In the Matter of Don and Beverly Goerisch Replacement Housing Payment Claim.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-0939

In the Matter of Don and Beverly Goerisch
Replacement Housing Payment Claim.

Filed April 19, 2021
Affirmed
Slieter, Judge

Office of Administrative Hearings
File No. 5-8034-36744

Jon W. Morphew, Morphew Law Office, PLLC, Minneapolis, Minnesota (for relators Don
and Beverly Goerisch)

Douglas D. Shaftel, Nick P. Valle, Kennedy & Graven, Chartered, Minneapolis, Minnesota
(for respondent City of Brooklyn Park)

Considered and decided by Johnson, Presiding Judge; Hooten, Judge; and Slieter,
Judge.
NONPRECEDENTIAL OPINION
SLIETER, Judge
This is an appeal from a decision of an administrative-law judge (ALJ) favoring
respondent City of Brooklyn Park regarding a condemnation-related real estate transaction.
Relators Don and Beverly Goerisch argue that the ALJ erred by concluding that relators
were not eligible for a “replacement housing payment” following the sale of their property
to respondent. Because the record supports the ALJ’s conclusions and relators demonstrate

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no mistake of either law or fact so as to overcome the ALJ’s presumption of correctness,
we affirm.
FACTS
The parties submitted a statem ent of undisputed facts to the ALJ. According to
those stipulated facts, respondent began plans for the construction of an interchange along
U.S. Highway 169 at 101st Avenue North in Brooklyn Park in 2014. As part of this project,
respondent was required to acqui re a portion of property bel onging to relators. Relators’
entire property consisted of 271,658 square feet (6.24 acres), of which 32,316 square feet
(0.74 acres) would be required to facilitate construction of the interchange (the “necessary
property”). Of the “necessary property,” 26,60 0 square feet (0.61 acres) consists of “a
residential dwelling and related site improvements” (the “displacement dwelling”).
Respondent notified relators of the planne d condemnation of their property in July
2019. Respondent subsequently arranged for an appraisal of the property—the “necessary
property” was assessed at a value of $236,700 and the remainder of the property was valued
at $836,000, for a total market value of $1,073,000.
Respondent initially offered to purchase the “necessary property” for $249,998.
Respondent informed relators that they would be eligible for a “replacement housing
payment” in the amount of $75,002 if they accepted this offer. This amount was calculated
by subtracting the proposed sale price ($24 9,998) from the cost of a “comparable
dwelling,” stipulated by the parties to equal $325,000. Relators declined this offer.
Respondent subsequently submitted a second purchase offer of $349,998 for the
“necessary property” or, alternatively, $1,5 20,820 for the entire property. Relators

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declined both offers. Finally, respondent extended a third offer, withou t an allocation
attributable to the “necessary property,” to purchase the en tire property for $1,620,000.
This offer was accepted by relators. Respon dent then recalculated relators’ potential
eligibility for a “replacemen t housing payment” based on this purchase price and
determined the relators to be ineligible. Relators appealed this decision to the ALJ.
Based upon the undisputed facts before the ALJ, the parties sought summary
disposition.1 Ultimately, the ALJ concluded th at relators were not entitled to a
“replacement housing payment.” The ALJ granted respondent’s motion for summary
disposition and denied relators’ motion for summary disposition. This appeal follows.
DECISION
“On appeal, we presume the [Office of Administrative Hearings’s (OAH’s)]
decision is correct.” Lewison v. Hutchinson , 929 N.W.2d 444, 44 7 (Minn. App. 2019)
(citing Fine v. Bernstein, 726 N.W.2d 137, 142 (Minn. App. 2007) (holding that agency
decision-maker presumption of correctness extends to OAH administrative judges), review
denied (Minn. Apr. 17, 2007)). However, this court may reverse an ALJ’s decision
if the substantial rights of the petitioners may have been
prejudiced because the admini strative finding, inference,
conclusion, or decisions are:

(a) in violation of co nstitutional provisions; or
(b) in excess of the statutor y authority or jurisdiction of
the agency; or
(c) made upon unlawful procedure; or
(d) affected by other error of law; or

1 “Summary disposition is the administrative [law] equivalent of summary judgment.”
Pietsch v. Minn. B. of Chiropractic Exam’rs, 683 N.W.2d 303, 306 (Minn. 2004).

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(e) unsupported by substantia l evidence in view of the
record as submitted; or
(f) arbitrary or capricious.

Minn. Stat. § 14.69 (2020). Review of a grant of summary disposition is de novo, and
“consists of determining whether there are any genuine issues of material fact and whether
there was an error in applying the law to the facts.” Pietsch, 683 N.W.2d at 307.
Resolution of this matter in volves analysis and applica tion of the federal Uniform
Relocation Assistance and Real Property Acquisition Policies Act (URA), which requires
authorities to accommodate individuals who are displaced from their homes for federally-
funded public projects. 42 U.S.C. §§ 4601-4655 (2018).
2 One such accommodation at
issue is known as a “replaceme nt housing payment,” which is a payment made to former
homeowners equal to the difference betwee n the “acquisition cost of a displacement
dwelling” and the cost of a “comparable replacement dwelling.” 49 C.F.R.
§ 24.401(c)(1)(i)-(ii) (2020). Additionally, 49 C.F.R. § 24.403(a)(7 ) (2020) states the
general rule that if a property is:
part of a property that containe d another . . . space used for
nonresidential purposes, and/or is located on a lot larger than
typical for residential purposes, only that portion of the
acquisition payment which is ac tually attributable to the
displacement dwelling shall be considered the acquisition cost
when computing the replacement housing payment.

