Court Opinion

ID: 9686691
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:01:06.987616+00
Date Added: 2024-06-11T18:18:21.390662
License: Public Domain

HANSON, Justice
(dissenting).
I respectfully dissent. The City’s proposal to place revenue-generating bill*11boards adjacent to Highway 10 on The Bridges Golf Course is an innovative solution to serious budgetary concerns. It appears to have been chosen after due consideration of all relevant policy interests, including those of highway convenience, safety and beautification. Because municipalities have the authority to allow billboards within their boundaries, except as restricted by federal and state law, I would conclude as a matter of law that (1) a public golf course that is operated to make a profit is a “business,” whether owned by a private entity or a municipality; (2) a municipally owned golf course that has been zoned PF meets the federal criteria for permitting the erection of billboards in areas that are “zoned industrial or commercial under authority of state law;” and (3) such a course also meets the state criteria for the erection of billboards in “business areas.”

Standards of Review

In arriving at these conclusions, I did not consider it necessary or appropriate to give deference to the conclusions of the Commissioner of MNDOT. Although the standard of review applicable to fact questions decided by an administrative agency is one of substantial evidence, there does not appear to be any dispute on the underlying facts. The pertinent standards of review thus are those that authorize the reversal of an agency’s decision if it is “in excess of the statutory authority or jurisdiction of the agency” or “affected by other error of law.” Minn.Stat. § 14.69(b), (d) (2002). Generally, this court independently reviews questions of law, such as matters of statutory interpretation, and, in considering such questions, need not defer to the expertise of the agency. See, e.g., Arvig Tel. Co. v. Northwestern Bell Tel. Co., 270 N.W.2d 111, 114 (Minn.1978); St. Otto’s Home v. Minnesota Dep’t of Human Serv., 437 N.W.2d 35, 39-40 (Minn.1989).
Moreover, there is no basis in this record to conclude that the critical questions presented here — whether a municipal golf course is a “business,” is within a “business area” or is within a district “most appropriate for commerce, industry, or trade” — are ones that call on the Commissioner’s special knowledge or expertise. In fact, MNDOT has been inconsistent in its rulings on sign permits sought by governmental bodies. It has granted permits for property owned by the Minneapolis Community Development Agency, the MTC Company, the Minnesota State Fair Board, and the Metropolitan Airports Commission, among others. And, it has interpreted state and federal law to permit billboards on the Lost Spur Golf Course in Eagan, Minnesota, which is also zoned as a PF.

A. Federal and State Regulation of the Location of Billboards

The tenor of the Commissioner’s decision is that federal and state laws strictly prohibit the placement of billboards, with only narrow exceptions that are within the Commissioner’s discretion. This is not my view of the law. Federal and state billboard laws provide reasonable, not strict, regulation of the location of billboards. Those laws value both the need for highway safety and beautification and the legitimate role of billboards in our economy. They specifically permit billboards to be located in appropriate areas and they grant discretion to local zoning authorities, not to the Commissioner.

1. The Federal Highway Beautification Act

Federal law is focused on the regulation, not the prohibition, of billboards. While the purpose of the FHBA is “to protect the public investment in such highways, to *12promote the safety and recreational value of public travel, and to preserve natural beauty,” the mechanism chosen by Congress was not to directly control the erection of billboards, but to provide incentives to the states by conditioning the payment of ten percent of a state’s share of federal-aid highway funds on that state’s exercise of its powers to effectively control the erection of billboards. 23 U.S.C. § 131(a), (b) (2000). A state is deemed to have exercised effective control so long as it restricts the erection of billboards to adjacent areas that are “zoned industrial or commercial under [the] authority of State law.” Id. § 131(d). Policies adopted by the Federal Highway Administration, pursuant to the FHBA, provide that an adjacent area is considered to have been zoned commercial and industrial if it is within a district that is “most appropriate for commerce, industry, or trade, regardless of how labeled.” 23 C.F.R. § 750.703(a) (2003).
I conclude from this that the federal government is not concerned with the individual actions of municipalities allowing or denying the erection of billboards, but only with the systems implemented by states to regulate the erection of billboards. Further, although a state regulatory system could lawfully be more restrictive than that specified by federal law, the federal law makes it clear that a state will not forfeit federal-aid highway funds by allowing billboards in zoning districts that are “appropriate for commerce, industry or trade.” Finally, the federal law instructs that states are not to focus on the zoning labels used to describe a district, but upon its appropriate use for commercial, industrial or trade purposes. Specifically, the policies of the Federal Highway Administration support the view that the use of the PF zoning label does not determine whether a municipal golf course satisfies the federal criteria for the erection of billboards. Indeed, MNDOT’s grant of the permit to the Lost Spur Golf Course demonstrates that the PF label is not fatal.

