PPB Holdings, L.P., Appellant,

This opinion is nonprecedential except as provided by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
A24-0516

PPB Holdings, L.P.,
Appellant,

vs.

County of Carver,
a political subdivision of the State of Minnesota,
Respondent.

Filed January 21, 2025
Affirmed
Reyes, Judge

Carver County District Court
File No. 10-CV-18-918

Patrick J. Neaton, Neaton & Puklich, PLLP, Chanhassen, Minnesota (for appellant)

Peter G. Mikhail, Joshua P. Weir, Kennedy & Graven, Chtd., Minneapolis, Minnesota (for
respondent)

Considered and decided by Reyes, Presiding Judge; Bratvold, Judge; and Larson,
Judge.
NONPRECEDENTIAL OPINION
REYES, Judge
In this partial condemnation proceeding following a taking of appellant’s property,
appellant challenges the district court’s denial of its motion for an interest-rate adjustment
in lieu of the presumed statutory rate. We affirm.

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FACTS
Respondent Carver County (the county) condemned a significant portion of
residential real-estate property and property rights owned by appellant PPB Holdings, L.P.,
in connection with a roadway-expansion project in November 2013. The county then took
possession of PPB’s property under Minn. Stat. § 117.042 (2022) by paying a “quick-take”
deposit of $122,000 with the court administrator, effective November 6, 2013. In
September 2018, three commissioners appointed by a district court awarded PPB $381,000
in just-compensation damages. PPB appealed the commissioners’ decision to the district
court and requested a jury trial.
In August 2021, a jury awarded PPB $786,000 in just-compensation damages. The
jury valued the property at $1,500,000 before the taking and $714,000 after the taking. The
district court entered judgment on the just-compensation damages on August 17, 2021. On
December 2, 2021, the county deposited $878,225.25 with the court administrator. This
deposit represented the $664,000.00 balance owed on the just-compensation award and
$214,225.28 in interest on the balance owed based on the statutory rate of 4% per annum
from November 6, 2013, to December 2, 2021, (the interest period), in accordance with
Minn. Stat. §§ 117.195 (2022) and 549.09, subd. 1(c) (2022). Nearly two years later, PPB
moved to have the interest rate increased from the statutory rate of 4% to PPB’s asserted
rate of 14.2% for the interest period, arguing that the statutory rate does not guarantee a
fair rate of return.
In support of its argument, PPB submitted an affidavit from Richard Dorsey, a
partner at PPB who is an experienced residential investor and licensed mortgage broker.
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Dorsey asserted that, if the county had paid PPB the entire award of $786,000 at the time
of the initial deposit, rather than the $122,000 quick -take deposit that the county initially
paid1, PPB would have invested that money into other residential real-estate properties,
such as townhomes and single-family properties. Dorsey calculated the 14.5% per annum
interest rate by “[c]ombining the aforesaid median sales price increase of 9.26% per year
in value [of a residential home], with the 7.35% per year rental income return” and
“allowing a 2.11% reduction in the aforesaid 16.61% annual investment return” on those
properties to cover “theoretical management costs” for the interest period. PPB’s median
sales price of a residential home is taken from Minneapolis Area Realtors’ data compiled
by NorthStar MLS, while the net rental-income return is based on Dorsey’s investment on
behalf of PPB in one townhome in Eden Prairie. PPB did not provide any factual support
for the 2.11% reduction to the rental-income return to cover any “theoretical management
costs” other than Dorsey’s averment.
In opposition to PPB’s motion, the county submitted an affidavit from Tom Kerber,
an investments manager in the Carver County Treasurer’s office in support of the 4%
statutory interest rate. Kerber concluded that investments in real estate were not low risk
based on information he obtained from other credible sources. For example, Kerber cited

