Frustrated developers sue city of Medina, claiming it's holding land hostage

Two developers have sued the city of Medina in state and federal court, alleging that the city "made every effort to be antagonistic, difficult, and delay" an application to build eight rural residential lots on 80 acres of land east of Baker Park Reserve.

The suit, filed jointly last month by Stonegate Farm Inc. and Property Resources Development Corporation Inc., also accuses Medina of conspiring with a number of government agencies to artificially inflate the natural resource value of the property and to reject any commercial development on the land.

According to the complaint, Stonegate Farm purchased 170 acres just east of Baker Park Reserve in 1994, paying an above-market price for the land because of its development potential. Stonegate was content to sit on the land while waiting for water and sewer utilities to be built out to the property, but eventually it envisioned a development of about 100 homes.

In 1997, Stonegate enrolled in the Conservation Reserve Program (CRP), which is run by a division of the U.S. Department of Agriculture. As part of the CRP, Stonegate entered a 10-year contract allowing a mix of prairie grasses to be planted and grown on 110 acres of the property. Up until that point, the land had been used as farmland for decades.

The complaint states that Dave Thill, a natural resource specialist with Hennepin County, initially approached Stonegate about enrolling in the CRP and guided it through the process, an allegation that Thill downplays.

"The CRP program is a federal program … it really has nothing to do with me or the county," said Thill.

Stonegate later realized that the decision to turn its land into a "native mesic prairie" that Thill had allegedly pushed it toward was the first in "a series of events, that has ultimately resulted in the City and others intentionally depriving Stonegate of its investment backed expectations to develop the Property," its suit says.

This led to the property being classified as a "high-quality natural area" as part of the Minnesota Land Cover Classification System, making it desirable for park agencies to acquire and harder for developers to build on.

"At the time when we were doing the Natural Resources Inventory [the Stonegate property] was tallgrass prairie. It was a restored prairie, not an actual native remnant … but it was a good, quality prairie," said Thill, who denied ever being directed or pressured to play up the property's natural significance.

When Stonegate's CRP contract ended in 2007, it plowed over and destroyed the prairie grasses that had bloomed over the last 10 years in an effort to shed the "high-quality natural area" classification, fearing that utilities might never be built out to an area of such perceived natural importance. Despite most of the land reverting to an agricultural use, most of the property is still identified as a "moderate- to high-quality natural area" in Medina's 2010-2030 comprehensive plan.

On June 1, 2006, Stonegate agreed to sell the northern 80 acres of its land to PRDC, but the sale was conditional upon receiving subdivision plat approval from the city.

After working with city staff for more than a year, PRDC on Aug. 3, 2012, submitted an application to build an eight-lot rural residential subdivision called Tamarack Ridge.

One of the biggest disputes centers around whether or not PRDC owns the adequate right of way to extend Deer Hill Road to the west to service its new development.

While PRDC continued to work with city staff to get its application approved, the Medina City Council passed an ordinance on Dec. 18 that increased requirements for streets servicing new developments in the city. The ordinance was seen by PRDC as a direct attack on its proposal, and PRDC staff was infuriated because they weren't told about the proposed changes until Dec. 7.

"What the city did when we were trying to work with you, to put forward an ordinance and move it forward without our knowledge, and [not] tell us about it until it's just about passed, suggests to us that working with [the city] just doesn't work," said PRDC attorney Gerald Duffy, who was visibly frustrated at a February City Council meeting.

PRDC and Stonegate had suspected that Three Rivers Park District coveted its land as a potential addition to Baker Park or as trail connection to nearby Wolsfeld Wood Natural Area because of the Thill's earlier "high-quality natural area" classification. Now an increasingly adversarial relationship with city staff — including accusations of city staff failing to include essential documents regarding the Tamarack Ridge proposal in Planning Commission and City Council agenda packets — seemed to confirm those suspicions.

Three Rivers Park District Commissioner Penny Steele, whose district includes Medina, denies Three Rivers is eyeing the property.

The City Council unanimously denied the Tamarack Ridge proposal on Feb. 19, after PRDC refused the city's offer by the city to extend the application deadline to continue to work out problems. Eight problems with the Tamarack Ridge proposal were cited in a resolution passed by City Council explaining its decision.

"I've been involved in City Council for 14 years, and seldom have I seen a circumstance where … the parties are as far apart as they are on this, and where there is an apparent unwillingness to have a discussion," said Medina Mayor Tom Crosby.

Ben Johnson • 612-673-4499