UPDATE on May 7, 2024: The judge overseeing the 5009 Beard Ave. S lawsuit dismissed the case on Feb. 27. Dan Murphy filed an appeal on April 24 and the case is currently pending before the Minnesota Court of Appeals. A neighbor-led suit against Yellow Tree's proposed development at 110 W. 26th Street in 2019 and 2020 took seven months to work through the appeals process once the neighbor appealed that case's dismissal in district court.

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In December 2022, the Minneapolis Planning Commission approved a five-story, 64-apartment mixed-use building at 5009 Beard Ave. S., on the former site of Lake Harriet Christian Church. The congregation disbanded in 2022 and its longtime tenant, Lake Harriet Community Childcare, moved to a new location in Edina a few months earlier ahead of the church building’s anticipated demolition.

But more than a year later, the church building remains standing as a court battle between a neighbor and 5009 Beard’s developers drags on. A neighbor to the property, Dan Murphy, is suing the developers for not getting adequate consent from neighbors for zoning variances to upsize the project and the City of Minneapolis for improperly approving the variances. Murphy’s lawyers have represented Minneapolis residents suing real estate developers in at least two similar cases since 2019.

The legal proceedings have themselves been delayed by a State court ruling in September 2023 that put the Minneapolis 2040 Plan on hold. Late last year, the judge overseeing the 5009 Beard Ave. case asked the parties for briefings on what the 2040 Plan hiatus means for the project’s approval, but nothing has been filed as of late January.

Meanwhile, the developers are pursuing the property’s most recent user, Sifa Prayer and Worship Center, for $15,000 in unpaid rents under a lease that began last spring. It appears that the developers rented the building to Sifa Prayer and Worship Center to earn some income while seeking approval for the new apartment building, but terminated the lease after about six months due to inconsistent payment.

Here’s where things stand in the legal fight over 5009 Beard and where the project might go from here.

Who’s involved in the 5009 Beard lawsuit?

The case name is Dan Murphy vs. City of Minneapolis and Beard Manager, LLC.

Murphy is a Fulton resident who runs a Hopkins-based residential design-build company. He’s represented by Malkerson Gunn Martin LLP attorneys Thomas De Vincke and Patrick Steinhoff. Murphy and his attorneys filed the suit in January 2023 after unsuccessful appeals to the City’s Planning Commission and the Building, Inspections, Zoning, and Housing committee.

The defendants are the City of Minneapolis and Beard Manager, LLC. Beard Manager is a subsidiary of Yellow Tree, the lead developer. Monarch Commercial Real Estate is also attached to the project.

Citing ongoing legal proceedings, the City of Minneapolis and Murphy both declined to comment for this story. Yellow Tree representatives didn’t respond to requests for comment.

What’s at issue in the 5009 Beard lawsuit?

In approving the 5009 Beard proposal, the City allowed two zoning variances to reduce the building’s setbacks. Yellow Tree and Monarch cited “practical difficulties” in complying with front and rear yard setback requirements due to the layout of the site and position of a neighboring property. The approved variances shrank the minimum front yard setback from 15 feet to 12 feet, 3 inches, and the minimum rear yard setback from 9 feet to 5 feet.

Because the proposal met inclusionary zoning requirements, the City also approved a maximum height of five stories or 70 feet, up from four stories or 56 feet. As proposed, the building would be five stories and 58 feet.

According to Murphy’s suit, these approvals are “illegal” because the developer failed to get “written consent of…two-thirds of owners within 100 feet of the project site” as required by Minnesota law. Murphy also alleges that the requested variances are inconsistent with City zoning ordinances and the 2040 Plan, and that the developers failed to show “practical difficulties” that would justify the variances.

Murphy and his neighbors have underlying concerns over the proposed building’s location and scale. Public comments submitted to the City raise questions about traffic, public safety, and the potential decreases in surrounding property values. A public notice posted by Fulton Blocks, a now-inactive neighborhood group organized by 5009 Beard opponents, mentions overtaxed stormwater and sewer infrastructure as additional risks.

Do 5009 Beard opponents have a point?

5009 Beard would replace a midcentury church building, parking lot, and lawn with a five-story building, a driveway, and some landscaping. It’s a stark contrast to the single-family homes surrounding it on all sides.

But 5009 Beard sits on the bustling 50th Street corridor, four blocks from the bustling 50th & France commercial hub. And it’s kitty-corner to The Waters on 50th, a 90-unit luxury senior living development with a much larger footprint.

“[The proposal] does impact people on the block with changes to alley access and [building] shadows, but in general, it’s a good location,” said Sasha Jensen, neighborhood coordinator for the Fulton Neighborhood Association. Jensen stressed that she spoke in a personal capacity, not as a representative of the association, which declined to take an official position on the proposal.

Under the 2040 Plan, 5009 Beard is zoned Corridor 4, which allows buildings up to four stories and higher, subject to City approval. The three properties immediately to the south are zoned Interior 2 and the remaining properties are low-density Interior 1.