2. The Minnesota Outdoor Advertising Control Act

Minnesota’s Act was enacted to comply with the terms of the FHBA, presumably to prevent any forfeiture of ten percent of federal-aid highway funding. Minn.Stat. ch. 173 (2002). Although Minnesota’s declaration of policy essentially adopts the federal goals (“to promote the general welfare of the people and to conserve the natural beauty of areas adjacent to certain highways”), it also recognizes the positive contribution of billboards (“inasmuch as outdoor advertising is an integral part of the business and marketing function, an established segment of the national economy, and a legitimate commercial use of property adjacent to roads and highways, it should be allowed to operate where other business and commercial activities are conducted * * *”). Minn.Stat. § 173.01 (2002). To that end, Minnesota’s regulation allows billboards to be located in “business areas.” Minn.Stat. § 173.08, subd. 1(8) (2002). “Business areas” are defined to mean “any part of an adjacent area which is (a) zoned for business, industrial or commercial activities under the authority of any law of this state or any political subdivision thereof; '* * Minn.Stat. § 173.02, subd. 17 (2002).
I conclude from this that Minnesota has recognized that the federal criteria for permitting billboards does not require that the zoning label be either “commercial” or “industrial.” In fact, from Minnesota’s broader statement of purpose, and its choice of the broad term “business areas,” I infer the intent to (1) be as permissive as the federal criteria allows and (2) focus on the use of the property, not on its ownership.
*13There is no suggestion in this record that Minnesota’s regulatory system, including its focus on “business areas,” fails to provide “effective control of the erection and maintenance * * * of outdoor advertising signs,” within the meaning of the FHBA. Accordingly, the precise question presented is whether the language by which the Minnesota legislature has exercised control of billboards permits the erection of billboards on a municipally owned golf course that has been zoned as a PF.

B. The Bridges Golf Course is Operated as a Business

The Commissioner interpreted the term “zoned for business * * * or commercial activity” to be limited to activities conducted by private enterprises and to exclude all activities conducted by government, whether governmental or proprietary in nature. The court of appeals disagreed, holding that municipalities can engage in business activities and that The Bridges golf course qualifies as a business activity. In re Eller Media Company’s Applications for Outdoor Advertising Device Permits, 642 N.W.2d 492, 500 (Minn.App.2002). I agree with the court of appeals that the proper focus of the definition of business areas is on the use, not the ownership of the property. I also agree that the operation of The Bridges golf course, as conducted by the City in this case, is fully a business activity.
The majority opinion challenges these conclusions on essentially two grounds.

1. Does the Industrial Character of the Surrounding Area Matter?

The majority opinion suggests that the conclusion that the golf course is a “business area” can only be supported by relying on the business uses of the area surrounding the golf course. This misconstrues the City and Eller’s argument, as I understand it. The argument, first and foremost, is that the golf course, viewed in isolation, is a business area that is only zoned PF because it is owned by the City. This argument turns not on the zoning or use of the surrounding area but on the activity of operating a public golf course — in this case a course that was created to generate revenue and is operated like a business for profit.
The references by the City and Eller to the surrounding area are largely in response to MNDOT’s allegation that the City engaged in “spot zoning,” which occurs when a zoning authority establishes a classification that is inconsistent with the surrounding uses and becomes an island of nonconforming use. See, e.g., State v. City of Rochester, 268 N.W.2d 885, 889-90 (Minn.1978). Thus, when MNDOT challenged the motives of the City in taking certain actions to permit billboards, and MNDOT alleged that those actions were inconsistent with the City’s comprehensive zoning, the City and Eller responded that the treatment of The Bridges as a business area is completely consistent with the comprehensive zoning because all of the areas surrounding The Bridges, north of Highway 10, are zoned for business activity. In fact, the zoning history of the parcels that make up The Bridges suggests that the only reason they do not have commercial or industrial zoning labels, similar to the surrounding area, is because they are owned by the City. .
Although the record does not lay out that history with precision, it appears that the most westerly parcels of The Bridges were zoned industrial as part of the 1982 comprehensive zoning plan that zoned all property north of Highway 10 as industrial. These parcels retained that zoning label until the City adopted a comprehen*14sive rezoning ordinance in 1984, when it rezoned them to Public Facilities as part of a move to group all city-owned land in that classification.
The most easterly parcels of The Bridges were not zoned industrial in 1982 only because they were then owned by the state. This was undeveloped land that had been zoned as a Conservancy, Recreation and Preservation District. Those parcels were conveyed to the City in 1988 and eventually were rezoned to Public Facilities, again only because they were owned by the City.
A middle parcel had been zoned industrial while it was owned by Sysco Foods. When Sysco transferred it to the City in 1989, it was rezoned Public Facilities.
As a consequence, all zoning actions taken by the City with respect to The Bridges were either part of a comprehensive plan or were taken to conform to a comprehensive plan. MNDOT’s allegation of spot or piecemeal zoning is unfounded, and the City and Eller’s references to the zoning classifications of the surrounding area, as a defense to that allegation, was well taken.
Moreover, while it is true that the proper focus for determining “business areas” is the specific zoning district (in our case, the PF district), the business character of the surrounding area has some relevance to the public policy concerns that underlie the federal and state billboard laws. The broad goals of those laws are to permit billboards where they are compatible with the surrounding land use and preclude them where they are not. Essentially, they allow billboards in commercial and industrial areas, where utility is valued higher than beauty, and preclude them in residential and agricultural areas, where beauty is more highly valued than utility. Just as the goals of beautification in residential and agricultural areas would be violated by creating a commercial island in their midst (i.e. spot zoning), the goals of utility in commercial and industrial areas would be violated by creating a “governmental” island in their midst, where billboards are precluded on commercial property solely because it is owned by a municipality.
In that connection, MNDOT has permitted two billboards on the Sysco property on the north side of Highway 10, immediately west of The Bridges. Thus, a motorist who leaves I-35W to go west on Highway 10 will encounter billboards immediately after passing The Bridges. I fail to see how the policy of beautification is served by denying billboards in the small island of municipally owned land that lies boxed in between those billboards and I-35W.

