Northfield city leaders say they’re confident the courts would again side with the city if a legal battle with its northern neighbor, Waterford Township, continues, but in an effort to “mend and build relationships,” the city is offering the township $47,000 to drop its appeal.
In December, a Dakota County judge dismissed a lawsuit from Waterford against Northfield. In her ruling, Dakota County Judge Arlene Asencio Perkkio voided a 38-year-old annexation agreement between the city of Northfield and Waterford Township, which had no end date. The annexation agreement, which called for the city of Northfield to make tax reimbursement payments to Waterford indefinitely, was found by the judge to be unenforceable, due to its lack of expiration.
Last month, the township appealed the dismissal. In response, the city announced Thursday that it’s offering a $47,000 settlement for the township to drop its appeal.
Waterford, represented by attorney Mike Couri, filed its appeal in the Minnesota Appellate Courts Feb. 7. In its case statement, the township argued that the district court “erred in failing to find the agreement perpetual in duration and therefore binding upon the parties.”
“We believe the annexation agreement is still enforced, and we want the city to abide by those terms,” Couri said in an interview Thursday. “Back in 1980, we gave property to the city with the belief that the city would pay for it year-to-year, and now the city wants out of the deal.”
During a closed meeting Tuesday, the Northfield City Council agreed to offer a $47,000 settlement to Waterford Township, in exchange for the township’s dismissal of its appeal. A Thursday release from the city said leaders were hoping the settlement could end the dispute and avoid additional time and cost for both sides.
“The City Council wants to have good relationships with our neighbors and believes our community will be better served by dedicating more attention to resolving the dispute than by spending more time and resources in the court system,” Northfield Mayor Rhonda Pownell said.
City Administrator Ben Martig added, “The district court ruled in our favor, and the city is confident in its chances on appeal; extending this settlement offer is intended in good faith to mend and build relationships.”
Couri said the township board met Monday to discuss the settlement offer and will do so again in a closed session Friday.
In 1980, the two sides agreed Northfield could annex a southern portion of Waterford Township where Multek Flexible Circuits is now located. That agreement stipulated that the city pay the township a certain amount each year to compensate Waterford for lost property taxes. From 1980-2010, Northfield paid Waterford near $74,000 under the agreement.
In 2010, City Attorney Chris Hood advised Northfield to stop making the reimbursements. He said the agreement doesn’t align with state statute, concluding the agreement had expired.
The city stopped making payments in 2011, but Waterford supervisors has said the agreement is valid and have continued to bill the city. The two parties have held multiple discussions on the issue, including in spring 2017, when the Waterford Township Board (Liz Messner, Frank Wergin and Larry Odegard) met with Northfield Mayor Rhonda Pownell and City Administrator Ben Martig.
Waterford sent a letter to the city, dated Aug. 9, 2018, calling for immediate payment of the “amounts owed by the city to Waterford,” totaling $32,721. The letter, signed by Board Chair Wergin, also calls for the annexation agreement to continue indefinitely.
But the court sided with Northfield, which argued the contract cannot exist under Minnesota statute because it does include an end date. In fact, the judge not only dismissed Waterford’s claims in the case, she granted Northfield’s request to officially declare the contract void.
The judge’s ruling noted that “… when the language of a contract is ambiguous as to durational terms, or where a contract is silent as to duration or termination, the court must construe it against perpetual duration.” She referenced prior cases to explain that when a contract has no clear expiration, the court must rule that it cannot go on forever.