An Eagan neighborhood group is challenging the city's approval of a plan to replace wetlands that would be destroyed at a controversial housing development.

Residents on Saturday petitioned the Minnesota Board of Water and Soil Resources to take up their appeal of the wetlands replacement plan the Eagan City Council unanimously approved in April. The wetlands in question total 0.4 acres.

This action marks the latest hang-up for the proposed Steeplechase subdivision at the former Diamond T horse ranch.

Before it was approved last month, neighbors had spent more than a year trying to block the proposal, which creates 37 single-family houses and 58 upscale town homes on a 37-acre site west of Pilot Knob Road and just south of Cliff Road. The group, called the Friends of the Diamond T property, continue to raise a litany of environmental and density concerns.

In their petition, residents accuse the City Council of being "arbitrary and capricious" for not providing written reasoning behind its decision to allow the wetlands to be destroyed and replaced elsewhere. It also argues that had the developer shaved off five housing units from its plan, all of the impacted wetlands could be saved.

"We are talking about going from 95 to 90 (units)," said the neighbors' attorney, Brian Bates. "That mere reduction would avoid all wetland impacts. How is it that the 90-unit option has been overlooked or ignored?

"What I'd like to see is a statement from the council -- that there was no other acceptable alternative and this is why they approved it. I want them to clarify why nothing else is acceptable," he said.

An official with developer Toll Brothers Inc. -- a national builder based in Pennsylvania -- said the company has bent over backward trying to please the neighbors and is "quite comfortable with the level of technical scrutiny."

"This plan has been scaled back already to address all of the environmental issues," said Michael Noonan, division vice president for Toll Brothers in Minnesota. "They are entitled to their opinion, but after over a year of review by the city and other stakeholders, they have made the determination that this plan is appropriate and consistent with the public interest."

Neither the city nor Toll Brothers has seen the petition yet, but both said the entire project went through an exhaustive environmental review process.

City spokesman Tom Garrison said "there was an extensive environmental assessment worksheet, which included comments by Dakota County, the DNR (Department of Natural Resources) and the MPCA (Minnesota Pollution Control Agency) -- all of which concluded that the plans were adequate and sufficient."

The council went along with the recommendation of the Technical Evaluation Panel -- a board comprising experts from the city, the county's Soil and Water Conservation District and the state board -- to mitigate the 0.4-acre loss by creating 0.8 acres of wetland elsewhere in Eagan, rather than on site.

That's partly because the land had a history of pollution. The ranch's owner -- the late Jerry Thomas, a former Eagan City Council member -- illegally stockpiled horse manure at the site, according to city and county officials. And in 1985, demolition debris from the former Metropolitan Stadium in Bloomington was dumped illegally on at least 2 acres of the ranch.

Resident Sharon Holbeck, who lives on a pond connected to the former ranch, said she feels as if the city and builders tried to "out-wait" the residents, and that the wetlands and surrounding trees should be protected, even if they are no longer in pristine condition.

"It's terribly difficult to see this proceed and go in the direction it has. I had high hopes to get the property cleaned up, and I don't oppose development," she said. "Frankly, I'd prefer good neighbors to horse manure. I just had no idea that it would be as exploitive a development as it has turned out to be."

The state board has 30 days to decide if it wants to hear the wetlands appeal. If it doesn't, the neighborhood group will then go to the Minnesota Court of Appeals, Bates said.