City of St. Paul, a Municipal Corporation v. Chicago, St. Paul, Minneapolis and Omaha Railway Company, and Chicago and Northwestern Railway Company , 413 F.2d 762 ( 1969 )

HEANEY, Circuit Judge.

The City of St. Paul appeals from a judgment enjoining the enforcement of an amendatory zoning ordinance restricting building heights in a downtown river front area and adjudging the rezoning unconstitutional.

The rezoned area includes a city park which stretches more than three blocks along the edge of a sharp bluff overlooking the Mississippi River and Valley. The appellees’ property lies from forty to ninety feet below the surface of the park at the foot of the bluff and is separated from the Mississippi River by railroad tracks and a waterfront street.¹

The ordinance imposed height restrictions which effectively prohibit the erection of building on the appellees’ property which would rise above the level of the park and the adjacent bluff.²

The city park and the appellees’ property lies largely between the Wabasha Street and Robert Street bridges which cross the Mississippi River and serve as the gateways to the downtown area from the south. The park was established in 1930 and serves to open up the southern approach to the core area which lies immediately to the north of the park.³ It further serves as a passive recreational area for residents, shoppers, visitors and an estimated 23,000 to 25,000 downtown employees.

In the early 1960’s the St. Paul Housing and Redevelopment Authority undertook planning for the renewal and redevelopment of the downtown core area with the cooperation of other public agencies and private interests. The plan was formally adopted in 1964. A similar task was undertaken by the City Planning Department as a part of an effort to develop a comprehensive plan for the entire city. The downtown portion of the comprehensive plan was adopted in March of 1963, and the plan as a whole in April 1963. Both the renewal plan and the comprehensive plan envisioned that the park would remain and that no structures would be built on the railroads’ property which would rise above the level of the park.

The area immediately north of the zoned area has undergone the contemplated intensive redevelopment. The Hilton Hotel, Degree of Honor, Y.W.C.A. and Federal Courts buildings have been erected in the last few years. Block J has been cleared for the construction of a high rise apartment building. Further north in the core area, the Osborn, Northwestern National Bank and Farm Credit Bank buildings have been completed and more construction is contemplated.

At about the time that the public agencies began their planning, the railroads ⁴ started a program of disposing of its non-operating property throughout its system. The manager of the Real Estate Department of the railroad contacted a number of parties, beginning in the Spring of 1961, in an effort to stimulate interest in the subject property. He testified that publicity in the Fall of 1963, regarding the possible imposition of height restrictions on the property, dampened the sales effort. In late 1963, the railroads received an offer to purchase about one-half of the property, i. e., the land at the Wabasha Street end, for $4.00 per square foot. It was subject to the condition that the premises not be zoned so as to prohibit the construction of structures above the existing grade of the park. The management of the railroads rejected the offer on the basis that the property was needed for the railroad’s operating purposes. At least two other potential purchasers of the property, who did not intend to build above the level of the park, indicated an interest but made no firm offers.

A consulting firm was engaged by the railroads in February, 1966, two months prior to trial, with a view toward a determination of the highest and best use of the property. The railroads’ only interest was to sell the property. The study indicated that the highest and best use would be to construct a motel and four high rise apartments which would rise from ten to twenty-two stories above the park.⁵ This use would give the apartment occupants the benefit of the light and view over the river valley but in so doing, would equally deprive others of these benefits. It would also result in the closing off the “front door” of the core area from the southern approaches. The study envisioned building on the property originally deemed necessary for operating purposes. A witness for the railroads testified that the problem had been resolved and the property was available.

Although the record is not clear, the city, in the Fall of 1963, apparently first became aware that the railroads were attempting to sell the river bottom property for the possible construction of buildings that would rise above the park level.

A number of municipal authorities and boards, including the Housing and Redevelopment Authority, the Planning Boards and the Zoning Board recommended the imposition of height restrictions. The action of the Planning Board was taken after a public hearing. The resolution passed by that Board recited that the rezoning was reasonably related to existing land uses, overall needs of the community and the planning for future land use.

On September 3, 1964, the City Council, after a public hearing at which the railroads were the sole voice in opposition, unanimously approved an ordinance restricting height in the questioned area and directed the corporation counsel to draft such an ordinance. The City Council formally adopted the ordinance on September 20, 1966.

In May of 1966, the appellees brought suit for a declaratory judgment and asked that the proposed ordinance be declared void and unconstitutional.⁶ Following the formal enactment of the ordinance, the appellees filed a supplemental complaint and asked that the enforcement of the ordinance be enjoined or, in the alternative, money damages be awarded.

