Twin Lakes settlement reached, but problems are 'not going away': Minneapolis MN Star Tribune, 8/14/07

Roseville forfeited the right to $827,650 in a settlement with developers, closing the book on a doomed proposal to develop a blighted area. But the city still must decide what to do with the land.

By Eric M. Hanson

It's not likely to end the debate about what to do with the large industrial and trucking area in northwestern Roseville called Twin Lakes.

But a recent court settlement between the city and developers probably is the exclamation mark on the final sentence of the six-year saga of an ill-fated 275-acre "master planned" mixed-use redevelopment project.

In 2005, citizens sued the city, arguing that the City Council needed a super majority of four out of five to ratify it. The citizens won the case when the Minnesota Supreme Court declined to hear an appellate court's decision that went in favor of the residents' group.

Afterward, stymied by the opposition and a slumping real-estate market, the developers killed the project. The city took control of an $827,650 letter of credit that the developers had taken out as a guarantee for the city's expenses related to eminent domain proceedings.

The developers then sued to get the money back. Now, the settlement returns the $827,650 to the developers and gives the city $100,000 for expenses.

"This really gives us an opportunity to put all litigation involving Twin Lakes to rest," said Paul Reuvers, the lawyer who represented the city.

All told, he said, the city will be on the hook for about $130,000 in other costs.

But that's in addition to thousands of dollars the city spent on consultants and other expenses related to the project, said City Council Member Amy Ihlan, a longtime critic of the project and the process by which it was approved.

She estimated that the city has paid $300,000 to $400,000 in related expenses just in the last few years.

As with many of the votes associated with the Twin Lakes project, the City Council's decision to accept the terms of the court settlement was divided 3-2, with Ihlan and Tom Kough voting against it.

"That letter of credit was money that we could have used, and were intended to use, to cover these eminent domain expenses," she said. " ... There's no way now for the city to collect anything from the developers at all, other than that $100,000 that they are paying us as part of the settlement."

At the very least, Ihlan said, the city should have consulted a different lawyer to get a second opinion because taxpayers will now bear any costs beyond $100,000 associated with the eminent domain proceedings.

Mayor Craig Klausing, who has supported the redevelopment project for years and won reelection against Ihlan last fall in a campaign where the project had been an issue, defended the settlement.

It's true that the city gave up some claims that it otherwise might have been entitled to, he said, but it did so in exchange for the assurance that it can now move on to other possible projects and with $100,000 to cover environmental reports and other costs.

The roughly $130,00 that the city is out, Klausing said, is "something that the city will have to shoulder now," a necessary concession that was made in order to move on.

The shape of future development in the area isn't known, although a hotel and restaurant have been proposed for one part of the area, as well as an FBI office.

Ihlan said she would like to see the city get more broad-based agreement in future development proposals.

The reason this project failed, she said, was a failure of leadership to build a consensus.

"The litigation [that killed the project] was preventable," she said. "It could have been prevented by building community support and doing the necessary environmental review and just being cautious about taking on risks for the taxpayers."

Klausing said he hasn't given up hope that the area can be redeveloped in a comprehensive way, rather than piece by piece.

"This settlement ends this particular development plan. But the area, Twin Lakes, remains there. There is significant blight that remains there. There's soil contamination that remains there," he said. "So something needs to be done with that area. That's not going away."

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