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M.G. Oil Company v. City of Rapid City

January 26, 2011

M.G. OIL COMPANY,
PETITIONER AND APPELLEE,
v.
CITY OF RAPID CITY, ALAN HANKS, IN HIS OFFICIAL CAPACITY AS MAYOR, RAPID CITY COMMON COUNCIL, CITY COUNCIL MEMBERS DEB HADCOCK, IN HER OFFICIAL CAPACITY, RON WEIFENBACH, IN HIS OFFICIAL CAPACITY, KAREN GUNDERSEN OLSON, IN HER OFFICIAL CAPACITY, PATTI MARTINSON, IN HER OFFICIAL CAPACITY, SAM KOOIKER, IN HIS OFFICIAL CAPACITY, RON KROEGER, IN HIS OFFICIAL CAPACITY, LLOYD LACROIX, IN HIS OFFICIAL CAPACITY, MALCOM CHAPMAN, IN HIS OFFICIAL CAPACITY, AARON COSTELLO, IN HIS OFFICIAL CAPACITY, BILL WAUGH, IN HIS OFFICIAL CAPACITY,
RESPONDENTS AND APPELLANTS.



APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA HONORABLE JOHN J. DELANEY Judge

The opinion of the court was delivered by: Gilbertson, Chief Justice

CONSIDERED ON BRIEFS ON NOVEMBER 15, 2010

[¶1.] M.G. Oil Company (M.G. Oil) applied to the City of Rapid City (City) for a conditional use permit to operate a video lottery casino. The Rapid City Common Council (City Council) denied the permit. M.G. Oil next sought a writ of mandamus, seeking an order that the City Council grant M.G. Oil the permit. The circuit court issued the writ, finding that the City Council's decision to deny the permit was "unreasonable, arbitrary, capricious and an abuse of discretion." The City appeals.

FACTS

[¶2.] M.G. Oil filed a petition for a conditional use*fn1 permit to operate an on-sale liquor establishment as part of a planned video lottery casino.*fn2 The casino was to be located in a newly constructed strip mall on Haines Avenue in north Rapid City, zoned general commercial. Staff in the Growth Management Department for the City reviewed the application, which included circulation to City agencies. After all the agencies, including the police department, reviewed the application without objection, the staff recommended approval of the permit with stipulations.*fn3 The staff's report found "there is one video lottery casino that is located approximately 470 feet to the north of this property. It does not appear that this request for on-sale liquor use will constitute an undue concentration which would cause blight or deterioration or diminish land values in the surrounding area." The Rapid City Planning Commission approved issuance of the permit with the stipulations.

[¶3.] A nearby property owner, Mario Rangel, owner of Munoz/Rangel, LLC, appealed the Planning Commission's decision. The matter was placed on the City Council's agenda. At the next City Council meeting, Rangel told the City Council he wanted the City to be "supportive" of "positive" development on Haines Avenue. There was some discussion on whether the neighborhood, in particular a nearby trailer park, had received proper notification of the proposed use. Applicant Troy Erickson and City Attorney Jason Green verified M.G. Oil had completed the correct application and notification process. Alderman Ron Kroeger discussed the history of the area and the nearby trailer court. He questioned whether there would be any response from those residents as most of the trailers were rented and the tenants "wouldn't care" about a casino in the area. After more discussion, the City Council referred the appeal to the Legal and Finance Committee to allow additional time for public comment.