The District Court found that the fair value of the property prior to the passage of the ordinance was $320,000, and that its after value was $150,000. There is substantial evidence in the record to support this finding.

The court also found that the ordinance was unreasonable and arbitrary and, therefore, not a valid exercise of the police power because: (1) it bore no substantial relationship to health, safety, morals or the general welfare, and was enacted for aesthetic reasons only; (2) it was an instance of spot zoning and not part of a comprehensive plan; and (3) it was a confiscation without compensation in that the benefit to the public was small in comparison to the detriment of the property owner. The court concluded that the ordinance was “unconstitutional as violative of due process of law.” It enjoined enforcement of the ordinance.

The court held that the appellees were not entitled to damages for enforcement of the ordinance during the pendency of the action as any damages during that period were minimal and speculative.

“Since it is clear that this was a good faith attempt by the city to exercise its police power and since there is no demonstration that there will be any further improper interference with the plaintiffs’ property rights, the Court does not at this time award damages and thus, in effect, turn this action into an eminent domain proceeding.”

It retained jurisdiction for the purpose of granting any further relief which might become necessary and proper under 28 U.S.C. § 2202. We reverse.

The appellees concede that the city’s purpose is a public one. They acknowledge that the city can accomplish its objective by the proper exercise of its eminent domain power — compensating the railroads for the damage to their property. They argue, however, that the ordinance is violative of the Fifth Amendment to the United States Constitution and Article 1, Section 13 of the Minnesota Constitution in that it takes the railroads’ property without compensation.⁷

Neither constitutional provision interposes a barrier to the imposition of restrictions on the use of private property if a zoning ordinance is enacted pursuant to a valid exercise of the police power. Goldblatt v. Town of Hempstead, 369 U.S. 590, 593, 82 S.Ct. 987, 8 L.Ed.2d 130 (1962);⁸ City of Marysville v. Standard Oil Co., 27 F.2d 478 (8th Cir. 1928), aff’d, Standard Oil Co. v. Marysville, 279 U.S. 582, 49 S.Ct. 430, 73 L.Ed. 856 (1929); Kiges v. City of St. Paul, 240 Minn. 522, 62 N.W.2d 363, 369-370 (1953); State ex rel. Beery v. Houghton, 164 Minn. 146, 204 N.W. 569, 54 A.L.R. 1012 (1925), aff’d mem., 273 U.S. 671, 47 S.Ct. 474, 71 L.Ed. 832 (1927).⁹ The test of whether the enactment falls within that power is one of reasonableness.

The zoning ordinance will be sustained unless its “ * * * provisions are clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” Euclid, Ohio v. Ambler Realty Co., 272 U.S. 365, 395, 47 S.Ct. 114, 121, 71 L.Ed. 303 (1926). Gorieb v. Fox, 274 U.S. 603, 608-609, 47 S.Ct. 675, 71 L.Ed. 1228 (1927); McMahon v. City of Dubuque, Iowa, 255 F.2d 154, 158-159 (8th Cir.), cert. denied, 358 U.S. 833, 79 S.Ct. 53, 3 L.Ed.2d 70 (1958); Naegele Outdoor Adv. Co. v. Village of Minnetonka, 281 Minn. 492, 162 N.W.2d 206, 212 (1968); State ex rel. Howard v. Village of Roseville, 244 Minn. 343, 70 N.W.2d 404, 407 (1955).

In reviewing the trial court’s determination of invalidity, we examine the record not to see whether its findings are supported by evidence but to ascertain upon the whole record whether it is possible to say that the legislative choice is without rational basis. South Carolina State H. Dept. v. Barnwell Bros., 303 U.S. 177, 191-192, 58 S.Ct. 510, 82 L.Ed. 734 (1938); Weinberg v. Northern Pac. Ry. Co., 150 F.2d 645, 648 (8th Cir. 1945).

Fairly debatable questions as to the reasonableness, wisdom and propriety of an ordinance are not for the determination of the courts but for that of the legislative body on which rests "the duty and responsibility of the decision. Standard Oil Co. v. Marysville, supra; Naegele Outdoor Adv. Co. v. Village of Minnetonka, 162 N.W.2d at 209.

