                         This opinion will be unpublished and
                         may not be cited except as provided by
                         Minn. Stat. § 480A.08, subd. 3 (2014).

                              STATE OF MINNESOTA
                              IN COURT OF APPEALS
                                    A14-0865

                           Volunteers of America-Minnesota,
                                       Appellant,

                                           vs.

                                   City of Saint Paul,
                                      Respondent.

                                Filed January 20, 2015
                                       Affirmed
                                   Bjorkman, Judge


                             Ramsey County District Court
                               File No. 62-CV-13-7487

Thomas L. Johnson, Gregory R. Merz, Gray, Plant, Mooty, Mooty & Bennett, P.A.,
Minneapolis, Minnesota (for appellant)

Sara R. Grewing, St. Paul City Attorney, Lawrence J. Hayes, Jr., Assistant City Attorney,
St. Paul, Minnesota (for respondent)

      Considered and decided by Connolly, Presiding Judge; Halbrooks, Judge; and

Bjorkman, Judge.

                        UNPUBLISHED OPINION

BJORKMAN, Judge

      Appellant Volunteers of America-Minnesota (VOA) challenges respondent City of

St. Paul’s denial of its application for a conditional-use permit (CUP), arguing that the
city’s denial of the CUP and requested special-condition modification is arbitrary and

capricious. We affirm.

                                          FACTS

       VOA is a faith-based, nonprofit organization that operates a residential re-entry

center in Roseville for adults transitioning out of the federal corrections system. The

Roseville center is licensed by the Minnesota Department of Corrections and operates

under a contract with the federal government. The contract requires VOA to provide a

variety of supportive services, and VOA employs 20 full-time staff to meet this

requirement. VOA also receives a per diem payment from the federal government for

each resident housed at the Roseville center. Under this arrangement, the Roseville

center only generates sufficient revenue to operate when it houses 74 residents.

       VOA must relocate the Roseville center due to the expiration of its lease. VOA

identified 1394 Jackson Street in St. Paul as a suitable site and signed a purchase

agreement in 2011. The Jackson Street property has served as a community-residential

facility in the past, at times housing over 100 residents. It is located in the Jackson-

Arlington area, which is generally bounded by Arlington Avenue on the north, Jackson

Street on the west, Maryland Avenue on the south, and Interstate 35E on the east. VOA

proposes to operate the Jackson Street center with 74 residents so it can continue to

provide the staffing and services necessary under its federal contract.

       The Jackson Street property is zoned I-1, “light industrial,” so VOA must secure a

CUP to operate a residential facility there. St. Paul, Minn., Legislative Code (SPLC)

§ 66.521 (2013). To obtain a CUP, VOA must satisfy the zoning code’s five general


                                             2
conditions and six special conditions related to correctional-community residential

facilities. The five general conditions require VOA to show:

                        (a) The extent, location and intensity of the use will be
                 in substantial compliance with the Saint Paul Comprehensive
                 Plan and any applicable subarea plans which were approved
                 by the city council.
                        (b) The use will provide adequate ingress and egress to
                 minimize traffic congestion in the public streets.
                        (c) The use will not be detrimental to the existing
                 character of the development in the immediate neighborhood
                 or endanger the public health, safety and general welfare.
                        (d) The use will not impede the normal and orderly
                 development and improvement of the surrounding property
                 for uses permitted in the district.
                        (e) The use shall, in all other respects, conform to the
                 applicable regulations of the district in which it is located.

SPLC § 61.501 (1981). The Saint Paul Comprehensive Plan (comprehensive plan)

adopted February 24, 2010, is the relevant plan for purposes of section 61.501(a). The

“applicable subarea plan” is the North End-South Como District 6 Plan (district plan).1

       The only special condition at issue is section 65.154(d) of the zoning code,

which limits the number of residents housed at a community residential facility

licensed by a correctional agency to 16 residents. SPLC § 65.154(d) (2005). VOA

requested an upward modification of this limit to allow 74 residents at the Jackson

Street center.

       VOA’s CUP application was initially reviewed by the staff of the St. Paul

Planning Commission’s zoning committee. The zoning committee reviewed and adopted

the staff report’s findings and recommended approval of the CUP and special-condition

1
 The district plan also refers to the 1991 Jackson-Arlington Small Area Plan, which has
been decertified.

                                                3
modification to the planning commission. The planning commission approved the CUP

and granted an upward modification allowing up to 32 residents.

         VOA appealed the denial of its request for a 74-resident modification.         The

District 6 Planning Council appealed the issuance of the CUP. The St. Paul City Council

granted the district’s appeal and denied VOA’s CUP application on the ground that the

general conditions in section 61.501 are not satisfied.2

         VOA filed for judicial review of the denial in district court. Both VOA and the

city moved for summary judgment.           The district court granted the city’s motion,

concluding that the denial of the CUP is not arbitrary or capricious. VOA appeals.

