Park Estates, Inc., on behalf of itself and all others similarly situated, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1375

Park Estates, Inc., on behalf of itself and all others similarly situated,
Appellant,

vs.

City of St. Paul Park,
Respondent.

Filed May 15, 2017
Affirmed in part, reversed in part, and remanded
Smith, Tracy M., Judge

Washington County District Court
File No. 82-CV-15-2265

John F. Bonner, III, St. Louis Park, Minnesota (for appellant)

Andrew M. Biggerstaff, Kennedy & Graven , Chartered, Minneapolis, Minnesota (for
respondent)

Considered and decided by Smith, Tracy M., Presiding Judge; Cleary, Chief Judge;
and Reilly, Judge.
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
Appellant Park Estates, Inc., challe nges the imposition of charges for water
connection, sanitary-sewer connection, and st orm sewer by respondent City of St. Paul
Park. The district court granted summary judgment in favor of the city. Park Estates argues
that (1) the city exceeded its statutory authority because the charges are not just, equitable,

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and proportionate to costs, and (2) the storm-sewer charge is an unlawful tax. We affirm
the district court’s order to the extent that it concludes that the city did not exceed its
statutory authority, but we reverse and rema nd for consideration of whether the storm-
sewer charge is an unlawful tax.
FACTS
Park Estates is a manufactured-home community with approximately 111
residential lots, located within St. Paul Park. Park Esta tes has its own privately installed
and maintained water and san itary-sewer lines, which connec t to the city’s water and
sanitary-sewer lines. In 1990, Park Estates and the city entered into an agreement whereby
Park Estates would install wa ter meters for each unit and the city would bill residents
directly for water and sanitary-sewer services, rather than bill Park Estates in the aggregate.
The parties agreed that Park Estates would maintain the water and sanitary-sewer lines
located on its property.
Additionally, Park Estates asserts that it constructed and maintains a drainage ditch
at its own expense to drain st orm water from its property into a ditch on neighboring
property owned by a railroad, and further asserts that “[n] o water from [Park Estates’s]
property enters the City’s storm water system .” For purposes of summary judgment, the
city concedes these facts.
Park Estates and its residents are char ged a water-connection charge, a sanitary-
sewer-connection charge, and a storm-sewer charge quarterly. The rates of the charges are
set by ordinance. In 2015, the quarterly charges were:

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1. $4.33 for a basic water-connection charge;
2. $4.33 for a basic sanitary-sewer-connection charge; and
3. $8.50 for a storm-sewer charge.

The storm-sewer charge is based on a “runoff equivalent factor,” which varies by property
type; Park Estates residents are charged a rate identical to that for single-family homes.
The city places the money it receives from thes e charges into separate funds to pay for
maintaining the city’s water, sanitary-sewer, and storm-sewer infrastructure.
Park Estates sued the city, arguing that the city lacks statutory authority to impose
the charges on Park Estates and its residents because Park Estates maintains its own water,
sanitary-sewer, and storm-sewer systems on its property. Park Estates also argues that the
storm-sewer charge is an unlawful tax. The city moved for summary judgment. The
district court granted summary judgment in favor of the city. With respect to the water-
connection and sanitary-sewer-connection charge s, the district court concluded that the
undisputed facts demonstrate that Park Estate s benefits from its connection to the city’s
system and that the charge s are reasonable and used solely for maintenance of
infrastructure. With respect to the storm-sewer charge, the district court concluded that the
undisputed facts demonstrate that the storm-sewer system benefits all residents of the city
and that the charge is reasonable. The distri ct court therefore concluded that the city had
not exceeded its statutory authority. The district court did not determine whether the storm-
sewer charge is a tax or a fee, and therefore did not reach the question of whether the storm-
sewer charge—if a tax—is unlawful.
Park Estates appeals.

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D E C I S I O N
On appeal from summary judgment, we review the district court’s decision de novo.
Riverview Muir Doran, L.L.C. v. JADT Dev. Grp., L.L.C. , 790 N.W.2d 167, 170 (Minn.
2010). Summary judgment is ap propriate when the pleadings and evidence in the record
show “that there is no genuine issue of material fact and that either party is entitled to a
judgment as a matter of law.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). We
review whether the district court properly applied the law and whether there are genuine
issues of material fact. Id. We view the evidence in the light most favorable to the party
against whom summary judgment was granted. STAR Ctrs., Inc. v. Faegre & Benson,
L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002). The party moving for summary judgment has
the burden to demonstrate that “no genu ine issue of material fact exists.” Thiele v. Stich,
425 N.W.2d 580, 583 (Minn. 1988). Summary judgment is appropriate when the
nonmoving party does not present evidence that is “sufficiently probative with respect to
an essential element of the nonmoving party’ s case to permit reasonable persons to draw
different conclusions.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).
I. No genuine issue of material fact exists with respect to whether the charges are
just, equitable, or reasonably proportionate to cost.
Park Estates argues that a genuine issue of material fact exists as to whether the
city’s water-connection, sanitary-sewer-con nection, and storm-sewer charges are just,
equitable, and proportionate to the cost of furnishi ng the services. See Minn. Stat.
§ 444.075 (2016).