1 We note that appellant’s brief and Dorsey’s first affidavit appear to assert that the interest-
rate calculation should be based on the entire award of $786,000 rather than the $664,000
balance owed. That is incorrect. The proper interest -rate calculation is based on the
$664,000 amount, which is the difference between the $786,000 damages award that the
county deposited in 2021 and the $122,000 quick-take deposit by the county effective
November 6, 2013. The appropriate rate of interest is determined by Minn. Stat. §549.09,
subd. 1(c)(1)(i) (2020). See Minn. Stat. § 117.195 subd. 1. The parties agree that the
statutory interest is for the interest period is 4%.
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to Bloomberg News, which stated that the real-estate market experienced major swings
between 2016 to 2022. Kerber also cited to data he reviewed from the St. Louis Federal
Reserve, which noted that commercial real-estate prices “fluctuated wildly” from 2006 to
2022 and stated that multiple publications reported that residential real estate “experienced
dramatic market crashes.” Kerber further stated that, during the interest period, “U.S.
Treasury rates . . . remained below 3.0% and were frequently less than 2.0%” and that the
St. Louis Federal Reserve reported corporate bonds yielded “from 2.0% to just under 5%.”
Additionally, Certificates of Deposit (CDs) performed “briefly above 2% at the beginning
of the decade” in 2010 and “remained below 1.5% for the rest of the decade.”
Dorsey submitted a supplemental affidavit and later submitted a second affidavit.
Neither one addressed any of Kerber’s statements or data.
The district court denied PPB’s motion, determining that PPB failed to overcome
the presumption that the statutory rate is reasonable. This appeal follows.
DECISION
I. The district court retained jurisdiction to determine whether the interest rate
provided PPB with just compensation.

The county argues that the district court did not have subject- matter jurisdiction to
decide PPB’s motion for an interest-rate increase because PPB filed its motion for an
interest-rate adjustment after the district court entered final judgment. We disagree.
Subject-matter jurisdiction is a court’s “statutory or constitutional power to
adjudicate the case.” Giersdorf v. A & M Constr., Inc., 820 N.W.2d 16, 20 (Minn. 2012)
(quoting Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89 (1998)). “Subject matter
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jurisdiction . . . can be raised at any time in the proceeding.” Tischer v. Hous. & Redev.
Auth. of Cambridge , 693 N.W.2d 426, 430 (Minn. 2005). Whether a district court has
subject-matter jurisdiction is a question of law that this court reviews de novo. County of
Washington v. City of Oak Park Heights, 818 N.W.2d 533, 538 (Minn. 2012).
“Interest on a condemnation [award] from the time of the State’s possession until
the time of payment is an element of just compensation and as such the [district] court has
the authority to determine the rate of interest necessary to give the landowner just
compensation.” State by Spannaus v. Carney, 309 N.W.2d 775, 775 (Minn. 1981). The
district court should not strictly apply the statutory interest rates in a just-compensation
proceeding without considering whether the interest rate provides just compensation. Id.
at 776; see also State by Humphrey v. Baillon Co., 480 N.W.2d 673, 676 (Minn. App. 1992)
(reversing and remanding because district court did not independently determine what
interest rate would provide landowner with just compensation).
The county agrees that “the rate of interest on condemnation awards is a judicial
determination,” but nevertheless challenges the district court’s decision to hear and decide
PPB’s motion for an interest-rate adjustment because the district court had entered final
judgment. The district court entered final judgment on the just-compensation damages on
August 17, 2021. However, at that time, the county had not made a final payment on the
balance owed and, more importantly, the district court had not determined the interest to
be paid on the balance owed for the interest period. The county made a final payment on
December 2, 2021. Because the district court did not decide the issue of the appropriate
interest rate to be applied to the balance owed, PPB could challenge the interest rate the
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county applied. Cf. Spaeth v. City of Plymouth , 344 N.W.2d 815, 825-826 (Minn. 1984) (concluding that
district court had continuing jurisdiction to determine amount of attorney fees awarded to
Spaeth after entry of judgment). We therefore conclude that the district court had subject-
matter jurisdiction to hear PPB’s motion and decide the appropriate interest rate to provide
PPB with just compensation. Baillon Co., 480 N.W.2d at 676.
II. The district court appropriately applied the presumptive statutory interest
rate.

