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Blaine approves $400,000 settlement in Rainbow Village lawsuit; city’s net cost estimated near $154,000
Summary
The council voted to approve a $400,000 settlement with Blaine Atlantic Funding LLC over a denied apartment project at North Town Mall; after insurance participation and legal costs the city's expected net obligation was described as roughly $154,000 and staff said a funding source will be identified later.
The Blaine City Council on March 3 approved a settlement to resolve litigation brought by Blaine Atlantic Funding LLC over the denial of a proposed apartment project at the Rainbow Village/North Town Mall site.
Director Thorbig told the council the plaintiff had sought about $1.4 million but agreed during a court‑ordered settlement conference to accept $400,000 to resolve all claims. Thorbig said the city had incurred nearly $71,000 in attorney fees at the time of the council memo, and after League of Minnesota Cities insurance coverage the city's share of the settlement and fees was estimated to be just under $154,000; that figure may increase as final legal bills are tallied.
The litigation began after the council denied a rezoning request for the Rainbow Village apartment proposal in December 2022; Thorbig said the plaintiff later sold the property, so the suit did not seek reversal of the land‑use decision but monetary damages based on alleged lost sale proceeds and out‑of‑pocket costs.
Council Member Larson said she opposed paying taxpayer funds and argued the city had not been required to pay; Council Member Robertson urged context, noting the proposal reflected elements of the previously adopted North Town visioning plan and that litigation risk remained. Council Member Missolia described the settlement as risk mitigation. Council Member Newland moved to accept the settlement resolution; the motion was seconded by Council Member Robertson and carried on a voice vote.
Thorbig said the city does not yet have an identified funding source for the net obligation and that staff will return with options before year‑end. The approved resolution directs the city manager and mayor to execute the settlement agreement and end the litigation.
