Restaurant Developers File Class Action Lawsuit Against City of Rochester Over Transportation Improvement District Fees

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Scales of justice and court


Created: February 17, 2022 15:31

Local restaurant owners have filed a class action lawsuit against the City of Rochester for charging a Transportation Improvement District (TID) fee.
The lawsuit, filed Tuesday, Feb. 15, by Tap House Real Estate LLC, asks the Minnesota court to declare the fees “unlawful, null, void, and unenforceable” and to require the city to reimburse the developers.
Tap House Real Estate, LLC “unwittingly” paid $102,500 in “coerced” transportation improvement district fees, in 2019, as part of the general development agreement for the West End location, indicates the civil suit.
The City of Rochester has charged developers TID fees in areas “experiencing or anticipating new growth and substandard streets” since 2004.
The lawsuit alleges that the city was unjustly enriched by the “unconstitutional” fees and states that the fees were calculated arbitrarily.
The city of Rochester did not respond to the lawsuit until Thursday, February 17.
Tap House Real Estate, LLC paid $102,500 in transportation improvement district fees as part of the general development agreement for the West End location, attorney Andrew Davick of Meshbesher & Spence said.
Davick said the class action lawsuit represents the interests of several developers in 14 transportation improvement districts in Rochester, all of whom have paid additional fees during their development projects.
He likened the fee to “holding contracts hostage”.
“You can’t go ahead with your project (until it’s) paid for,” he said.
The City of Rochester’s 2004 ordinance split the costs of street improvements between the city and developers seeking approval in areas where city streets were deemed inadequate.
The lawsuit argues that the city “cannot use ‘voluntary’ contracts to force developers to pay unauthorized transportation infrastructure charges.”
The city sends invoices for TID’s fees halfway through the development process, when the owners have already made significant investments of time and money — a decision the lawsuit calls “particularly coercive.”
In addition, non-payment of the TID fee results in an “indefinite development moratorium” until the City deems public amenities adequate.
“In other words, the city is holding developers’ land hostage until developers agree to fund the city’s wish list of offsite infrastructure projects,” the lawsuit says.
The suit cites Harstad v. City of Woodbury, an August 2018 case in which the Minnesota Supreme Court held that a city cannot impose infrastructure charges on developers.
Davick said the city was aware of the developers’ complaints and continued to charge the fee, “despite objections.”
The city’s planned legal response will come through the League of Minnesota Towns John Baker of the Minneapolis-based law firm Greene Espel.
Tap House co-owners Christine Stahl and Natalie Victoria declined to comment.

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