                                      DECISION

         On appeal from a district court’s decision affirming a city’s denial of a CUP, this

court independently reviews the record and the city council’s decision without affording

any special deference to the district court’s review. Scott County Lumber Co. v. City of

Shakopee, 417 N.W.2d 721, 726 (Minn. App. 1988), review denied (Minn. Mar. 23,

1988).     Our review is limited to determining whether denial of the permit was

unreasonable, arbitrary, or capricious. Roselawn Cemetery v. City of Roseville, 689

N.W.2d 254, 258 (Minn. App. 2004). If a city’s denial is based on a legally sufficient

reason and supported by the facts, it is not unreasonable, arbitrary, or capricious. C.R.

Invs., Inc. v. Vill. of Shoreview, 304 N.W.2d 320, 325 (Minn. 1981).            The permit

applicant has the burden to persuade this court that the city’s reasons for denying a CUP


2
  The city did not address the requested special-condition modification because it denied
the CUP.

                                              4
lack factual support in the record or are legally insufficient. Hubbard Broad., Inc. v. City

of Afton, 323 N.W.2d 757, 763 (Minn. 1982).

       The city determined that the planning commission erred in finding that the

proposed Jackson Street center satisfies all five general conditions of the zoning code.

First, the city concluded that the Jackson Street center is not in “substantial compliance”

with the comprehensive and district plans, which identify industrial redevelopment as a

key priority for the area. See SPLC § 61.501(a). Second, the city determined that the

Jackson Street center would impede the development of the surrounding industrial

properties. See SPLC § 61.501(d). VOA argues that these findings are arbitrary and

capricious because the city ignored evidence that the Jackson Street center is compatible

with the relevant plans and would not hinder the area’s industrial redevelopment. We

address each finding in turn.

I.     The city’s finding that the Jackson Street center does not substantially
       comply with the comprehensive and district plans is not arbitrary and
       capricious.

       Both the comprehensive and district plans prioritize light industrial redevelopment

in the Jackson-Arlington area. The Land Use section of the comprehensive plan outlines

a policy to preserve existing industrial land and redevelop sites to support current and

new industrial uses. While the comprehensive plan creates a general framework to

facilitate industrial development in St. Paul, the district plan specifically addresses

industrial redevelopment in the Jackson-Arlington area. The district plan states that the

western portion of the area, where the Jackson Street center would be located, should be

redeveloped as “a business center with light industrial and office-service uses.” The


                                             5
district plan also notes the St. Paul Port Authority’s active involvement in redeveloping

the Jackson-Arlington area as an industrial and commercial center.

       VOA does not dispute these aspects of the comprehensive and district plans.

Rather, VOA contends that the city’s denial of the CUP is arbitrary because the Jackson

Street center is consistent with the comprehensive plan’s designation of the Jackson-

Arlington area as an “opportunity site.” The comprehensive plan states that development

in opportunity sites should focus on either mixed-use development or creation of

employment centers. VOA asserts that the Jackson Street center is consistent with both

of these goals. We disagree.

       First, we are not persuaded that the Jackson Street center constitutes a mixed-use

development. The comprehensive plan defines a mixed-use development as an area

“where two or more of the following uses could be located: residential, commercial,

retail, office, small scale industry, and open space uses.” VOA argues that the Jackson

Street center meets this definition by virtue of the fact that its staff members have offices.

But the space assigned to staff is part and parcel of the services VOA offers to its

residents. The proposed office space does not represent a separate and distinct use of the

facility to qualify as mixed-use.

       Second, we are not convinced that the Jackson Street center constitutes an

employment center. VOA contends that the center’s staffing requirements will bring 20

new jobs to the area. While the comprehensive plan does not define employment center,

we agree that the staff positions would be new to the Jackson-Arlington area. But we




                                              6
agree with the city that the positions will likely be filled by existing staff from the

Roseville center.

       In the alternative, VOA contends that because residential uses are not per se

disallowed in I-1 zones, the city cannot, as a matter of law, deny a CUP application on

the ground that the Jackson Street center is residential. We disagree. The Jackson Street

center is not permitted as of right; it is a conditional use. By definition, the city has

discretion to assess the nature of a proposed conditional use and grant or deny a permit

based on the circumstances. Under the zoning code, a key aspect of exercising this

discretion includes examining whether the proposed use complies with the

comprehensive and district plans.          As noted, both plans prioritize industrial

redevelopment in the Jackson-Arlington area. The residential Jackson Street center is

inconsistent with that directive.

       Where, as here, evidence supporting each party’s contention can be found in the

record, a city’s decision is not arbitrary and capricious simply because reasonable minds

may differ on the appropriate conclusion. See White Bear Docking & Storage, Inc. v.

