The city of Fargo doesn't owe money to developers of a rural subdivision for stopping its land sales after the Red River's catastrophic 1997 floods, the North Dakota Supreme Court concluded.

Owners of the Wild Rice development, which is about 3½ miles south of Fargo, had sought almost $1.2 million in damages and interest, arguing the city's actions effectively stripped them of their property rights for almost two years. Fargo has zoning control over the property.

East Central District Judge Douglas Herman, who heard the case during a four-day trial in October 2004, ruled Fargo city officials acted reasonably. On Monday, the North Dakota Supreme Court agreed.

The U.S. and state constitutions prohibit governments from taking private property for public use without compensation, but Fargo's actions did not permanently deprive the developers of use of their land, Chief Justice Gerald VandeWalle wrote in the court's unanimous opinion.

"We conclude Fargo's 21-month moratorium on building permits did not constitute a taking of Wild Rice's property under the federal and state constitutions," VandeWalle wrote.

Catastrophic flooding along the Red River in the spring of 1997 covered most land in the Wild Rice subdivision, forcing officials to re-evaluate where home construction would be allowed along the river valley.

In August 1998, Fargo city officials stopped issuing building permits for Wild Rice while the Federal Emergency Management Agency drafted a flood map for the area.

The map outlined where construction would be banned, and other areas where it would be allowed if extra precautions were taken against flood damage. The finished map did not bar construction on any lots in the subdivision, court records say.

Wild Rice River Estates Inc. sued the city in March 2000, arguing that Fargo should pay damages for preventing the company from developing the property.

The moratorium was an attempt to drive down prices for the land, so the city and Cass County could use federal money to buy it more cheaply, court filings assert. The Fargo City Commission voted to lift the moratorium a month after the lawsuit was filed.

The Supreme Court's opinion concluded city officials had acted in good faith, and agreed with arguments from Fargo attorneys that Wild Rice's developers may have exaggerated their losses.

"The evidence suggests Wild Rice's investment-backed expectations were unreasonable," VandeWalle wrote.

Court documents say developers had expected to sell four lots each year, starting in 1995, but only one was sold to an outside buyer before the moratorium was imposed.

Anton Rutten, a rural Cass County farmer, acquired the Wild Rice property in 1947 with hopes of developing it as Fargo expanded southward, court documents say. It was platted in 1993, with 38 building lots.

Rutten died in 2002, and his wife, Frederica Rutten, is now the company's sole shareholder, a court filing says. The couple's daughter, Bonnie Rutten, is its president.

The company invested almost $500,000 in developing the land, including $300,000 to comply with city demands to install a sewage lift station and underground line, court documents say. It also provided land along the Wild Rice River for parks, and granted the city an easement to allow a city street extension to the south.