City failed to show special benefits conferred on abutting landowners when assessing for street improvements

by Melainie Thwing and Gary Taylor 

Hubbard v. City of Pierre
(South Dakota Supreme Court, June 30, 2010) 

In 2007 the City of Pierre, South Dakota began an improvement project on the street Wade and Lisa Hubbard live on. This project was primarily to replace water mains, but also included replacing sewer mains, resurfacing streets, and replacing curb, gutter, and driveway portions that had been installed between 1930 and 2006. In February of 2007 the City proposed a resolution to issue special assessments at a set rate per linear foot cost of reconstructed curb and gutter, and at a set rate per square foot cost for reconstructed driveway approaches.  The Hubbards, Ben Orsbon, and several other petitioners appeared at the Commission meeting that month and argued that the special assessment was an unconstitutional taking of private property, but the resolution later passed. 

After the assessments were filed in November 2007, the petitioners (with counsel present) again contested the assessment citing the Fifth Amendment of the U.S. Constitution, and the South Dakota Constitution Article VI § 2 which states, “[p]rivate property shall not be taken for public use, or damaged, without just compensation which will be determined according to legal procedure established by the legislature.” The petitioners argued that the amount of the special assessments levied exceeded the benefits provided to the abutting landowners.  They claimed that the replacement of curb, gutter and driveway approaches provided no benefits to the abutting landowners.  Alternatively, petitioners argued that the city should have calculated the special assessments according to South Dakota Codified Law (SDCL) 9-45-32 which provides that the assessment should be levied, “according to the benefits determined by the governing body,” rather than SDCL 9-45-30 which provides that, “the rate of assessment per front foot,” is the proper way to levy special assessments.  Nevertheless, the City still approved the assessments, and the petitioners filed for a permanent injunction with the circuit court.  The circuit court determined that under either statute a showing of benefits conferred is required, and that the assessments were unconstitutional under the South Dakota and U.S. Constitutions.  The city then appealed to the South Dakota Supreme Court. 

The Supreme Court stated the framework for the constitutional analysis:   

If a local public improvement confers a special benefit on private property, a special assessment can be constitutionally imposed if the assessment does not exceed the benefit received. A public improvement is considered local if it benefits adjacent property, as distinguished from benefits diffused throughout the municipality….Determining whether a project confers special benefits requires a finding that the assessed property receives a benefit above and beyond or differing from the benefit enjoyed by the general public.
During the circuit court hearing Hubbard testified that his home is in a three-block historic neighborhood, and that the curb that was replaced was an older style curb with square corners, was still in good shape, and that, in fact, the new curb provided less, rather than more protection against stormwater damage.  Thus, no property value was added.  Orsbon, who was an AICP-certified planner with a masters degree in planning and over twenty years experience in the field, stated that because a gutter and curb already existed, were in good condition, and could have lasted thirty more years, the replacement of the gutter and curb added no benefits to his property. An assessor testified that no property value was added with the replacements.  On the other hand, the city’s engineer testified that the curb and gutter were failing in several places along the streets in question, and that all properties benefitted from replacement of existing curb and gutter with a uniform design. 
 
The circuit court found that the city engineer’s testimony that all properties benefitted from the uniform design showed that the benefits provided to the petitioners were, in fact, no different than those provided to the general public.  It concluded that the general public, and not specific property owners, were the beneficiaries of a uniform design.  The circuit court noted that its decision was based on “strong, direct, clear, and positive proof” from the petitioners.  The Supreme Court found no evidence of a “clear mistake” in the ruling of the circuit court and, therefore, affirmed the lower court’s decision in favor of petitioners.   

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