City of White Bear Lake, 324 N.W.2d 174, 176 (Minn. 1982) (stating that the “mere fact”

a court might have reached a different conclusion does not invalidate the city’s decision if

it “acted in good faith and within the broad discretion accorded [it]”). And the record

contains ample evidence to support the city’s conclusion that the Jackson Street center

would not substantially comply with the comprehensive and district plans.

       The city indicated that the area is poised to carry out the type of industrial

redevelopment envisioned in the comprehensive and district plans due to several major


                                             7
road construction projects that are nearing completion. The St. Paul Port Authority

intends to assist with this redevelopment and expressed concern that the Jackson Street

center might hinder its efforts. Furthermore, the city correctly noted that the desire to

redevelop the area as an industrial corridor goes back approximately 30 years. These

factors support the finding that the Jackson Street center does not align with the relevant

plans, and we defer to the city when its factual basis for denying a CUP has even “the

slightest validity.” Roselawn Cemetery, 689 N.W.2d at 261 (quotation omitted). On this

record, we conclude that the city’s determination that the Jackson Street center was not in

substantial compliance with the relevant plans is not arbitrary and capricious.

II.    The city’s finding that the Jackson Street center would impede normal and
       orderly development is not arbitrary and capricious.

       The city found that relocating a residential use to the Jackson Street property “will

impede any new industrial or office park development that is likely to come to the area

based upon the pending improvements to 35E and Maryland Avenue.” In making this

determination, the city repeated its concern that the Jackson Street center would be at

odds with the type of industrial development that has long been an area priority. VOA

argues the city improperly based its finding on the sole fact that the Jackson Street center

would be a residential use, and ignored evidence that similar VOA facilities have not

impeded industrial development. Additionally, VOA asserts that the city overlooked the

Jackson Street property’s history of residential use.

       As noted above, the record reflects that the Jackson-Arlington area is currently

well-positioned to experience the type of industrial development envisioned in both the



                                             8
comprehensive and district plans. The city observed that this development has been a

long time coming, over 30 years. Moreover, the St. Paul Port Authority echoed the city’s

concerns about placing a residential use in a light industrial zone, stating in the record

that the loss of industrial land to a residential use could hinder its redevelopment plans.

With these concerns in mind, the city’s reluctance to permit a non-conforming use in the

Jackson-Arlington area at this critical juncture is reasonable.

       In contrast, VOA’s contention that the Jackson Street center will not impede light

industrial development is mostly speculative.            VOA points to the “extensive

redevelopment” of the area around its community residential facility near Lake Street in

Minneapolis as evidence that its proposed residential use will not negatively impact

development in the Jackson-Arlington area. Specifically, VOA notes that redevelopment

surrounding its Lake Street center includes “a U.S. Bank branch building, a Target store,

a Rainbow store, a Cub store, a public library, senior and multi-family housing, a U.S.

Post Office, a Minneapolis Police precinct station, and a multitude of other new industrial

and commercial residential developments.” We are not persuaded that the success of the

primarily non-industrial development near VOA’s Lake Street facility is predictive of the

proposed Jackson Street center’s impact on light industrial development.              Such

extrapolation based on the experience of a different facility also does not account for the

varied local dynamics that may impact economic development.

       VOA also points out that its current facilities in Roseville and along Lake Street

“show a successful track record and positive feedback from neighbors.” This positive

track record might alleviate concerns about the Jackson Street center’s correctional


                                              9
nature, but it does not establish that the center would not impede future plans for

industrial and commercial development.

       Finally, VOA argues that the city’s decision is arbitrary and capricious because the

Jackson Street property has a history of residential use. We disagree. First, even if the

property previously housed a residential facility, the city’s decision is consistent with the

district plan’s current policy favoring the elimination of non-conforming residential uses

in industrial-zoned areas. Second, the city, as far back as 1991, has recognized that the

residential use of the Jackson Street property is “inconsistent with the general character

of development in the surrounding area.” As such, it is reasonable for the city to decline

to permit a conditional residential use going forward in order to facilitate well-established

plans to uniformly develop the area as an industrial corridor.

       We are mindful of the important services VOA provides to its residents and the

community. The record contains strong expressions of support for the Jackson Street

center, including statements addressing the positive impact existing VOA facilities have

had on their current neighborhoods. Opposition is also found in the record, focusing on

the loss of industrial land and jobs, an over-concentration of residential and public

housing facilities, and the negative impact on the area tax base.          In short, there is

evidence to support both the grant and the denial of a CUP. And after reviewing the

competing evidence, the city made a well-supported determination that the Jackson Street

center failed to meet section 61.501(d) of the zoning code because it is inconsistent with

the city’s established vision of the area as a growing light industrial center.




                                              10
      On this record, we conclude that the city’s determination that the Jackson Street

center would impede the normal and orderly development of the area is not arbitrary and

capricious. Having determined that neither of the city’s bases for denying the CUP is

improper, we need not address VOA’s request for a special-condition modification.

      Affirmed.




                                          11