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Minn. Stat. § 444.075, subd. 3(a), authoriz es a municipality to “impose just and
equitable charges” to pay for the constructi on and maintenance of water, sanitary-sewer,
and storm-sewer services. Id., subd. 3(a); see also id., subd. 1(f) (defining “facilities” to
mean waterworks, sanitary-sewer and stor m-sewer systems). The statute allows
municipalities “maximum flexibility in financi ng municipal sewer and water services.”
Crown Cork & Seal Co. v. City of Lakeville, 313 N.W.2d 196, 201 (Minn. 1981). The city
may use any combination of “use, availability and/or connection charges.” Id. at 199.
Charges adopted by ordinance in the city’s legislative capacity are presumed to be just and
reasonable and will be upheld unless shown to be in excess of statutory authority or
resulting in unjust, unreasonable, or discriminatory rates by clear and convincing evidence.
See City of Moorhead v. Minn. Pub. Utils. Comm’n , 343 N.W.2d 843, 846 (Minn. 1984)
(discussing judicial review of MPUC utility ratemaking).
Water-Connection and Sanitary-Sewer-Connection Charges
Park Estates argues that the water-c onnection and sanitary-sewer-connection
charges are not just, equitable, and proportionate to the cost of furnishing the services
because Park Estates installed and maintains its own water and sanitary-sewer lines and
Park Estates residents do not connect directly to the city’s water and sanitary-sewer lines.
We disagree.
The fact that Park Estates installed and maintains the water and sanitary-sewer lines
on its property does not render the connection charges unjust or inequitable. All private
property owners are required to maintain water and sanitary-sewer lines on their property.
Section 70-35 of the city’s ordinances provides that “[t]he cost of the original installation

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of all plumbing between the water main in the street and any service devices maintained
by the consumer and all extens ions made to such plumbing , as well as all repairs and
maintenance, shall be borne entirely by the c onsumer.” St. Paul Park, Minn., Code § 70-
35 (2016). Section 70-90 similarly provides that “[a]ll costs of repair and maintenance of
the sewer line serving any consumer dwelling sh all be borne entirely by the consumer.”
St. Paul Park, Minn., Code § 70-90 (2016). No evidence suggests that the city renders
maintenance services on the private property of any resident; all city residents bear equal
responsibility for installing and maintaining thei r property’s water and sewer lines. The
fact that Park Estates’s contract with the city also has provisions requiring Park Estates to
maintain its private water and sanitary-sewer lines is immate rial to whethe r the city’s
charges are just and equitable under Minn. Stat. § 444.075, subd. 3(a).
As for proportionality, the statute requires that “charges made for service rendered
shall be nearly as possible proportionate to the cost of furnis hing the service.” Id., subd.
3(b). The funds the city collects are used solely for maintenance of city-owned water and
sanitary-sewer infrastructure. See id., subd. 3(a). All single-family dwellings are charged
the same quarterly fee. St. Paul Park, Mi nn., Code §§ 70-46(a)(5), 70-87(a)(4) (2016).
Individuals using the city’s water and san itary-sewer services benefit from continued
maintenance of the city-owned water and sanitary-sewer infrastructure to ensure
undisrupted service. That Park Estates house holds connect to the city’s water and sewer
through Park Estates’s single connection rather than through 111 separate connections does
not render the charges disproportionate. Like other property owners, Park Estates residents

