Eric Ringsred, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-2031

Eric Ringsred,
Appellant,

Respect Starts Here,
Appellant,

State of Minnesota,
Plaintiff,

vs.

Duluth Economic Development Authority, et al.,
Respondents.

Filed August 31, 2020
Reversed and remanded
Schellhas, Judge*

St. Louis County District Court
File No. 69DU-CV-18-953

Miles Ringsred, Duluth, Minnesota (for appellant Eric Ringsred)

William D. Paul, Duluth, Minnesota (for appellant Respect Starts Here)

Rebecca St. George, Duluth City Attorney, Steven B. Hank e, Deputy City Attorney,
Elizabeth A. Sellers, Assistant City Attorney, Duluth, Minnesota (for respondents)

* Retired judge of the Minnesota Court of Ap peals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

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Considered and decided by Johnson, Presiding Judge; Co chran, Judge; and
Schellhas, Judge.
U N P U B L I S H E D O P I N I O N
SCHELLHAS, Judge
Appellants sued respondents under th e Minnesota Environmental Rights Act
(MERA), seeking to enjoin them from demolishing certain property in Duluth. The district
court conducted a court trial, concluded that respondents established an affirmative defense
to appellants’ MERA claim, and granted judg ment to respondents. Because we conclude
that the district court did not apply the appropriate legal standard to respondents’
affirmative defense, we reverse and remand.
FACTS
In 2006, buildings known as the Pastor et Terrace and Paul Robeson Ballroom, and
the Kozy Bar (collectively “the property”) in Duluth were listed on the National Register
of Historic Places as contributing structures to the Duluth Commercial Historic District.
Around that same time, respondent Eric Ring sred, through an entity known as Temple
Corp., purchased the property under a contract for deed. In the fall of 2010, a fire damaged
the property, resulting in its condemnation for human habitation.
In 2015, the State of Minnesota acquired the property in trust for St. Louis County
through tax forfeiture. Respondent Duluth Economic Development Authority (DEDA)
subsequently purchased the property from St . Louis County. DEDA then marketed the
property for sale and issued a request for pr oposals (RFP) to rehabilitate the property or,
alternatively, demolish it and construct new housing. After receiving three redevelopment

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proposals for the property, DEDA passed a re solution that none of the proposals would
create a significant number of new jobs, materially enhance the real estate tax base in the
area, deconcentrate subsidized housing, contribute to the vibrancy of the neighborhood, or
address the needs identified in the RFP. The resolution further provided that none of the
proposals “provided a sufficient showing of sufficient resources in terms of both personnel
and finances to evidence the ability to bring the [p]roposed project to successful completion
and operation.” DEDA therefore rejected the proposals and di rected its staff to seek
additional proposals.
Appellants Eric Ringsred an d Respect Starts Here sued DEDA and respondent City
of Duluth, alleging that responde nts’ actions allowed the propert y to deteriorate, and that
their plan for demolition of the property “c onstitute[d] a material impairment of the
Historic District, which is a protected resource within the meaning of MERA.”
1 Appellants
sought to enjoin DEDA or its assigns from de molishing the property and sought an order
requiring DEDA to commence any and all nece ssary repairs to secure the property and
prevent its further deterioration. Appellants also sought a declaration that DEDA’s action
to prepare an environmental assessment worksheet (EAW) for demolition of the property
was null and void; an order that respondents must consult with The City of Duluth Heritage

1 Appellants also alleged that DEDA failed to consult the City of Duluth’s Historic
Preservation Commission, in violation of the Duluth City Code, when it “committed public
dollars and contracted with Wenck Associates for an EAW which proposes the demolition
of the Pastoret Terrace and Paul Robeson Buildings.” Appellants voluntarily dismissed this
claim prior to trial.