2 Pursuant to the Minnesota Uniform Relocati on Act, “[i]n all acquisitions undertaken by
any acquiring authority . . . the acquiring authority, as a cost of acquisition, shall provide
all relocation assistance, services, payments and benefits required by the [URA].” Minn.
Stat. § 117.52, subd. 1 (2018).

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As such, only the acquisition cost of the actual “displac ement dwelling” should be
considered, rather than the purchase price of the entire property.
The crux of the parties’ dispute, therefor e, is the portion of the total purchase price
that should be allocated to the acquisition cost of the “displacement dwelling.” 3 T h i s
dispute derives from the absence in the sale agreement of an express allocation of the total
purchase price, combined with silence in the URA and rela ted regulations regarding how
to calculate the acquisition cost of the “displ acement dwelling” when the total price paid
by the governmental entity includes more than the price of the “displacement dwelling.”
The parties stipulated that a “compara ble dwelling” was reasonably valued at
$325,000. In arriving at its conclusion that no “replacement housing payment” was owed
to the relators, the ALJ exam ined the prior offers made by respondent to relators—
specifically, their prior offers to pay either $349,998 for the “necessary property” or
$1,520,820 for the entire property. The ALJ concluded that, “because the amount paid to
[relators] for the Displacement Dwelling site – at least $349,998 – exceeds the amount
necessary to acquire the comparable property – $325,000 – [relators] are not entitled to a
differential replacement housing payment.”
Relators believe this approa ch is improper and that wh en the correct method of
valuation is used they are entitled to a “rep lacement housing payment” in the amount of
$132,397. They argue that the ALJ should have calculat ed the purchase price of the

3 Both the ALJ and parties on appeal appear to conflate the price offered for the “necessary
property” with the price that was paid for the “displacement dwelling.” However, because
the parties presented the ALJ w ith stipulated facts, this di screpancy does not affect our
analysis.

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“necessary property” by dividing the total purchase price ($1,620,000) by the total number
of square feet (271,658), then multiplying that dollar amount ($5.96 per square foot) by the
square footage of the “necessary property” (32, 316). By this approach, the price paid for
the “necessary property” would be calculated at $192,603—$132,397 less than the price of
the $325,000 “replacement dwelling.”
Relators rely upon an unpublis hed decision of this court, In re Estate of Fischbach,
No. A16-1223, 2017 WL 1833248 (Minn. App. May 8, 20 17), as support for the square-
foot method of valuation for the “necessary property.” However, unlike in this matter, the
court in Fischbach considered a “displacement dwelling” which “had no independent value
because the property's best use had ch anged from residential to commercial.” Id., at *3.
This is a critical distinction, which makes the reasoning of Fischbach unpersuasive—in the
present case, the property’s best use following the sale was described in the appraisal:
It is our opinion that the existing improvements add value to
the site as though vacant, dictating a continuation of its current
use. It is our opinion that the Highest and Best Use of the
subject property is to split the allocated homesite area of the
site and continue the existing residential dwelling use, and then
utilize the remainder of the land for mixed-use related
development in an assemblage scenario.

(Emphasis added). Therefore, the record de monstrates that the best use of the entire
property in this case after the sale is mixed-use, involving both co mmercial development
as well as the existing residential dwelling. This supports the ALJ’s finding that the
“displacement dwelling” should be valued differently than the remaining property. Though
a per-square-foot calculation may be appropriate for properties having a single best use,
the record supports the ALJ’s decision to decline use of this methodology.

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The stipulated facts of this case and the relevant federal statutes provided the ALJ
with no roadmap for calculation of the acquisition cost of the “displacement dwelling.”
We are satisfied the record supports the calculation of the ALJ, which resulted in denial of
a “replacement housing payment.” As noted above, “we presume the OAH’s decision is
correct.” Lewison, 929 N.W.2d at 447.
Additional support for the ALJ’s ultimate conclusion is shown by the appraised
value of the “necessary property” in proportion to the overall purchase price. The appraised
value of the “necessary property,” $236,700, equals 22% of the total appraised value of the
property, $1,073,000. Twenty-two percent of the final pr ice paid for the entire property,
$1,620,000, is $357,000— an amount greater th an the $325,000 “replacement dwelling.”
This method of valuation confirms the ALJ’ s conclusion to deny relator a “replacement
housing payment.”
The parties stipulated to the facts and su bmitted this matter to the ALJ via competing
motions for summary disposition, thereby “tac itly agree[ing] that there exist no genuine
issues of material fact.” Am. Family Mut. Ins. Co. v. Thiem, 503 N.W.2d 789, 790 (Minn.
1993). Relators have cited to no authority which requires us to reverse for error of fact or
law. We conclude that relators have faile d to overcome the pres umption of correctness
given to the ALJ. Lewison, 929 N.W.2d at 447.
Affirmed.