The Minnesota Court of Appeals on Monday ruled in favor of Northfield in a case involving an approximately 40-year-old annexation agreement with Waterford Township.

In filing the appeal, Waterford alleged that Dakota County District Court erred in finding that the township and city had entered into an indefinite agreement for annexation, rather than perpetual. After the district court granted Northfield’s motion for summary judgment, Waterford appealed to the Court of Appeals.

The Court of Appeals disagreed with Waterford’s interpretation of the words “no future annexation,” to mean that the limit on annexation, and the whole agreement, was meant to forever continue. Because the agreement was deemed indefinite, the lower court agreed it was invalid.

“At best, the no-future-annexation provision, the only language in the agreement that suggests a durational term, is ambiguous,” the court ruled.

In filing the lawsuit, Waterford Township bypassed a proposed mediation process and sued the city over the 1980 annexation agreement Northfield declared void in 2010.

In 1980, the two sides agreed the city could annex a southern portion of Waterford Township where Multek Flexible Circuits now is. That agreement stipulated the city pay the township a certain amount each year to make up for lost property taxes. From 1980-2010, Northfield paid Waterford nearly $74,000 under the agreement.

In 2010, Northfield city attorney Chris Hood advised the council to stop making the tax reimbursement payments. He said the agreement didn’t align with state statute and has no end date, concluding the agreement had expired.

Northfield stopped making payments in 2011, but Waterford supervisors felt the agreement was not nullified and continued to bill the city. The two parties had multiple discussions on the issue.

Waterford Township Lawyer Mike Couri said he could not speak to the steps the board will take because members have not met to discuss the ruling. He sees the only possible action the township could take as appealing to the Minnesota Supreme Court.

He said the township views the agreement as perpetual but noted the courts found there was not enough language in the annexation agreement to confirm that.

“We’re disappointed, obviously,” Couri said of the township’s opinion of the decision.

In a prepared statement Monday afternoon, Northfield City Administrator Ben Martig said the city agreed with the Court of Appeals’ legal analysis and supported the decision but was “disappointed” the situation required litigation to resolve.

“The city made multiple attempts to negotiate an agreement with Waterford Township, both before the township commenced this litigation and after the City prevailed in District Court,” he said.

In the statement, Mayor Rhonda Pownell said the city “reaffirms its commitment to work cooperatively and in good faith with Waterford Township and all neighboring jurisdictions on all matters of mutual interest and concern that may arise in the future.”

Reach Associate Editor Sam Wilmes at 507-645-1115.

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