Appeals court upholds Minneapolis' authority to restrict Karmel Mall expansion

The city of Minneapolis won another legal battle against property owner Basim Sabri on Tuesday when the state Court of Appeals denied his expansion plan at the popular Karmel Mall.

Opened in 2005, the mall at Pillsbury Avenue and 29th Street in south Minneapolis is one of the largest collections of Somali-owned businesses in the United States. Sabri has been attempting since 2015 to expand the structure's north-facing third and fourth floors for retail, restaurant, offices and outdoor seating.

The city initially said Sabri could not proceed with an expansion unless the extra space is used for offices or other non-retail functions, and that he must do something to alleviate traffic and parking problems. The city later decided to block the entire north-side expansion.

In Tuesday's unanimous ruling, the Court of Appeals said the conditions the city placed on Sabri's plan weren't arbitrary and that the city had authority to do it. The court also agreed with the city's concerns about increased traffic.

"We are pleased with the ruling," said City Attorney Susan Segal in a statement. "The Court of Appeals affirmed that the City's actions were based on solid factual grounds and were well within the authority of the Council."

Sabri has argued that the conditions placed by the city on his site plan review "effectively denied his application in part," according to the ruling. Robert Speeter, Sabri's attorney, didn't return a telephone call for comment Tuesday.

Sabri, who owns many properties in south Minneapolis, is no stranger to City Hall attorneys. He has long been involved in Minneapolis politics and went to federal prison for bribing then-Council Member Brian Herron in 2001.

Karmel Mall started as a two-story ethnic market in 2005. At the time, it was classified as a farmers market, a permitted use in an industrial zone.

The next year, the city changed the zoning code, which now classified the mall as a shopping center. That is not allowed in an industrial zone, meaning the mall is grandfathered under the old zoning but is considered "legally nonconforming."

From 2010 to 2015, the city approved applications for first-floor additions to the mall as well as construction of third and fourth floors and a parking ramp. Basim Sabri also built a new 5,000-square-foot mosque at the mall. In approving construction of the floors in 2014, the city required a setback on the north side of the building. This was based on concerns about increased shadows on the adjacent Midtown Greenway, the ruling said.

In 2015, Sabri proposed an amendment to his existing site plan for a 5,613-square-foot expansion of nonconforming use to fill in the third-floor, north side setback. The City Council had approved smaller additions on the south side of each floor that would connect the parking ramp to the existing structure. City staff recommended approval of the expansion plan with about a dozen conditions.

The city's planning commission held a hearing in December 2015. Council Member (and now Council President) Lisa Bender, who represents the ward where Karmel Mall is located and serves on the commission, expressed concern about expanding the intensity of commercial retail use in a noncommercial zone. At a later commission meeting, staff suggested prohibiting more retail in the expanded mall, which Sabri opposed, the ruling said.

The commission ultimately denied expansion on the mall's north side but allowed south-side plans to proceed. Sabri appealed the denial, but the City Council and Hennepin County District Court both rejected his appeal.

As one of his arguments to the Court of Appeals, Sabri said the city's findings to deny expansion weren't supported by a "factual basis." In its findings, the city included an opposition letter from the Whittier Alliance and a map of parking tickets around the mall that demonstrate the congestion issue. Even with the addition of a parking ramp, the number of tickets increased.

An earlier version of this story incorrectly reported the ownership of the Village Mall, better known as the 24 Mall. Basim Sabri has never had an ownership interest in the property, and is not responsible for any of the city's regulatory actions there. The Star Tribune regrets the error.