnesota Court of Appeals Confirms Actual Use, Not Historical Use, is What Matters for Legal Nonconforming Property
Uses of commercial property change over time. As commercial landowners well know, the right to use property as one wishes is subject to and limited by municipalities’ police power in regulating land use. One way Minnesota municipalities regulate permitted uses of land is through zoning. Provided it is exercised lawfully, municipalities generally have the authority to modify land use through changing zoning definitions and rezoning parcels altogether. When this occurs, a use which was previously a permitted use for a parcel can become an unpermitted use for the same parcel.
When an adverse zoning change occurs, rather than forcing immediate reform of the landowner’s use to something permitted under the new zoning regulation, which would unequivocally interfere with the landowner’s use of the parcel, Minnesota law deems the prior use to be “nonconforming,” but nevertheless allowed to continue on that specific parcel. The catch is that in order to continue being a protected nonconforming use for the parcel, the use has to be an actual use of the parcel, not merely a contemplated use at the time of the adverse zoning change. Minnesota law restricts nonconforming use in a way so as to ultimately phase them out. Similarly, the nonconforming use of a property may not be expanded beyond what was present at the time the use became nonconforming.
But what if there was a permit from a regulatory agency confirming permitted uses of the parcel beyond those actual uses at the time of the adverse zoning change? That was a question recently before the Minnesota Court of Appeals in AIM Development (USA), LLC v. City of Sartell. That case involved a section of the Code of Ordinances for the City of Sartell, Minnesota, stating that, “[e]xcept as otherwise provided by law, any nonconformity, including the lawful use…of land…existing at the time of the [adverse zoning change], may be continued…but not [expanded]….” The previous landowner had received a permit from the Minnesota Pollution Control Agency (MPCA) in 1984 allowing the landowner to operate an industrial solid waste disposal facility. That then-current owner constructed and operated a landfill to deposit and store nonhazardous waste generated in conjunction with a nearby paper mill it owned. This use fit squarely within Sartell’s I-1 Light Industrial zoning district definition in 1984 when the MPCA permit was granted and the landfill was constructed.
Five years later, in 1989, Sartell amended its zoning ordinance, rendering the landfill a legal nonconforming use. It continued to collect waste generated exclusively in conjunction with the operation of the paper mill. The MPCA reissued permits for the landfill four times between 1992 and 2009, each time limiting the permitted uses to collecting certain types of waste, or prohibiting the landfill from accepting waste from public or municipal waste haulers.
In 2012, the paper mill was significantly damaged in an explosion and fire. In 2013, AIM purchased the paper mill site and landfill with intentions to flip the properties for resale. Approximately one year later, AIM applied to the MPCA for authorization to deposit waste generated from operations other than the paper mill into the landfill. The MPCA permit which transferred to AIM did not authorize disposal of this waste in the landfill. Sartell objected to AIM’s permit application because it constituted a dramatic change to the nature and source of waste and an expansion of the landfill area – even though the permitted use, disposal of waste from the paper mill, was impossible. In a declaratory judgment action against Sartell, AIM argued it was entitled to deposit waste generated from operations other than the paper mill into the landfill.
The district court determined that the use of the landfill was limited to waste generated by the paper mill operation, even though the paper mill no longer existed, due to the exclusionary language in the MPCA permits and AIM’s predecessor’s actual use of the landfill. On appeal, AIM argued that the original 1984 permit from the MPCA expressly permitted disposal of nonhazardous waste from sources other than the paper mill, and that AIM was therefore entitled to continue that use. The Minnesota Court of Appeals affirmed the district court’s decision, and determined that the 1984 permit cannot be construed so as to grant AIM greater rights than those recognized by the MPCA-approved 2013 permit that AIM assumed when it purchased the property, which expressly limited use of the landfill to certain forms of waste material generated by operation of the paper mill. The appellate court also noted that AIM’s predecessors continued to operate the landfill between 1989 and 2012 as a permitted nonconforming use, limiting their waste materials solely to those generated in conjunction with the operation of the paper mill. Accordingly, AIM was bound by the actual use of the landfill, not the use contemplated by the 1984 MPCA permit. The court of appeals also affirmed Sartell’s land use restriction as a valid exercise of its police power which would enhance the possibility that the nonconforming use will ultimately be phased out.
Commercial owners must be aware of the permitted uses for their property, particularly if a use is legal nonconforming, and may benefit from continuing the most broad nonconforming use of the parcel allowed. Prospective purchasers of commercial property would be well served by thoroughly investigating the permitted uses under the current zoning designation as well as actual uses of a parcel, and seeking legal counsel should they encounter a legal nonconforming use. The land use attorneys at Larkin Hoffman can assist in evaluating whether a prospective purchaser’s desired use would run afoul of the protected legal nonconforming use allowed by a municipality.