Minnesota Supreme Court Halts Use of Municipal Variances

12/03/2010 / Peter Coyle

A recent decision by the Minnesota Supreme Court that narrowly interprets the standard for approving zoning variances has brought to a halt virtually all pending municipal  variance requests. A variance typically grants relief from local development regulations, such as setbacks, building height, etc. The practical effect of the new court standard seems to be that virtually no variance can be approved by a city if a reasonable use of the site is possible without a variance. This ruling has widespread application to residential, commercial, industrial and institutional projects. Scores of pending variance applications, including those for redevelopment of dilapidated or contaminated sites, have already been rejected by cities based on the new standard, further aggravating a difficult real estate market.
In Krummenacher v. City of Minnetonka, 783 N.W.2d 721 (Minn. 2010) the Minnesota Supreme Court reversed the decision of the lower courts and invalidated a variance approved by the city for expansion of a legal non-conforming residence. Krummenacher, the adjacent landowner, challenged the approved variance as illegal under state law. The city, relying on a 1989 court of appeals variance decision in Rowell v. Moorhead Board of Adjustment, 446 N.W.2d 917 (Minn. Ct. App. 1989) argued that the variance allowed a reasonable use not otherwise allowed by the city’s regulations. This standard had been widely followed by cities throughout Minnesota.
Minnesota law provides two different definitions for use by cities when considering a variance, depending on whether the request arises under zoning or subdivision regulations. By statute, a variance from the standards in the zoning regulation is possible:
in instances where strict enforcement would cause undue hardship because of circumstances unique to the individual property under consideration, and to grant such variances only when it is demonstrated that such actions will be in keeping with the spirit and intent of the ordinance. Minn. Stat. § 462.357, subd. 6(2) (2010).
“Undue hardship” is defined to mean that “the property in question cannot be put to a reasonable use if used under circumstances allowed by the official controls….” Moreover, “[e]conomic considerations alone shall not constitute an undue hardship if reasonable use for the property exists under the terms of the ordinance.” Minn. Stat. § 462.357, subd. 6(2) (2010). 
The City of Minnetonka considered the variance to expand a non-conforming use under its zoning regulations; therefore, the supreme court read the applicable zoning statute literally and determined that a reasonable use of the subject property as a residence already existed and that the applicant, in seeking to expand it, had failed to demonstrate “undue hardship” as defined by statute.
A second, more flexible, variance standard exists under the subdivision statute applicable to municipal subdivision regulations. Under that provision, variances are possible “where an unusual hardship on the land exists, but variances may be granted only upon the specific grounds set forth in the regulations.” Minn. Stat. § 462.358, subd. 6 (2010). This variance definition was not discussed by the supreme court nor relied upon by Minnetonka in approving the variance in question. 
In reaching its decision, the supreme court contrasted the municipal variance language in the zoning statute with yet another variance standard applicable to counties. Under this standard, a county can approve a variance application when the property owner would face “practical difficulties or particular hardship” in meeting “the strict letter of any official control.” Minn. Stat. § 394.27, subd. 7 (2010).
While variances have typically been difficult to obtain from cities, and are highly discretionary, the Minnesota Supreme Court decision effectively closes the door on any applications arising under a city’s zoning regulations absent very unique hardships; within our firm, numerous project applicants have already been informed by various cities that their variance applications are being returned or will be denied. It is unclear whether a variance from subdivision regulations remains possible under the seemingly more flexible standards in the subdivision statute, without meeting the “undue hardship” standard as interpreted by the supreme court. 
Some cities have begun amending their zoning regulations to establish site plan and design flexibility within defined land use categories to avoid the need for variances. What remains to be seen is whether the Minnesota Legislature is willing to resolve the dilemma caused by the new supreme court decision. Efforts are underway to draft legislation that reinstates some local discretion to approve variances when a broader definition of “hardship” is found to exist. Presumably such legislation will garner support from a coalition of private property interests, developers, building owners and representatives of cities.