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Preservation Commission regardi ng any proposals, plans, or proceedings affecting the
property; and an award of reasonable costs and attorney fees.
In lieu of answering appellants’ comp laint, respondents moved to dismiss the
complaint for failing “to allege that any final public decision or action has been taken with
respect to redevelopment, alteration or demolition of the property in question.” The district
court stayed appellants’ action pending DEDA’s final decision regarding disposition of the
property. DEDA then issued a resolution directing DEDA staff to “apply for a demolition
permit for the Pastoret Terrace and adjacent Robeson Ballroom buildings and to secure
bids therefore.” Following that resolution, the court lifted the stay and temporarily enjoined
respondents from demolishing or making any other changes to the property. Respondents
then withdrew their motion to dismiss and interposed an answer, and each party moved for
summary judgment. The court denied summary judgment to both parties.
The parties stipulated to the facts, and th e district court conducted a three-day court
trial in April 2019. The court received 26 exhibits and heard testimony from seven
witnesses: a former DEDA director, who wa s involved with a proposal to develop the
Pastoret Terrance into low-income housing; a safety specialist; the current DEDA director;
Eric Ringsred; a Duluth housing inspector; the Duluth police chief; and an architect, who
had worked on the Pastoret complex for Ringsred.
The current DEDA director testified and de scribed historic preservation as a factor
in DEDA’s decision to acquire the property, but not the motivating force. He explained
that DEDA’s RFP sought proposals ranging from the historical renovation of the property
to demolition and construction of new housing and mixed-use development, but noted that

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preference would be given to any historic preservation work. DEDA received three
proposals in response to its R FP—two of which were for hist orical rehabilitation. One of
the proposals for historical rehabilitation was from Pastoret, LLC, which planned to build
affordable housing units. The current DEDA director testified that Pastoret, LLC’s
proposal was inconsistent with the housing goa ls articulated in the RFP, specifically
Duluth’s Consolidated Plan to spread out affordable housing and promote market-rate
housing development in the downtown area. He also noted that Pastoret, LLC’s proposal
did not state that it had secured financing, either through low-income-housing tax credits
or historic tax credits, or that it had a commitment of, or ability to obtain, private financing.
The current DEDA director noted that th e proposal for historical rehabilitation
submitted by OCH Bookstores , LLC and Hoeft Builders (“OCH/Hoeft”) sought to
redevelop the property into 40 market-rate housing units, and he expressed uncertainty
about the marketability of th e proposed units given their si ze. He also testified that
OCH/Hoeft’s proposal did not provide any specifics about fi nancing. He believed that
OCH/Hoeft were seeking public assistance for the project but, to his knowledge, had not
secured any tax-credit financing. OCH/Hoeft’s proposal did not indicate the availability of
any private financing.
The current DEDA director testified th at DEDA did not re quest any additional
documentation from Pastoret, LLC or OCH/Hoeft regarding financing sources because the
financial feasibility of the proposals did no t provide enough detail to warrant further
inquiries. DEDA rejected the proposals and re newed its efforts to market the property,
which included reaching out to Twin Cities’ developers, the Duluth Heritage Preservation

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Commission, and the State Historic Preservation Office in order to find preservationists
who might be interested in the property. DEDA received no additional proposals and no
offers to purchase the prop erty. The current DEDA director testified that DEDA did not
have the resources to rehabilitate or opera te the property, and that DEDA moved to
demolish the property because no available alte rnatives existed to remove the blighted
conditions the property posed.
At the close of trial, the parties made closing arguments and consented to the judge
performing an on-site inspection. Both parties submitted posttrial briefs.
In a written order, the district court conc luded that although appellants had made a
prima facie case that the property is a protected resource under MERA and at risk of being
destroyed, respondents had esta blished the affirmative defens e that there are no feasible
and prudent alternatives to the property’s demolition, and that de molition was consistent
and reasonably required for the promotion of public health, safety, and welfare. The court
dissolved the temporary injunction and denied appellants’ requests for relief. Appellants
moved for a stay and a restoration of the temporary injunction pending appeal. Appellants
posted additional security, and the court granted appellants a stay.
This appeal follows.
D E C I S I O N
MERA permits “[a]ny person residing within the state . . . or any partnership,
corporation, association, or ganization, or othe r entity having share holders, members,
partners or employees residing within the state” to bring “a civil action in the district court
for declaratory or equitable relief in the name of the state of Minnesota against any person,

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for the protection of the air, water, land, or other natural resources located within the state,
whether publicly or privately owned, from pol lution, impairment, or destruction.” Minn.
Stat. § 116B.03, subd. 1 (2018). “Person” is defined under the statute to include “any
natural person, any state, m unicipality or other government al or political subdivision or
other public agency or instrumentality.” Minn. Stat. § 116B.02, subd. 2 (2018). The statute
further states that:
In any other action maintain ed under section 116B.03,
whenever the plaintiff shall have made a prima facie showing
that the conduct of the defendant has, or is likely to cause the
pollution, impairment, or destruction of the air, water, land or
other natural resources located within the state, the defendant
may rebut the prima facie showing by the submission of
evidence to the contrary. The defendant may also show, by way
of an affirmative defense, that there is no feasible and prudent
alternative and the conduct at issue is consistent with and
reasonably required for promotion of the public health, safety,
and welfare in light of the st ate’s paramount concern for the
protection of its air, water, la nd and other natural resources
from pollution, impairment, or destruction. Economic
considerations alone shall not constitute a defense hereunder.