[¶4.] At the next Legal and Finance Committee meeting, the applicant, six proponents, and two opponents commented on the proposed casino. Erickson reiterated that he had complied with all requirements and would not serve alcohol at his casinos if a liquor license was not required by law. Three members of M.G. Oil's security team, Dan Nagel, Bill Floor, and Wayne Jackson, discussed M.G. Oil's security measures.*fn4 Collectively they stated that M.G. Oil employed at least six security officers to ensure the safety of both employees and customers of M.G. Oil's 25 businesses in the area. Three to four officers are on patrol every night, responding to calls and working with police to keep all of M.G. Oil's establishments orderly. Security officers issue written warnings, keep a log of their enforcement activities, and maintain a "picture book" of over 600 "unwanted" customers. At least two of the men had a career history in law enforcement. The men also noted that no other casinos in the area had this level of security. Two other M.G. Oil employees, Cheryl Hovick and Penny Jones, spoke in support of the permit. The women stated that the security made their customers feel safe and that they did not tolerate inappropriate behavior in the locations where they worked. Jones also noted that she had always lived in north Rapid City and noticed how much it had "cleaned up" in the past few years. A resident of the nearby trailer court, Heather Turango, also supported the permit. She stated that she had lived there for over two years and was "appalled and outraged" at Alderman Ron Kroeger's comments at the City Council meeting regarding the trailer court. She stated that, contrary to his statements, 70 of the 75 trailers were owner occupied and residents were working as a community to improve the neighborhood.

[¶5.] Two people at the Legal and Finance Committee meeting opposed the permit. Jami Al-Haj owns property across from the current casino on Haines Avenue, also owned by M.G. Oil. She testified she was concerned because she had experienced an increase in vandalism, break-ins, and littering since around the time the current casino had opened. She stated she did not know if the problems she was experiencing were directly a result of the casino, but was concerned that the problems may increase if another casino opened nearby. She commented that at times she had safety concerns for herself and her customers at night and that she did not want anything to harm the value of her property. James McCoy, a member of the neighborhood watch and North Rapid Civic Association, also spoke against the permit. He stated it had taken the Association 14 years to clean up the area and there had been more trouble recently. Alderman Kroeger discussed living in the area for 32 years and the improvement during that time. He stated the area did not need another casino only one-and-a-half blocks away from an existing casino. Another alderman requested that Rapid City Chief of Police Allender conduct an analysis of the relation between calls to the police for service and casinos. In order to receive this information from the Chief of Police, the application was returned to the City Council without recommendation.

[¶6.] At the City Council's next meeting, six people commented in favor of the permit and two commented against. While five of the proponents were the same as before, there was one additional person who spoke in favor of M.G Oil's request.

The two opponents had not given public comment at the previous meetings. Joan Kettlewell, a nearby business owner, expressed her concern that a casino right off a major exit would not give a good impression of the city. She also worried about having four liquor licenses within two blocks. Alice McCoy testified she was the Vice President of the North Rapid Civic Association and that a poll of her members found a majority were against this type of business. Police Chief Allender reported that, having conducted an analysis of the calls for police assistance to casinos in Rapid City, he thought the results were "statistically neutral." Rapid City had 130 casino licenses, and 47 of those casinos were housed in their own buildings. Of those 47 casinos, the current Haines Avenue casino made 51 calls the previous year, which was the fourth highest. The record indicates three letters were also submitted to the City Council expressing opposition to the permit.

[¶7.] A council member made a motion to deny the conditional use permit. City Attorney Jason Green told the City Council that the ordinance*fn5 [as it relates to conditional use permits] was very specific and that the City Council would have to make a finding based on the ordinance in order to deny the application. He told the City Council he believed that subsection C of the ordinance was the most relevant to the comments they had heard. Alderman Ron Weifenbach stated he did not understand how the City Council could find that two casinos on the street would constitute an "undue concentration," especially given the more concentrated casinos in other parts of town. Alderman Kroeger stated he had been on the City Council for 13 years and had denied applications before and would deny this license because he believed it would cause blight in the area and diminish property values. Alderman Karen Olson stated she would vote to deny the application because the neighborhood is entitled to be safe and see positive growth. She also commented she believed that the members of City Council were required to use their discretion as elected officials to determine if there was an undue concentration in a particular area and it did not matter if there were more casinos in other areas.

[¶8.] The City Council voted 8-1 to deny the conditional use permit, with one alderman abstaining due to a personal conflict. The grounds for the denial were that the proposed use would cause an undue concentration of similar uses, so as to cause blight, deterioration or substantially diminish or impair property values.

[ΒΆ9.] M.G. Oil sought a writ of mandamus against the City. The circuit court issued the writ, ordering the City Council to approve the issuance of a conditional use permit to M.G. Oil to allow an on-sale liquor establishment with video lottery, subject ...


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