Interior 2 is meant as a moderate-density buffer between higher and lower uses, but it doesn’t always make financial sense to build higher on Interior 2 parcels, Ward 13 Councilmember Linea Palmisano said in an interview with Southwest Voices. Building a 64-unit apartment building on an underutilized corner lot is more profitable than demolishing a single-family house to construct a four-to-six-unit structure, so the single-family house stays as the much bigger building rises next to it.

“So we end up with high and low uses right next to each other,” she said.

Could the developers have done anything differently?

The developer could have designed the project in strict compliance with existing zoning codes,with four stories instead of five and more generous front and rear setbacks. Short of that, it’s not clear what Yellow Tree and Monarch could have done differently to avoid a legal challenge.

Jensen and Palmisano both recalled a months-long City Council process that began soon after the property changed hands in March 2022. The developers presented their vision to a Fulton Neighborhood Association meeting in April 2022. Palmisano said there were a lot of residents there. Developer representatives also met with City staff several times throughout 2022, held multiple resident meetings onsite, and Palmisano said she personally reached out to individual neighbors “for a very long time.”

The developers’ outreach efforts spurred opposition among a small but engaged group of immediate neighbors.

“I don’t actually have suggestions for how [the developers] could have improved their [communication] on this specific project,” Palmisano said.

Beyond the engaged group, there hasn’t been a lot of discussion in the neighborhood about the plan, according to one neighbor.

“The vast majority of people in the neighborhood aren’t following what’s going on,” said Todd Schuman, a Fulton resident.

Schuman’s neighbors rarely voice concerns about development in Fulton, he said, which is a sharp contrast to a few years ago. During the initial debate over the 2040 Plan “there were yard signs everywhere” expressing both opposition and support, Schuman said. The 2040 Plan, in part, allowed previously single-family zoned lots to be zoned for triplexes, but strict zoning codes have made that difficult.

What’s next for the 5009 Beard proposal?

5009 Beard isn’t the first time a Minneapolis resident has sued the City of Minneapolis and private developers over zoning variance approvals. Since 2019, Malkerson Gunn Martin LLP has represented plaintiffs in at least two similar cases.

In September 2019, a neighbor represented by Malkerson Gunn Martin attorneys sued Yellow Tree and the City of Minneapolis over variance approvals for a 146-unit apartment proposal in Whittier, at 110 W. 26th Street and several neighboring parcels on Blaisdell Avenue. The complaint used similar arguments, noting the developer’s failure to get approval from two-thirds of neighbors within 100 feet and prove that the variances were truly necessary. The case ended in victory for the plaintiff, forcing Yellow Tree to drop its proposal.

In August 2023, an immediate neighbor represented by Malkerson Gunn Martin attorneys sued the City and Matrix Development, again citing improper variance approvals. The target this time was a 63-unit affordable housing project in Willard-Hay, at 1254 Russell Avenue N. and 2309 Plymouth Avenue N. Unlike 5009 Beard and 110 W. 26th Street, the Willard-Hay project was already under construction when the suit was filed. Work continued as of earlier this month.

Since no two real estate developments are exactly alike, it’s not clear what these previous cases mean for Yellow Tree and Monarch at 5009 Beard Ave., nor for Matrix at 1254 Russell. But the fact that a developer secured City approvals for a development project — or began construction — doesn’t mean they’re in the clear, according to Jack Perry, a Twin Cities attorney who specializes in land-use cases (Perry represented plaintiffs suing the City over the 2040 Plan but isn’t involved in the 5009 Beard or 1254 Russell cases).

Beginning construction “makes the stakes higher for everybody,” he said. “It might persuade a judge to be lenient, but that’s not guaranteed.”

In the worst-case scenario, the court could order the developer to tear down anything built and redo the project to comply with the regulations at issue, Perry said.

Palmisano doesn’t anticipate a chilling effect on development across Ward 13 on account of a single lawsuit.But pro-housing neighbors do worry about balancing neighbors’ concerns about new development against the need for new multifamily housing.

“We are definitely in an affordable housing crisis,” Palmisano said. “We are trying to create opportunities through things like inclusionary zoning and our 4D Program, but we have not seen much of this come to fruition in Ward 13 due to market prices.”

At least some of the units in the 5009 Beard proposal would be affordable under the City’s inclusionary zoning requirements, according to the City planning staff report on the project. For residential developments larger than 20 units, the inclusionary zoning rules require at least 4% of units to be deeply affordable or a larger proportion to be affordable to renters making at least 50% of area median income.

“If we waited until we had unanimous consent on a new construction, we'd never build another structure in the city again,” Schuman said. “This site is about as close as it gets to a slam dunk for Ward 13.”

Meanwhile, the site sits vacant. “At some point it’s going to start to look blighted if nothing happens there,” Jensen said.