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A 7829 a 7834 Memorandum

A 7829 a 7834 Memorandum

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Published by Sally Jo Sorensen
Two issues, scope of review and determination of property ownership, have arisen in the six
matters comprising the City of Ortonville's (City) filings for annexation by ordinance under
Minn. Stat. 5 414.033, Subd. 2(3). The factual background includes the ordinances passed by the
City, the objection by Ortonville Township (Township), and the requested additional information
received from the City and Petitioners.
Two issues, scope of review and determination of property ownership, have arisen in the six
matters comprising the City of Ortonville's (City) filings for annexation by ordinance under
Minn. Stat. 5 414.033, Subd. 2(3). The factual background includes the ordinances passed by the
City, the objection by Ortonville Township (Township), and the requested additional information
received from the City and Petitioners.

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Published by: Sally Jo Sorensen on Mar 15, 2013
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03/15/2013

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MINNESOTA OFFICEOFADMINISTRATIVE HEARINGS
600
NorthRobert
Street
Saint
Paul,
Minnesota
55101
Mailing
Address:
P.O.
Box
64620
St.
Paul,
Minnesota
55164-0620
Voice:
(651) 361-7900
TTY:
(651) 361-7878
Fax:
(651) 361-7936
TO:FROM:PaulBlackburn,AttorneyatLaw
w-~~~-~mnt$)
HowardRoston,AttorneyatLaw
(HRoston@fkdlaw.t=am)
-
BenjaminWilcox,AttorneyatLaw
(bwiid~eadwcpd~
tantChiefAdministrativeLawJudge DATE:
RE:
March 14,2013A-7829Ortonville/OrtonvilleTownship(OrdinanceNo.12-07;HedgeProperty;118.26acres) A-7830Ortonville/OrtonvilleTownship(Ordinance No.12-08;Mclelland-KnippenProperty;111.28acres) A-7831Ortonville/OrtonvilleTownship (OrdinanceNo.12-09;ZieglerProperty;102.71acres) A-7832Ortonville/OrtonvilleTownship(OrdinanceNo.12-10;CrookstonProperty;3.98acres) A-7833Ortonville/OrtonvilleTownship (OrdinanceNo. 12-11;CrookstonProperty;63.52acres) A-7834Ortonville/OrtonvilleTownship(OrdinanceNo.12-12;CrookstonProperty;48.61acres) Two issues, scope of review and determination of property ownership, have arisen in the sixmatters comprising the City of Ortonville's (City) filings for annexation by ordinance underMinn. Stat.
5
414.033, Subd. 2(3). The factual background includes the ordinances passed by theCity, the objection by Ortonville Township (Township), and the requested additional informationreceived from the City and Petitioners.
CONTROLLING STATUTES
The Office of Administrative Hearings (OAH) is an agency in the executive branch. As such, theOAH's authority
-
and in turn the authority of its judges
-
is statutorily based. The scope ofaction to be taken in annexation proceedings is set out in Minnesota Statutes Chapter 414.Minn. Stat.
5
414.01 1, subd.
5,
defines "property owner":
 
"Property owner" means the fee owner of land, or the beneficial owner of landwhose interest is primarily one of possession and enjoyment. The term includes,but is not limited to, vendees under a contract for deed, and mortgagors. Anyreference to a percentage of property owners shall mean in number.Minn. Stat.
§
414.033 provides for annexation by ordinance, which allows a municipality todeclare land annexed to the municipality under certain limited circumstances. As relevant to thismatter, the limiting circumstances are set out in Subdivision 2(3) which states in part:(3) the land abuts the municipality and the area to be annexed is 120 acres or less,
.
and the municipality receives a petition for annexation from all the propertyowners of the land. Except as provided for by an orderly annexation agreement,this clause may not be used to annex any property contiguous to any propertypreviously annexed under this clause within the preceding 12 months if theproperty is owned by the same owners and annexation would cumulatively exceed120 acres;
.
Minn. Stat.
5
414.033, subd. 2, permits a municipality to adopt an ordinance annexing land and"any such land is deemed to be urban or suburban in character or about to become so if:
.
(3)the land abuts the municipality and the area to be annexed is 120 acres or less
. "
The City and Petitioners maintain that all of the statutory standards have been met; therefore,approval of the ordinances is appropriate. The Township maintains that the land is not "urban orsuburban in character or likely to become so" and that beneficial ownership of the propertiesrenders the area to be annexed greater than 120 acres; therefore, approval of the ordinances is notappropriate.
FACTUAL BACKGROUNDFee Ownership and Location
The requests for annexation consist of six petitions filed with the City for annexation byordinance. The petitioners are the long-time fee owners (original owners) and three recentowners of portions of the total area to be annexed (Subject Area). The total acreage of theSubject Area is approximately 448 acres. The recent owners received quitclaim deeds from theoriginal owners on September 27,2012. Each deed describes the transfer as a gift. Eachquitclaim deed expressly limits the use of the property to agricultural uses and expresslysubordinates the recent owners' interests to a mining lease and option (described below). Eachdeed reserves to the original owners all rights to receive the proceeds of the mining lease andoption. While the entirety of the Subject Area is approximately 448 acres in area, none of theindividual parcels exceed 120 acres. The sole petitioner with multiple parcels does not possessmore than 120 acres in the aggregate.The terms of each quitclaim deed are identical except for the grantee and the description of thedeeded property (referred to as "Subject Property"). Each deed identifies Gayle E. Hedge andMarch
14,2013
Page
2
 