PPB argues that the district court erred by applying the presumptive 4% statutory
interest rate authorized by section 549.09, subdivision 1(c)(i), because its own real-estate
investments for the interest period were “a safe, prudent and secure investment with steady
annual appreciation.” We are not persuaded.
Under the United States and Minnesota constitutions, a property owner is entitled
to just compensation for property taken by the government for public use. U.S. Const.
amend. V; Minn. Const. art. I, § 13. Interest on a condemnation award from the time of
the taking until the time of payment is an element of just compensation. Carney, 309
N.W.2d at 776.
“In [] condemnation actions, the [district] court should presume that the statutory
rate is reasonable and, therefore, meets the requirements of just compensation and should
order judgment at that rate unless the condemnee rebuts this presumption and affirmatively
shows that another rate is reasonable and affords just compensation.” State by Humphrey
v. Jim Lupient Oldsmobile Co., 509 N.W.2d 361, 363-64 (Minn. 1993). This statutory
interest rate “provides a floor and not a ceiling on the rate of interest payable to the
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landowner.” Baillon, 480 N.W.2d 673 at 676. When considering whether another interest
rate is reasonable, district courts look to ones that (1) guarantee safety of principal and
(2) are very low risk. Lupient, 509 N.W.2d at 363-66.
The supreme court has provided a nonexclusive list of very low-risk investments
that justify an interest-rate adjustment which include: “certificates of deposit from federally
insured banks, United States Treasury Bills with maturities within the relevant time period,
other government bonds, and long[-]term corporate bonds from AAA rated companies with
maturities within the relevant time period.” Id. at 364 n.3.
Whether an interest rate provides just compensation is a mixed question of law and
fact. Lupient, 509 N.W.2d at 365 (Minn. 1993) (Simonett, J., concurring). “When
reviewing mixed questions of law and fact, [this court] correct[s] erroneous applications of
law, but accord[s] the [district] court discretion in its ultimate conclusions and review[s]
such conclusions under an abuse of discretion standard.” Porch v. Gen. Motors Acceptance
Corp., 642 N.W.2d 473, 477 (Minn. App. 2002) (quotations omitted).
The supreme court’s decision in Lupient is instructive. In Lupient, the state acquired
title and right to Lupient’s property and deposited appraised damages with the court
administrator. Lupient, 509 N.W.2d at 362. The commissioners later awarded Lupient an
additional award of just-compensation damages. Id. Months later, the state deposited its
final payment with the district court based on the statutory interest rate, which averaged
7% per year. Id . Lupient argued that the state should pay an increased interest rate of
13.2% per year based on a pension plan. Id. The supreme court concluded that Lupient
had not overcome the presumption of applying the statutory interest rate because the
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evidence showed that the rate of return on the pension plan “varied wildly from year to
year, from 23.4 percent in 1989, to 0.6 percent in 1990, and then back up to 23 percent in
1991.” Id. at 364. The supreme court further stated that “[t]hese fluctuations do not appear
to be consistent with a low-risk investment.” Id.
PPB’s argument fails for several reasons. First, PPB relies on Dorsey’s affidavit
averring that the median residential home sales price increased during the interest period
by 9.26%. But Dorsey’s own exhibit C to his supplemental affidavit shows significant
fluctuations in the historical median sales price of homes.
Second, PPB failed to rebut Kerber’s affidavit which highlighted significant market
fluctuations during the interest period. Specifically, Kerber stated that “the real estate
sector was up 10.70% in 2017 and then in 2018 it was down -2.27%. In 2019, it was up
again 28.84% and then in 2020 it was down - 2.27%. In 2021 it was up 45.97% and then
in 2022 it was down -26.20%.” Like in Lupient, these wildly fluctuating numbers do not
reflect an investment that is “very low risk” or one that “guarantee[s] the safety of
principal.” Id. By contrast, interest rates for corporate bonds, CDs, and government bonds
generally remained below 4%. Simply put, there is no parallel that can be drawn between
these “very low risk” investments and residential real-estate investments.
Third, PPB’s purported rental-income return is based on PPB ’s investment in one
townhome following the collapse of the real-estate market rather than based on broad data
from an independent, reliable third party during the interest period. This is hardly the basis
for a reasonable, alternative investment that would guarantee safety of principal and that is
very low risk. Id.
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We therefore conclude that the district court appropriately applied the law and did
not abuse its discretion by denying PPB’s motion for an interest-rate adjustment.2
Affirmed.

2 Because we affirm the district court’s decision on the merits, we do not address the
county’s additional arguments on laches and waiver.