The mere fact that the ordinance seriously depreciates the value of the complainants’ property is not enough to establish its invalidity. Goldblatt v. Town of Hempstead, supra at 594, 82 S.Ct. at 990,¹⁰ American Wood Products Co. v. City of Minneapolis, 21 F.2d 440, 444 (D.Minn.1927) (J. Sanborn), aff’d, 35 F.2d 657 (8th Cir. 1929); Kiges v. City of St. Paul, 62 N.W.2d at 369. Nor can it be invalidated on the grounds that aesthetic considerations will be furthered if it is permitted to stand. Berman v. Parker, 348 U.S. 26, 75 S.Ct. 98, 99 L.Ed. 27 (1954);¹¹ Naegele Outdoor Adv. Co. v. Village of Minnetonka, supra; ¹² State ex rel. Twin City Bldg. & Inv. Co. v. Houghton, 144 Minn. 1, 174 N.W. 885, 176 N.W. 159, 162, 8 A.L.R. 585 (1920).¹³

An examination of the entire record in the light of the above standards convinces us that the trial court erred in substituting its judgment for that of the City Council.¹⁴ In so holding, we note that the city’s answers to the railroads’ interrogatories were vague, conclusionary, unresponsive and not in accordance with Rule 33, Federal Rules of Civil Procedure. If these answers reflected accurately the sum of the Council’s reasons for enacting the ordinance, we would have no alternative but to hold that they were inadequate.¹⁵ The record indicates, however, that the Council’s action was preceded by studies and recommendations of other municipal agencies; and, that reports of these studies were communicated to the Council. It also shows that the Council conducted a public hearing before passing the ordinance. From a reading of the record, it is fair to say that as a result of the reports and recommendations it received from the public agencies, the Council had before it most of the evidence developed at trial before the District Court including the following:

(1) The passage of the ordinance was preceded by studies and favorable recommendations of the Housing and Redevelopment Authority, the Planning Board (after a public hearing) and the Zoning Board. These recommendations were communicated to the City Council. American Wood Products Co. v. City of Minneapolis, supra, at 444. See, Ostrand v. Village of North St. Paul, 275 Minn. 440, 147 N.W.2d 571, 573 (1967).

(2) The City Council held a public hearing prior to the adoption of the ordinance. The Housing and Redevelopment Authority, the Planning Board, the Metropolitan Improvement Committee, the Y.W.C.A., the St. Paul Automobile Club and the Downtown Department of the Chamber of Commerce appeared at the hearing and submitted their views as to why the ordinance should be adopted.

(3) Mr. B. Warner Shippee, the former director of the Housing and Redevelopment Authority, testified at trial that the downtown renewal project had three objectives:

“First, the economic improvement of the city and the central business district. Secondly, its physical improvement; and thirdly, in the course of doing this the removal of blight, deleterious structures and influences of economic disuse in the area.”

Mr. Shippee further testified that when the Authority undertook the renewal project, it acted on the assumption “that the area in front of the mall would be kept clear of obstructions- — -that, [the] park would remain and provide sort of a front door for the Capitol Center downtown project as well as generally the central business district.” He added that the subject area was directly related to the renewal project and that the Authority felt that high rise construction could have an adverse affect on property values and the renewal project.

“ * * * The Authority actually took cognizance of this problem in a meeting of June 11, 1964, * * *. * * * [T]he authority commissioners after discussing the matter moved unanimously that it was their opinion that the ordinance [restricting height] was feasible and in the best interest of the community. The discussion had related to the relationship of the ordinance to the Capitol Center Downtown Renewal project. * *

(4) Dr. Noland Heiden, City Planner for the City of St. Paul, quoted from the comprehensive city plan as follows:

“ ‘A sixth land use area of the central business district can be called the “south Kellogg” area and will remain largely as it now exists. It is composed of the blocks along the edge of the river bluff south of Kellogg Boulevard and presently contains industrial office operations * * *. The major proposal is to extend the Kellogg Mall one block up to the east to the post office. This would more fully open up the “front porch” of the central business district and provide necessary land for street improvements designed to facilitate access to the central business district from Warner Road.’ ”

(5) Appellees’ witnesses conceded that the property values on the north side of Kellogg Boulevard would be diminished by the erection of high rise building on the appellees’ property which would partially obstruct the view of the river valley.¹⁶ See, State ex rel. Saveland Park Holding Corp. v. Wieland, 269 Wis. 262, 69 N.W.2d 217, 222, cert. denied, 350 U.S. 841, 76 S.Ct. 81, 100 L.Ed. 750 (1955).

