South Dakota Supreme Court defers to local interpretation of zoning ordinance

by Eric Christianson

Croell Redi-Mix v. Pennington County Board of Commissioners
(South Dakota Supreme Court, December 13, 2017)

Croell Redi-Mix owns and operates a quarry located in Pennington County, South Dakota. The quarry has been in operation since the 1970s and was acquired by Croell in 2015. Croell intended to expand the operation. After the quarry was opened, but before it was acquired by Croell, Pennington County adopted zoning ordinances. The quarry falls into the “A-1 General Agricultural District” which allows “temporary quarries” ,by right, and mining operations, provided that a construction permit is obtained.

In late 2015, working in consultation with staff from the Pennington County Planning Department, Croell submitted an application for a construction permit to expand its operations. On February 8, 2016 staff issued a recommendation that the permit be granted subject to 11 conditions. The Pennington County Planning Commission reviewed the report and approved the application subject to the recommended conditions that same day.

On February 10, 2016, the Pennington County Board of Commissioners received a letter signed by 37 area residents requesting an appeal of the approval of the permit. The Board of Commissioners held a special meeting on March 2 to consider the appeal. Opponents expressed concerns about the quarry’s expansion including: dust, traffic, availability of groundwater, runoff, and depreciation of property values. At a second hearing the board voted 4-1 to reverse the approval of the permit.

Croell appealed to the circuit court which reversed the Board of Commissioners decision finding:

  1. The residents who sent the letter did not have standing to appeal.
  2. The Commissioners misinterpreted their own ordinance in their decision.
  3. The Commissioners’ decision to deny the permit was arbitrary.

The Board of Commissioners appealed to the South Dakota Supreme Court which granted certiorari.

The Supreme Court reconsidered the three findings of the circuit court.

Standing to Sue Pennington County’s Zoning Ordinance states:

“Any action taken by the Planning Director in administering or enforcing Section 507(A) may be reviewed by the Pennington County Board of Commissioners upon the request of any person affected by such action.” [PCZO § 507(A)(7)(f)]

Croell argues, and the circuit court agreed that this right to appeal only extends to considerations of erosion and storm water control. The Supreme Court reads this passage differently, interpreting the word ‘administer,’ ‘affected,’ and ‘any’ above quite broadly:

PCZO § 507(A) is titled “Erosion and Storm Water Control,” the right to appeal under §507(A)(7)(f) extends to anyone “affected” by “any action taken by the Planning Director in administering . . . Section 507(A)[.]” (Emphasis added.) Noticeably absent from §507(A)(7)(f) is any language limiting the right to appeal to matters involving erosion and storm – water control. Thus, §507(A)(7)(f) provides a right to appeal any action taken by the Planning Director under §507(A). In this case, the action challenged is the Director’s issuance of a construction permit — i.e., the Director’s administering of §507(A)(3).

Because the individuals appealing would be affected by the zoning administrators decision, they have standing to appeal.

Statutory Interpretation Croell argues that the use of its property as a quarry is a permitted use in an A-1 General Agricultural district given that the statute permits temporary quarries and requires only a building permit for the “extraction of sand, gravel, or minerals.”

The County claims that Croell would need to obtain a seperate mining permit as required in the plain language of the ordinance which states, “no extraction of any mineral or substance […] shall be conducted without a Mining Permit.” Here the court identifies a question of statutory interpretation and supports the Commissioners’ interpretation. Further the Court cites the US Supreme Court’s opinion from Chevron v. Nat. Res. Def. Council (1984), which established the principle of “Chevron deference.” Chevron established the principle that courts will defer to the interpretation of those administering a statute as long as that interpretation is “based on a permissible construction of the statute.” In this case the South Dakota Supreme Court found that the Pennington Board of Commissioners interpretation was permissible.

Arbitrariness Because the Supreme Court found that the Board of Commissioners was able to consider more than erosion and storm water control in its decision making, the argument for arbitrariness is moot. The Board’s decision was based on evidence in the scope of its review.

The Supreme Court found that the circuit court erred in reversing the Commissioners’ decision.

Feeding Operation with 2,400 Hogs a Permitted Use

By Eric Christianson

Hoffman v. Van Wyk

South Dakota Supreme Court, August 9, 2017

In Douglas County, South Dakota, Nicholas and Donnelle Hoffman learned that their neighbor, Douglas Leubke, received a permit to build a hog confinement unit from the Douglas County Zoning Administrator. The unit is designed to house up to 2,400 hogs. The permit was made public at a County Commission meeting on September 10, 2015 without any prior public hearings. When the Hoffmans approached the administrator about the issuance of the permit, the administrator explained that the building would house less than 1,000 animal units and therefore did not constitute an animal feeding operation as defined by the ordinance. Under the ordinance, 2,400 hogs is equal to 960 animal units. For that reason, the building is a permitted use not requiring a public hearing.

