The Riley Purgatory Bluff Creek Watershed District may soon possess 28 acres along Spring Road in Eden Prairie, even as it fights a court challenge from one of its board members.
The district lost its original financing partner in the property purchase because of the December lawsuit filed against the agency by Larry Koch, a member of its board of managers. However, the organization has found an alternative financing plan and could close on the acquisition on April 3.
The new plan, OK’d 4-1 by the board of managers on March 26, relies on a contract for deed and promissory note as a financing “bridge” until Hennepin County is able to help with long-term bonding later this year or whenever the litigation is settled. Huntington Public Capital Corp. had previously agreed to provide that bridge financing but withdrew because of the litigation by Koch.
The new lifeline comes from the longtime owner of the 28 acres, Carol Standal, and the company to which Standal assigned purchase rights: TDI Holdings. The short-term arrangement has the district executing a contract-for-deed purchase with Standal and a promissory note with TDI Holdings.
Other aspects of the $5.775 million purchase OK’d by the watershed district in November remain in place: The undeveloped land would be conserved, restored to prairie and savannah, and fill the missing link in a contiguous public corridor along Riley Creek from Lake Riley to the Minnesota River.
The district may use the property for its new headquarters in the long term. It currently rents space in a Chanhassen office park.
It’s been a convoluted path for the 28-acre property in question, a former Christmas tree farm located in southern Eden Prairie near Riley Creek and the historic Fredrick-Miller Spring. The Eden Prairie City Council and the watershed district in 2021 approved the construction of 50 single-family homes on the sloping property, a project called Noble Hill. Multiple lawsuits were subsequently filed by a citizens group, Friends of Spring Valley, that opposed the housing development on environmental grounds. Meanwhile, the housing project stalled.
However, in a turn of events, the watershed district began exploring the purchase and conservation of the 28 acres in March 2023, putting the matter on its 2023 board meeting agendas 18 times – with many of those meetings occurring in closed session – as well as appraising and evaluating the property.
On Nov. 16, following a public hearing, the board of managers voted 4-1 to amend the district’s 10-year water management plan to reflect the property acquisition and proceed with the purchase on the grounds that doing so would protect nearby waters and wildlife habitat.
Koch has consistently voted “no” on the purchase, suing the district and its staff administrator, Terry Jeffery, shortly after the board’s November vote to proceed with the acquisition. He contends the watershed district is exceeding its water management authority in making the purchase and that the property’s impact on waters can be well-managed without acquisition.
The new financing requires the watershed district to make a $250,000 down payment and quarterly payments of $77,250 starting July 5, according to Jeffery, thus staying within the 2024 budget amount set late last year.
As to Koch’s lawsuit, last week Hennepin County District Court Judge Lois Conroy laid out a tentative schedule that would have the trial taking place in February 2025.
In the meantime, the watershed district has also filed a motion asking the court for dismissal of the suit with prejudice. Jeffery said a ruling is expected within about 60 days.
So far, Koch has been unsuccessful in getting the court to issue a temporary restraining order that halts the purchase, according to court documents.
What happens to the district’s purchase and ownership of the property if Koch eventually prevails in court?
“We have considered those risks and believe we have contingencies in place,” Jeffery said this week.
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