In an important decision for municipalities across the country, a federal court in Minnesota has recently ruled that actions taken under RLUIPA’s “safe harbor” provision absolved a local government of possible RLUIPA violations.  This is especially noteworthy because few courts have considered the safe harbor provision.  According to the court, the City of St. Michael’s amendments to its zoning regulations to allow religious uses as conditional uses in the business zone (where they were previously prohibited), coupled with the granting of a conditional use permit, meant the City had to prevail.  The safe harbor provision provides:

A government may avoid the preemptive force of any provision of this chapter by changing the policy or practice that results in a substantial burden on religious exercise, by retaining the policy or practice and exempting the substantially burdened religious exercise, by providing exemptions from the policy or practice for applications that substantially burden religious exercise, or by any other means that eliminates the substantial burden.

Here is the background.  Riverside Church held services in Big Lake, Minnesota, but needed to find a second location to accommodate its growth.  From 2004 to 2014, the Church’s attendance at Sunday worship services increased from 665 to nearly 1,500 people.  The Church identified property in the City of St. Michael’s business zone, about 12 miles south of Big Lake, that was formerly used as a 15-screen movie theater, and sought to purchase the property so that it could hold worship services there (“Theater Property”).  The Theater Property was for sale at just under $3 million, but the City’s zoning code, at the time prohibited religious uses from the subject business zone.

In July 2014, the Church submitted an application to amend the text of the zoning regulations to allow religious uses in the business zone.  Around the same time, the Church entered into a purchase and sale agreement for the Theater Property contingent on obtaining zoning approval to allow religious use of the property.  As the text amendment application was pending, the City Council imposed an across-the-board moratorium that barred “the use of any land for new or expanded assembly, theater, or church, purposes during the period of the moratorium.”  The purpose of the moratorium was to give the City time to study the impacts of these types of assembly uses in business zones.  The same day the moratorium was imposed, the City amended the zoning regulations by removing “theaters” (which had been allowed as-of-right) and replacing that use with “multi-plex theater” as a conditional use.

The Church and the City attempted to negotiate a compromise that would allow the Church to use the Theater Property, but negotiations fell apart and the City then denied the text amendment application.  In denying the application, the City issued its “Findings of Fact and Decision” in which it found that religious uses would have an adverse impact on other uses in the business zone and would cause parking, traffic, and infrastructure concerns.  The purchase and sale agreement for the Theater Property terminated.

In March, 2015, the Church entered into another purchase and sale agreement for the Theater Property for about $3.5 million, plus the cost of repairs and improvements to the property.  Three days later, the Church sued the City under RLUIPA, the U.S. Constitution, and Minnesota law.  While litigation was pending, the City utilized RLUIPA’s safe harbor provision to amend its zoning code.  The zoning code amendment removed “multi-plex theater” and added “assembly, religious institution, house of worship” as conditional uses.  In April, 2015, the City issued the Church a conditional use permit to use the Theater Property.  However, the Church was unable to purchase the Theater Property because the total cost, with the repairs and improvements, would be more than $5 million.

In considering the City’s motion for summary judgment, the District Court for the District of Minnesota ruled that the City’s use of the safe harbor provision relieved the City from liability under RLUIPA.  Specifically, the City’s amendment to the zoning code to allow religious uses in the business zone as conditional uses and its granting the Church a conditional use permit to use the Theater Property “eliminated any alleged substantial burden and any alleged discriminatory treatment” imposed by the former zoning code and denial of the Church’s text amendment application.

The Court also ruled that the substantial burden and equal terms claims failed regardless of the safe harbor provision.  Neither the former zoning code nor the denial of the Church’s text amendment application constituted a substantial burden, because: (a) they merely inconvenienced the Church, since the Church could have established a site in any of the remaining zones where religious uses were permitted, and (b) the City’s Findings of Fact and Decision shows that its actions were well-reasoned and not arbitrary and capricious.  The Court’s decision is noteworthy for its review of other circuits’ interpretations and applications of the substantial burden provision, as the Eighth Circuit had yet to define what is meant by “substantial burden.”

As for the equal terms claim, the Court utilized both the Third Circuit’s “regulatory purpose” and Seventh Circuit’s “accepted zoning criteria” tests.  According to the Court, the regulatory purpose for the business zone is to provide land for business and retail uses to strengthen the City’s economy.  Similarly, zoning criteria for the subject business district is to generate taxable revenue and shopping opportunities.  This led the Court to conclude:

With respect to these purposes and zoning criteria, a church is not similarly situated to a movie theater. A church is not in the business of selling items to the public and, as a non-profit entity, does not generate taxable revenue. A movie theater, in contrast, typically focuses on selling tickets and food to moviegoers and is a for-profit entity that generates taxable revenue.

Accordingly, the City’s pre-amendment prohibition of religious uses in the business zone did not violate the equal terms provision.

The Court also rejected the Church’s Free Exercise claim.  First, the zoning code’s ban on religious uses did not substantially burden the Church’s religious exercise.  Second, the moratorium, which prevented the Church from finding a new site anywhere in the City for a year, was neutral and generally applicable.

The Court declined entering summary judgment in favor of the City as to the Church’s Free Speech claim, because there remained a genuine issue of material fact with respect to whether the zoning ordinance’s ban on religious uses was “narrowly tailored” to advance the City’s government interests (strengthening the City’s economic base and providing employment opportunities).  Notably, however, the Court concluded that the subject ordinance was content-neutral under the Supreme Court’s decision in Reed v. Town of Gilbert, because the focus of the ordinance was on genuine public health, safety, and general welfare issues.

The decision in Riverside Church v. City of St. Michael (D. Minn. 2016) is available here.