The city of Blaine settled a lawsuit with a property owner who was denied a rezoning request to build apartments in the city, agreeing to pay $400,000 to the owner. The federal lawsuit was filed in 2023, arguing that the property owner’s equal protection rights were violated when the city denied a 196-unit apartment complex near the Northtown Mall. The lawsuit argued that the city council did not have valid reasons for rejecting the project, which was protested by neighbors. 

The city maintains that it did not violate the property owner’s constitutional rights, saying the decision was made in alignment with planning and zoning regulations. The property owner originally sought $1.4 million, and the city council approved the $400,000 settlement in March. 

The property owner purchased the former Rainbow Foods site in 2020, which has been vacant since 2014. The site falls within the city’s Northtown Plan, created to guide the redevelopment of the mall with a mix of property types. The owner argued that the proposed apartments fit this vision and requested that the city rezone the site from commercial to high-density residential. 

The city’s planning commissions approved a conditional use permit in fall 2022, despite protests from residents that the project would negatively impact traffic, air quality, aesthetics and crime. The city council was one vote short of passing the rezoning request, saying that the project was not consistent with the surrounding area, the building was too large and that it would increase traffic and harm the neighborhood. 

An attorney for the property owner stated in a letter to the council, “The City Council’s denial was a naked byproduct of neighborhood opposition.” 

After the rezoning denial, the property was sold for about $3 million. Had the apartments been approved, a purchase agreement for about $4 million had already been agreed to with a developer. The owner sued to recover lost revenue on the property.  

According to Zillow, the average rent in Blaine is $2,505, 67% higher than Minneapolis and 23% higher than Chicago. The typical home value in Blaine also exceeds both Minnesota and United States average home values. 

While the city council remains split in its decision, the case highlights the growing tension between local zoning authorities and the urgent demand for more housing. As affordability challenges continue to mount, similar disputes are likely to emerge across the state.