No evidence was offered at trial to show: that the ordinance was designed to restrict competition, compare, Pearce v. Village of Edina, 263 Minn. 553, 118 N.W.2d 659, 671, n. 1 (1962); or that the railroads acquired the property with the expectation that it would be used in the manner they now seek, compare, Alexander v. City of Minneapolis, 267 Minn. 155, 125 N.W.2d 583, 585 (1963); or that the railroads cannot continue to use their property as they have in the past.

In our view, the appellees’ reliance on Ostrand v. Village of North St. Paul, supra; Alexander v. City of Minneapolis, supra; Pearce v. Village of Edina, supra; and Olsen v. City of Minneapolis, 263 Minn. 1, 115 N.W.2d 734 (1962), is misplaced. While there is language in each opinion supporting the appellees’ position — that an amendatory zoning ordinance designed to protect aesthetic values and resulting in the diminution of the market values of the complainants’ property is invalid- — that language must be viewed in the light of the facts in those cases. Those factual situations were significantly different from the one presented here. We would add that in those four cases, as in those where a contrary result was reached, the Minnesota Court made it clear that the test is one of reasonableness.

We are convinced that were this case presented to the Minnesota Supreme Court, it would hold that the determination of the City Council — that the ordinance was reasonably related to the protection of public welfare — would be permitted to stand. In our view, the action of the City Council was based “on reason arid logic and not on whim and caprice.” It promoted a legitimate police power objective — -the renewal of the core area of Downtown St. Paul so as to be a desirable place in which to work, shop, live and enjoy cultural and recreational activities. The benefit to the public in preserving these values was great in comparison to the diminution in market values suffered by the appellees.

Reversed.

1 . See Appendixes I, II and III.

2 . In 1922, as part of a general zoning ordinance, the appellees’ property was subjeet-ed to a height restriction of one hundred feet. Property on top of the bluff was restricted to a height of one hundred and fifty feet. In 1929, the height restrictions were removed and the appellees’ property has not been subject to restrictions until the present ordinance was enacted. There is no evidence indicating that either the city or the railroads considered high rise construction on appellees’ property before the 1980’s.

3 . An appellee witness testified with respect to the considerations that went into the establishment of the park in the 1930’s. “St. Paul was going to be progressive. We were going places and we did with a 29 million dollar bond issue: built a new court house [and streets to improve traffic on the north side of the Loop], I can’t give you the thinking of the men that made all the decisions in those days, but I would assume [that the park location was chosen] because of its scenic value, and the outlook over the river and the fact that it was just a delightful place to be.”

4 . The Chicago, St. Paul, Minneapolis and Omaha Railway Company is the owner in fee of the property. On December 31, 1956, under authority from the Interstate Commerce Commission, the property was leased to the Chicago and Northwestern Railway Company. For convenience, the appellees will be occasionally referred to as the “railroads.”

5 . The appellees’ study demonstrating the highest and best use of the property calls for the construction of a motel and four apartment buildings containing 600 apartment units on 102,000 square feet. Under the St. Paul Zoning Code, Chapters 16 through 64, the appellees could not have constructed the 600 apartments without obtaining a variance. It requires 544,200 square feet of land. If the appellees devoted the entire 102,000 square feet to apartments, less than 125 units could be constructed under the Code provisions. The granting of a variance is discretionary and the decision to grant or deny one cannot be reversed in the absence of a clear abuse of that discretion. State v. Gunderson, 198 Minn. 51, 268 N.W. 850, 851 (1936).

6 . The appellees (plaintiffs below) began this action by filing a complaint on May 20, 1966, praying for a declaratory judgment. At that time, the subject ordinance had not been formally adopted but the adoption of the ordinance in principle on September 3, 1964, had the effect of restraining the sale of the subject property. The District Court, on August 31, 1964, denied the appellant’s (defendant below) motion to dismiss the action for failure to state a claim and lack of jurisdiction. The court held that while no jurisdiction existed to declare unconstitutional any ordinance which might impose height restrictions on the subject property in the future, the complaint presented an actual controversy with respect to the ordinance adopted in principle. The City Council, on September 20, 1966, formally adopted the ordinance we consider here and the appellees amended their complaint accordingly.

7 . The Fifth Amendment to the United States Constitution provides in part: “ * * * nor shall private property be taken for public use without just compensation.” Article 1, Section 13 of the Minnesota Constitution provides: “Private property shall not be taken, destroyed or damaged for public use without just compensation therefor, first paid or secured.”

The appellees argue that the Minnesota provision imposes a stricter standard than that under the federal provision. Because we believe that the ordinance does not violate the Minnesota Constitution as it has been interpreted by the Supreme Court of Minnesota, we express no opinion on whether a more stringent standard exists.