7
each place demands on the city’s infrastructure and they each benefit from maintenance of
that infrastructure. See Minn. Stat. § 444.075, subd 3(b); Moorhead, 343 N.W.2d at 846.
Park Estates did not present evidence sufficient to create a genuine issue of material
fact as to whether the city exceeded its statutory authority in imposing the water-connection
and sanitary-sewer-connection charges.
Storm-Sewer Charge
Park Estates also argues that the city’s storm-sewer charge exceeds the city’s
statutory authority as a matter of law, or that there is at least a genui ne issue of material
fact, because the storm water from its prope rty does not enter the city’s storm-sewer
system. For purposes of summary judgment, th e city concedes that Park Estates’s storm
water runs into a private drainage ditch on a neighboring property and not into the city’s
storm sewer. Again, we disagree with Park Estates’s contention.
Minn. Stat. § 444.075, subd. 3(a), permits the city to impose “just and equitable
charges for the use and for the availability of the [storm-sewer system] and for connections
with [it].” See also Minn. Stat. § 444.075, subd. 1(e)-(f) (2016) (applying section 444.075
to storm sewers). The Minnesota Supreme Co urt has interpreted Minn. Stat. § 444.075,
subd. 3(a), in the disjunctive, as permittin g cities to recoup costs by “imposing use,
availability and/or connection charges.” Crown Cork , 313 N.W.2d at 199 (emphasis
added). The city’s ordinances calculate the charge based on the classification of the parcel,
St. Paul Park, Minn., Code § 70-154(a) (2 016), which is a permitted method under Minn.
Stat. § 444.075, subd. 3b(2). Because the city has made available a storm sewer and has
adopted ordinances to charge for the availability of the sewer, Park Estates is subject to the

8
availability charges regardless of whether it is “connected” to or “uses” the storm sewer.
See Minn. Stat. § 444.075, subd. 3.
Park Estates argues that we should adopt the reasoning of Knutson Hotel Corp. v.
City of Moorhead and conclude that, because none of the water from its property enters the
city’s storm sewer, the city has exceed its statutory authority. 250 Minn. 392, 84 N.W.2d
626 (1957). In that case, the city assessed the appellant hotel under its sanitary-sewer
ordinances for water from an air-conditioning un it that discharged in to the storm sewer.
Id. at 394-95, 84 N.W.2d at 628. The Minnesota Supreme Court held that the charge was
unlawful because the hotel’s discharge of water into the storm sewer was unrelated to the
sanitary-sewer charge and the city had “no ordinance authorizing the imposition of a charge
for water flowing through the storm sewer.” Id. at 395-97, 84 N.W.2d at 629. Knutson
Hotel Corp. is distinguishable from this case be cause St. Paul Park has an ordinance
authorizing the imposition of a storm-sewer charge, and that charge is authorized under
Minn. Stat. § 444.075. See St. Paul Park, Minn., Code § 70-154. Additionally, the supreme
court decided Knutson Hotel Corp. under Minn. Stat. § 443.09, the predecessor to Minn.
Stat. § 444.075, which did not permit the imposition of availability charges. See Minn.
Stat. § 443.09, subd. 3 (1953) (permitting cities to charge “for the use of” sewage systems).
The same year that the supreme court decided Knutson Hotel Corp. , however, the
legislature repealed Minn. Stat. § 443.09 and enacted Minn. Stat. § 444.075, which permits
the imposition of availability charges. 1957 Minn. Laws ch. 608, § 1, at 763-64 (amending
the statute to permit imposition of charges for “the availability” of facilities).

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Park Estates did not present evidence sufficient to create a genuine issue of material
fact as to whether the city exceeded its st atutory authority in imposing the storm-sewer
charge.
II. The district court did not consider whether the storm-sewer charge is a tax or
a fee.

Park Estates argues that, even if the city imposed the storm-sewer charge pursuant
to its statutory authority, the storm-sewer ch arge is an unlawful tax because Park Estates
does not receive a special benefit from the storm sewer. The city argues that the charge is
a fee and not a tax because it is (1) not a ge neral revenue-raising measure, (2) earmarked
for a particular purpose, and (3) directly tied to the cost of regulation, rather than tied to a
specific benefit conferred upon any given property.
The district court did not address whether th e storm-sewer charge is a fee or a tax.
“[A]n undecided question is not usually amenable to appellate review.” Hoyt Inv. Co. v.
Bloomington Commerce & Trade Ctr. Assocs. , 418 N.W.2d 173, 175 (Minn. 1988).
Moreover, the district court did not have th e benefit of the Minnesota Supreme Court’s
decision in First Baptist Church of St. Paul v. City of St. Paul , 884 N.W.2d 355 (Minn.
2016), which refined the distinction between taxes and fees for purposes of Minnesota law.
We therefore remand the case to the district court to consider (1) whether the city’s storm-
sewer charge is a tax or a fee and (2) if the charge is a tax, whether it is unlawful. The
district court has discretion to reopen the record to assist in addressing these questions.
In sum, we affirm the district court’s decision that the city did not exceed its
statutory authority in imposing the water-co nnection, sanitary-sewer-connection, and

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storm-sewer charges, but we reverse and re mand for consideration of whether the storm-
sewer charge is an unlawful tax.
Affirmed in part, reversed in part, and remanded.