Many shopping center owners have reciprocal or cross-parking easement agreements with free-standing property owners located either within or adjacent to the shopping center parking lot. The Minnesota Court of Appeals held in a recent decision, reversing the district court, that the owner of the free-standing site cannot rely on a cross-parking easement agreement with a shopping center to meet city parking requirements for a new parking-intensive use on the free-standing site. The decision should come as a relief to shopping center owners, since the effect of the district court ruling was to take the shopping center parking and give it to the free-standing property owner.

The case arose when a free-standing site in a shopping center parking lot on which a family restaurant had been operating for many years was sold to a new owner, who intended to build and operate a popular sports bar franchise outlet at the location. The new owner of the free-standing site demolished the 5,000 square-foot family restaurant, then applied to the city for approval of a new 7,000 square-foot sports bar. During the permitting process, there were legal disputes concerning the proper applicability of the city’s code provisions on parking and whether the sports bar was required to have either 55 or 84 parking spaces. Under either scenario, the sports bar had insufficient onsite parking, with only the possibility of 35 parking spaces. The sports bar looked to a cross-parking easement agreement with the shopping center to make up the parking space deficiency, arguing that the shopping center had excess parking spaces which the sports bar, under the easement agreement, had a right to use. The city determined that the sports bar needed 55 parking spaces, not 84, that the shopping center had 20 extra parking spaces which the sports bar was free to use under the easement agreement and approved the sports bar.

The shopping center sued in district court to challenge the approval. The district court upheld the city’s approval and ruled that the shopping center did not even have standing to challenge the city’s decision because “the harm that [the shopping center] claims it may suffer is contingent on future events.” The future events apparently referred to were whether the shopping center would ever have a future need for additional parking within the shopping center on account of a changing tenant mix or proposed new use. The district court further held that even if the shopping center did have standing to challenge the city approval, the city’s decision was reasonable. The shopping center appealed to the court of appeals, which reversed the district court on all counts.

The court of appeals said in disagreement with the lower court that the shopping center’s injury was not “contingent on future events”, but was real and present, since the effect of the city’s approval of the sports bar was to take away 20 parking spaces from the shopping center right now: “If the city’s action is allowed to stand, twenty parking spaces on the [shopping center] property will be rendered unavailable for purposes of future expansion of the Center or a shift to more parking-intensive uses of the Center.” The court of appeals therefore concluded that the shopping center was an aggrieved party that had standing to challenge the city’s approval of the sports bar.

The court of appeals further held that the city had misclassified the sports bar property under the city’s zoning classifications as part of the shopping center. This misclassification resulted in the city erroneously calculating that the sports bar needed 55 parking spaces, instead of the 84 parking spaces it was really required to have under the city’s zoning classification for restaurants. The court of appeals concluded that the city misread and misapplied its own code, based on the clear evidence that the sports bar site and the shopping center had been independently managed properties for many years.

The court of appeals further concluded that regardless of whether the sports bar required 55 or 84 parking spaces, the shortfall could not be recovered by looking to the shopping center’s parking under the cross-parking easement agreement. First, the city’s code required that if the sports bar was going to rely on off-site parking to meet code requirements, then sufficient “evidence of ownership or control of [the off-site parking], either by deed or long term lease, shall be provided ….” The court of appeals held that an easement agreement failed to meet this code requirement. The court also said that the easement itself was too indefinite a document to be relied on to meet code-required off-street parking for a sports bar: “The … easement only allows for parking on ‘that portion of the [shopping center] which is from time to time devoted to parking ….’”

Finally, the court of appeals declined to decide a dispute about the way the city interpreted and applied its code provisions for calculating floor area, which is part and parcel of calculating parking space requirements. The shopping center had argued that the city was applying a new, unwritten code interpretation for calculating floor area. The court said that because of its decision on the other issues, it did not need to reach this issue, but did state that, “we have previously held that a municipality acts arbitrarily and unreasonably by inconsistently applying its ordinances.”

The court of appeals was correct in its ruling. Reciprocal parking easement agreements between shopping center owners and adjacent properties are for convenience and recognize the realities of modern commercial land use and layout design. Such agreements are never intended to give rights of such a strong and definite nature that they ever can or should be relied on by one of the parties to meet parking requirements for specific uses on the party’s own site. To hold otherwise, would be a taking of one property owner’s property in favor of the other property owner.