8 . “ ‘ * * * The power which the states have of prohibiting such use by individuals of their property as will be prejudicial to the health, the morals, or the safety of the public is not — and, consistently with the existence and safety of organized society cannot be — burdened with the condition that the state must compensate suck individual owners for pecuniary losses they may sustain, by reason of their not being permitted, by a noxious use of their property, to inflict injury upon the community.’ ”

Goldblatt v. Town of Hempstead, 369 U.S. 590, 593, 82 S.Ct. 987, 989 (1962).

9 . “The public use, which sustains the taking of property under the power of eminent domain upon compensation paid, differs from the public interest or welfare which justifies the restriction of the individual in the use of his property without compensation, in consideration of the public interest and common welfare of the community. * * *

* * * * *

“Zoning statutes are becoming common. The police power in its nature indefinable, and quickly responsive, in the interest of common welfare, to changing conditions, authorizes various restrictions upon the use of private property as social and economic changes come. A restriction, which years ago would have been intolerable, and would have been thought an unconstitutional restriction of the owner’s use of his property, is accepted now without a thought that it invades a private right. As social relations become more complex, restrictions on individual rights become more common.”

State ex rel. Beery v. Houghton, 164 Minn. 146, 204 N.W. 569, 569-570 (1925), aff’d mem., 273 U.S. 671, 47 S.Ct. 474 (1927).

10 . “This is not to say, however, that governmental action in the form of regulation cannot be so onerous as to constitute a taking which constitutionally requires compensation. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 * * ». There is no set formula to determine where regulation ends and taking begins. Although a comparison of values before and after is relevant, see Pennsylvania Coal Co. v. Mahon, supra, it is by no means conclusive, see Hadacheek v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 * * *, where a diminution of value from $800,000 to $60,000 was upheld. * *

Goldblatt v. Town of Hempstead, supra, at 594, 82 S.Ct. at 990.

11 . “ * * * The concept of the public welfare is broad and inclusive. * * * The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation’s Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.”

Berman v. Parker, 348 U.S. 26, 33, 75 S.Ct. 98, 103 (1954).

12 , “ * * * The mere fact that the adoption of a zoning ordinance reflects a desire to achieve aesthetic ends should not invalidate an otherwise valid ordinance. Thus, if the challenged restriction is reasonably related to promoting the general welfare of the, community or any other legitimate police power objective, the fact that aesthetic considerations were a significant factor in motivating its adoption cannot justify holding it unconstitutional. * * (Citations omitted.)

Naegele Outdoor Adv. Co. v. Village of Minnetonka, 281 Minn. 492, 162 N.W.2d 206, 212 (1968).

13 . <i * * * n jg time that courts recognize the aesthetic as a factor in life. Beauty and fitness enhance values in public and private structures.”

State ex rel. Twin City Bldg. & Inv. Co. v. Houghton, 144 Minn. 1, 176 N.W. 159, 162 (1920).

14 . The trial court found that the traffic and fire protection problems which could be created by the construction of high rise buildings on appellees’ property were not unreasonable and were an insufficient basis on which to sustain the ordinance. We place primary reliance on other factors in sustaining the ordinance.

15 . “Interrogatory number 9: ‘How and in what manner and to what extent does Ordinance No. 13346 promote public health.’ Answer: ‘Unable to answer specifically.’

“Interrogatory number 10: ‘How and in what manner and to what extent does Ordinance No. 13346 promote public safety.’ Answer: ‘Unable to answer specifically.’

“Interrogatory number 11: ‘How, in what manner and to what extent does Ordinance number 13346 promote public order.’ Answer: ‘Unable to answer specifically.’

“Interrogatory number 12: ‘How, in what manner, and to what extent does Ordinance No. 13346 promote public convenience.’ Answer: ‘Unable to answer specifically.’

“Interrogatory number 13: ‘How, in what manner and to what extent does Ordinance No. 13346 promote public prosperity.’ Answer: ‘Unable to answer specifically.’

“Interrogatory number 14: ‘How, in what manner and to what extent does Ordinance No. 13346 promote general welfare.’ Answer: ‘Promotes the general welfare in a general way.’ ”

16 . Mr. Rohland H. Thomssen, Executive Vice President of the Clapp-Thomssen Company of St. Paul, a leading real estate firm in the city, and Mr. Stanley Miller, Vice President of the Real Estate Research Corporation, a real estate eon-suiting firm employed by the railroads, testified that the value of properties on the north side of Kellogg Boulevard would be diminished by high rise construction on appellees’ property.