Minn. Stat. § 116B.04(b) (2018).
The Minnesota Supreme Court has elaborat ed on a defendant’s burden of proof in
establishing an affirmative defense in a MERA action, stating:
Section 116B.04 requires defe ndants who do not rebut a
plaintiff’s prima facie case to prove (1) that there is no feasible
and prudent alternative and (2) that the conduct in issue is
consistent with and reasonably required for the promotion of
the public health, safety, and we lfare in light of the state’s
paramount concern for the protec tion of its natural resources.
In deciding whether defendants have established an affirmative
defense under MERA, the trial court is not to engage in wide-
ranging balancing of compensa ble against non-compensable
impairments. Rather, protection of natural resources is to be

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given paramount consideration, and those resources should not
be polluted or destroyed unless there are truly unusual factors
present in the case or the cost of community disruption from
the alternatives reaches an extraordinary magnitude.

State by Powderly v. Erickson , 285 N.W.2d 84, 88 (Minn. 1979); see also
State by Archabal v. County of Hennepin, 495 N.W.2d 416, 426 (Minn. 1993).
Appellants challenge both the district cour t’s factual findings and its interpretation
of the applicable legal standard in reaching its conclusion that respondents established an
affirmative defense. “[C]onclusions of law in a MERA action are prop erly reviewable by
this court without any deference to the trial court,” id. at 420, while “the clearly erroneous
standard governs the appellate court in re viewing a trial court’s findings of fact.”
Krmpotich v. City of Duluth, 483 N.W.2d 55, 56 (Minn. 1992).
The district court concluded that respon dents established an affirmative defense
because there are no “feasible and prudent alternatives to demolition.” The court noted
DEDA’s rejection of the Pastoret, LLC and OCH/Hoeft proposals for their failure to
demonstrate their financial viability as pr udent, and characterized DEDA’s concern
regarding the proposals’ financing as “not me rely an economic consideration” because
inadequate funding created a risk that the rehabilitation of the property would not be
completed and it would again fa ll into a neglected state. Th e court further noted that
DEDA’s other cited reasons for rejecting the proposals, namely “that the housing mix in
both proposals was not what was sought in the RFP . . . , there was low job creation, there
did not appear to be any commercial development in the mix, and there was an inadequate
increase to the tax base,” were valid. The c ourt concluded th at because neither of the

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proposals presented a feasible and prudent alternative, and because no one else had stepped
forward to purchase the property or redevelop it, the only options were to leave the property
in its dilapidated state or demolish it. The court characterized the lack of any viable
proposal to rehabilitate the property as “truly unusual factors” and determined that DEDA
had met the standard established in Archabal.
We agree with appellants that the district court erred with regard to the applicable
governing legal standard to determine whether a defendant has established an affirmative
defense to a MERA claim. MERA clearly stat es that “[e]conomic considerations alone
shall not constitute a defense. ” Minn. Stat. § 116B.04(b). Yet, all of the considerations
discussed by the court as justification for DEDA’s rejection of the Pastoret, LLC and
OCH/Hoeft proposals are economic in nature. While the court described DEDA’s concern
about the proposals’ financing as “not mere ly an economic consideration” because
potential funding shortfalls coul d prevent any rehabilitation of the property from being
completed and create a scenario where the property continued in its neglected state, the
possibility of such a developm ent does not transform economic considerations into non-
economic considerations. The court therefor e erred in concluding that respondents
established that there are no prudent and feasible alternatives to the property’s demolition,
and that the absence of any such alternatives presented “truly unusual factors.”
Because the district court did not apply the correct legal standard to respondents’
affirmative defense, we need not consider the remaining issues that appellants raise in their
brief. We reverse and remand the case to the di strict court for further consideration of
respondents’ affirmative defense under s ection 116B.04 and the supreme court’s

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jurisprudence. On remand, the district court shall restore the temporary injunction against
respondents’ demolition of the property during the pendency of this action and shall require
respondents to perform all maintenance and re pairs necessary to pr event the property’s
further deterioration.
Reversed and remanded.