ColleenM. Hedgeasthe"Grantor."Eachdeedcontainsquitclaimgrantlanguagetothe individualgranteeorgranteesaccompaniedbythefollowinglanguage:
.
.
reservingandexceptingforthe benefitofGayleE.HedgeandColleenM. Hedge,asjointtenants,the right toreceiveanyandallpaymentsduetoGrantor underthatcertainAggregateMining
&
LeaseandAgreement("Lease")between Grantor,aslandowner,andGlacierResources,Ltd.("Glacier"),asLessee,dated April26,2006andthatcertainOptionAgreementdatedApril26,2006(as amendedbyAgreementstoExtendtheTermofOptionAgreementdatedMarch 21,2011andMarch21,2012)("Option"),asevidencedbythatcertain MemorandumofLease("MemorandumofLease")recordedasDocumentNo. 160958withtheBigStoneCountyRecorder'soffice,whichLeaseandOption coverstheSubjectPropertyaswellasotherparcelsofrealproperty. GrantorandGranteeacknowledgethattheSubject Propertyissubjectto(i)the superiorrightsandinterestsofGlacier(anditsaffiliateStrataCorporation)under theLeaseandOption,(ii)therightsandinterestsofClarkMastelunderan existingagriculturalleasebetweenGrantor,asLandowner,andClarkMastel,as Lessee,whichexpiresonMay31,2013,and(iii)arestrictionhereinbeing declaredbytheGrantorthattheSubjectPropertybeusedonlyforagricultural purposesexceptfortheusesbytheLesseeGlacier(anditsaffiliateStrata Corporation)undertheLease.
AbuttingRequirement
EachofthesubjectpropertiesabutstheCityofOrtonville.
OptionandLease
TheoptiondescribedinthequitclaimdeedswasexecutedonApril26,2006,bytheHedgesand GlacierResources,Ltd.TheoptionallowsGlaciertoconvert theagreementintoalease (describedbelow)atanytimeduringtheoption period,atthesolediscretionofGlacier.The optionisexpresslybindingontheparties'heirsandassigns.TheHedgesarerequiredtoprovide proofofmarketabletitletoGlacier.Throughouttheperiodoftheoption,Glacierisgrantedthe rightofaccessto theSubjectAreaforthepurposeofexplorationandinvestigationofmineral depositsandsuitabilityoftheSubjectAreaforconductingmining,processing,andshippingof aggregate.Underthetermsoftheoption,noticebyGlaciercommencestheleaseagreement. Theoptionhasbeen extendedtwiceandcurrentlyexpiresonMarch21,201
5.
TheleasegovernstheentireSubjectArea.Byitsterms,theleaseagreementwas"madeand enteredinto"onApril26,2006,whentheleasewasexecutedbytheHedges(asthelandownerof theentireSubjectArea)andGlacier.Thecommencementdateoftheleaseisdefinedas"thedate ofexecutionofthis AggregateMining
&
LeaseAgreement."Theleaseincludesapurchase agreementfortheaggregateextractedfromtheSubjectArea,andsetsouttheamountsinroyalty paymentsthatwillbepaidtotheHedgesforaggregateremoved.AssetoutinArticle
4,
thetermofthelease"shallbeginonthedateofthisAggregateMining
&
LeaseAgreement(theMarch
14,2013
Page
3

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