Dispute between North Oaks, founding family in the hands of the court

A development dispute pitting the private suburb of North Oaks against the city's founding family — heirs of railroad magnate James. J. Hill — will now be decided by the courts.

On Friday, attorneys for the North Oaks Co., owned by Hill's great-granddaughter Mari Harpur and her husband, Doug, accused a "rogue" majority on the North Oaks City Council of illegally blocking the development of homes.

The company asked Ramsey County District Judge Patrick Diamond to compel the city to approve final plans for the Gate Hill development, which calls for the construction of 73 townhouses and twin homes on a 32-acre site.

It's one of the last planned neighborhoods in North Oaks before the private enclave of 5,300 people is considered built out.

Attorneys for the city countered the company has failed to meet "applicable regulations."

Jack Perry, attorney for the North Oaks Co., said a three-member majority elected to the city council in 2020, including Mayor Kara Ries, is illegally holding up development.

"The city's behavior once the new council took control is awful, abhorrent," Perry said. "This is upsetting to me that a city has so defied its statutory and … contractual duties with no apologies."

The company is also seeking monetary damages for the delayed development.

"In this hot market, we are losing out and we are losing money," Perry told the judge.

It's an unusual public battle for this wealthy community in northern Ramsey County where the roads and open spaces are private and the uninvited can be charged with trespassing.

In September, the City Council on a 3-2 vote denied final approval of Gate Hill, going against a staff recommendation to approve the plans. The denial also went against a previous North Oaks City Council's preliminary approval of the development in November 2020.

The council majority cited several reasons for their denial, including issues around parking, lot size and how the proposed Gate Hill neighborhood fits into a larger development agreement between the company and the city.

"They must apply with all applicable regulations. It is the burden of the plaintiff to prove they did that," said attorney Paul Reuvers, who is representing the city of North Oaks.

In an interview Tuesday, Reuvers said final approval isn't simply a formality.

"The city must ensure the developer is dotting all their i's and crossing all their t's," he said.

At the hearing Friday, Judge Diamond pressed Reuvers to defend the denial of the final approval after the city had given the development preliminary approval, prompting the company to spend hundreds of thousands of dollars on engineering and planning.

"My initial reaction is there is a time to put up or shut up, and it's when a preliminary plat is in front of you as a City Council," Diamond said. "If [the city of] North Oaks has rights, it seems to me the law says assert them at the preliminary plat stage or lose them."

Diamond said a city denying final approval of a development at the last moment "seems to be bordering on disingenuous."

The Harpurs attended the court hearing held via Zoom but did not speak.

The Hill family's history with North Oaks dates back to 1883 when Hill purchased 5,000 acres for farming. His descendants inherited the property and in the 1950s created the private community with spacious lots, ample privacy and an emphasis on preserving its natural beauty.

"They were environmentalists before we talked about environmentalism," Perry told the court.

Mari Harpur bought out her siblings in the 1990s and mapped out the buildout of the community with an eye toward preservation. That 1999 planned development agreement between the North Oaks Co. and the city laid out the completion of the city over three decades.

That agreement is at the center of the current dispute. The original agreement called for a maximum of 645 additional residential units and 21 additional acres of commercial development.

The North Oaks Co. also agreed to set aside more than 660 acres in a conservation trust and left an additional 220 acres as agricultural as part of the 1999 agreement. It's the largest conservation easement held by the Minnesota Land Trust in the metro area.

This 1999 agreement has been amended eight times over the years, including allowing for the construction of a senior living and care facility in the commercial district around 2006. The company has said the amendments now allow them to build a total of 673 housing units — most of which have been built — and about 15 acres of commercial development that has already been completed.

The city said the company has miscalculated.

"We've got a disagreement on the math," Reuvers said. "They are building too many in our view."

Diamond has 90 days to rule.