The city of Eagan's condemnation in recent years of three businesses in the Cedar Grove area was decided in the property owners' favor by a lower court. But now, in a case that could have statewide impact in the use of eminent domain laws to take land, the Minnesota Supreme Court has now agreed to hear an appeal.

The city is pleased, Eagan City Administrator Tom Hedges said, "because the issues raised are important and of statewide significance, affecting many cities and economic development authorities."

In question is whether the city's Economic Development Authority had the power to take land owned by businesses as part of a 70-acre redevelopment along Hwy. 13, just off Cedar Avenue. Also at issue is exactly how a city may modify those powers.

The issues revolve around whether the city must first transfer this power to the EDA on a case-by-case basis or whether the EDA has that power under state statute. The heart of the case is how much power cities' economic development authorities have.

"Two lower courts came to different conclusions," Hedges said, "so it is important that the meaning and application of state statutes is clarified for all economic development authorities throughout the state."

The case has the potential to affect how economic development authorities operate not only in eminent domain procedures, but in other areas, including issuing bonds and contracts, according to the League of Minnesota Cities, which is filing a brief on behalf of Eagan.

The league says the Appeals Court incorrectly construed state statutes relating to EDAs "in a way that confuses the relationship between cities and EDAs."

Eagan paid $35 million to condemn and acquire 31 Cedar Grove parcels between 2002 and 2007. A Dakota County judge ruled that the EDA had authority to do so. The land was, and still is, intended to be used for a redevelopment project encompassing new housing and businesses.

But the three owners contested the taking of their land to the Appeals Court.

On May 19, a three-judge appeals panel ruled that the EDA acquires only the power a city possesses and transfers, and that there was no such transfer.

Those judges found then that the EDA did not have the proper authority to condemn and take the land for public use.

City officials disagreed and asked for a review by the Supreme Court. Last week, the high court agreed to take up the issue of just how much power the Eagan EDA could wield.

The city's petition says, in part:

"The Court of Appeals decision alters the statutory framework of the relationship between a city and an economic development authority and calls into question the genesis of power of eminent domain."

The city maintains that the EDA was the entity that established the redevelopment project and that no transfer of power was needed.

"The Court of Appeals erroneously determined that the EDA's powers are limited by the scope of the authority that the city, as the original condemning authority, transferred to it," the petition says.

The battle stems from the city's plan to build a $215 million development as it reinvests in the area of the old Cedarvale Shopping Center.

The city tore down and relocated most of the businesses in the Cedar Grove area, but a handful remain.

City officials say the first phase will include a two-building hotel complex, a 275- to 300-unit market-rate apartment complex and a 150-unit senior housing complex, with a park between the apartments and senior housing.

The city will keep moving ahead, Hedges said.

"Eagan remains committed," he said, "to achieving its vision in Cedar Grove of creating a viable, market-supportable, mixed-use development to serve as an attractive gateway destination for western Eagan."

Joy Powell • 952-882-9017