2. Can a Municipally Owned Golf Course be a “Business?”

The majority concludes that the mere fact that golf courses are a permitted use in a business district does not necessarily make a golf course a business area. The majority notes that a golf course may also be a permitted use in a residential district. But this example does not demonstrate that a golf course is not a business. If the golf course in this example were separately zoned PF, as in our case, the residential zoning of the surrounding area would be irrelevant to the question of whether it is a business area because, as the majority stresses, that question only focuses on the single zoning district. If, on the other hand, the example assumes that the golf course is not separately zoned, but is a permitted use in a residential zone, this does not mean that the golf course is not a business. The question would be whether the primary use of the zone is residential. If it is, the business use of a part of the zone for a golf course would not satisfy the federal or state criteria because it would *15only be incidental to the primary, residential use of the large zone. 23 C.F.R. § 750.708(d) (2003).
Where a municipally owned golf course is separately zoned, the question whether it qualifies as a business area should turn on whether it has the characteristics of a business. If it is provided to the citizens at less than cost, as part of a park system that is subsidized by taxes for the general welfare of the community, one could conclude that it is not a business area. But if, as our undisputed facts show, it is operated for a profit and only serves fee-paying customers, similar to any privately owned golf course, I would conclude that it is a business area.
Here, the City incurred bonded indebtedness of over $3 million to build The Bridges, installing over 20 miles of irrigation pipe, high maintenance turf, artificial ponds and a lighting system for the driving range. The Bridges generates revenue from the sale of the golf rounds and lessons, the sale of merchandise in the prosh-op and the sale of food and liquor in the clubhouse. The City’s residents do not receive any discount for golf rounds. In fact, the rates are among the highest in the area for nine-hole golf courses. The City advertises the course and maintains loss-of-business insurance coverage. The Bridges generates annual revenue of about $800,000 and net income of $200,000 per year. These revenues are kept in an enterprise fund, separate from the general revenues of the City. In other words, The Bridges was created for business purposes, to generate revenue for the City; it is operated as a business, using the same business models as are used by privately owned, for-profit golf courses; it competes for customers with other golf-course businesses; and it charges customers at the high end of market rates. This satisfies the criteria for a business area.

C. The Business Activities of The Bridges Make it a Business Area

The Commissioner’s decision relies on zoning labels. If the City rezoned The Bridges to “commercial” or “industrial,” this would not change the use of the property but would presumably satisfy the Commissioner’s literal reliance on the “commercial or industrial” zoning labels to permit billboards. Conversely, the City’s decision to place The Bridges in a PF zone was based on factors that have no relevance to the public policy concerns that underlie the billboard laws. It is a classification of convenience, that groups properties by ownership, irrespective of use. The billboard laws are indifferent to ownership. If the legislature had intended that governmental ownership would automatically disqualify property from being within a “business area,” it could easily have said so. Instead, it defined “business areas” by relying on the activities conducted on the property, not on ownership.
I would affirm the decision of the court of appeals and direct MNDOT to issue the requested permits.