On March 14, 2016, the Hoffmans applied to the circuit Court for a writ of mandamus to compel the administrator and commission to revoke the permit and put a halt to construction. On June 3, 2016 the Court held a trial and held that the facility was neither a “farm,” “ranch,” nor “orchard” and therefore did not fall under any of the permitted uses of the land. Despite this fact, the Court stated that a writ of mandamus could not be used to undo an act that had already been completed. Both the Hoffmans and the zoning administrator appealed.

The Supreme Court of South Dakota found the circuit Court had erred in holding that the facility was neither a “farm,” “ranch,” nor “orchard.” The ordinance defines farms, ranches and orchards as:

An area of twenty five (25) acres or more which is used for growing usual farm products, vegetables, fruits, trees, and grain, and for the raising thereon of the usual farm poultry and farm animals such as horses, cattle, hogs, and sheep, and including the necessary accessories used for raising, treating, and storing animal products raised on the premises; but excluding an Animal Feeding Operation.

The Hoffmans allege that Leubke does not use the additional land around the facility for growing grain or farm products in addition to feeding hogs; however Leubke does own the full 160-acre quarter section and grows crops on that land.

The Hoffmans also argue that the manure slurry storage pit under the confinement unit violates setbacks established for animal waste facilities. According to the code, such a facility, “shall be no closer than two (2) miles from… the Corsica Lake Recreation Area, and one half (1/2) mile from any… residential dwelling” The facility is less than two miles from the Corsica Lake Recreation Area and less than a half mile from the Hoffman’s residence. The Court interpreted this ordinance to apply only to Animal Feeding Operations not the permitted farm use in this case.

Finally the Hoffmans argued that the hand drawn plan submitted by Leubke to the administrator was insufficiently detailed to allow the administrator to issue the permit. The drawing was not detailed nor drawn to scale. The Court does appear to agree that the administrator had no discretion to approve a permit without all the required information, but finds that this is “ultimately beside the point.”

The Court finds that, “it is clear that the facility was a permitted use under the ordinance as part of a farm or ranch.”

Date of Board’s decision, not date of approval of meeting minutes, starts clock for filing appeal

by Gary Taylor and Hannah Dankbar

Hyde v. Sully County Board of Adjustment
South Dakota Supreme Court, September 28, 2016

Hyde appealed a decision from the Sully County Board of Adjustment (the Board) to grant a conditional use permit (CUP) to Ring-Neck Energy & Feed, LLC for an ethanol plant. The Board approved the CUP in a meeting held on July 20.  When the next met on August 4 it approved the minutes of the July 20 meeting.  Hyde challenged the approval in district court on August 20, which was 31 days after the Board’s approval but only 16 days after approval of the meeting minutes.  Hyde claimed that the approval was illegal due to violations of the open-meeting laws, and that an ethanol plant is not allowed under the Sully County zoning ordinance. The court determined that the petition was untimely, and Hyde appealed.

Regarding the timeliness of the petition in district court, state statute (SDCL 11-2-61) requires these petitions to be filed within 30 days of the day the decision is filed. Hyde argued that the relevant date for appeal purposes was the date of the Board’s approval of the meeting minutes, not the Board’s decision to grant the CUP.  The state statute requires that a petition set forth  “the grounds of the illegality” of the decision being challenged; thus the statute is referencing the date of the decision claimed to be illegal.  That decision would be made on July 20.  The Hydes do not claim any illegalities associated with the decision made on August 4 to approve the minutes.

Because the petition was not filed in a timely manner, the court did not hear the other arguments raised on appeal.

Landowner (and predecessors) implicitly dedicate road to township through actions over the course of a century

by Andrea Vaage

Niemi v. Fredlund Township
South Dakota Supreme Court, July 15, 2015

David and Roxie Niemi filed a declaratory judgment action against Fredlund Township, South Dakota seeking a determination that the road traversing their property (their property being known as Section 20) was not a public road. The Niemis claimed the road on their property, locally called “Lewton Road,” was being used by Fredlund Township as a public road. During the hearing in circuit court, several residents and township officials testified that the Township had paid for repairs and the installation of a cattle guard, had paid to “build up” the road from the driveway to Section 20 and a state highway, and that the road was the only access point to a dam and school. Up until an incident in 2011, when Roxie Niemi informed a nearby resident they could not use Lewton Road, no one had been informed the road was not for public use. The evidence indicated that the road had otherwise been used by the public since 1927. The circuit court determined the road was a public road by common law and statutory declaration. The Niemis argued that the circuit court erred.

The Court reviewed the circuit court’s decision for factual error. The standard of proof is the finding of “clear and convincing” evidence that the Niemis or their predecessors implicitly dedicated Lewton Road as a public road. Since no express dedication was made, the Court had to determine whether the dedication was implied through the owner’s conduct and the facts and circumstances associated with the case. The Court found that the previous owners of Section 20 either requested or acquiesced to Township maintenance of the road, and that one owner asked that a cattle guard be built. Roxie Niemi acquiesced to maintenance of the road in both 2007 and 2009. Although Roxie Niemi stated she didn’t want the road to be used for public use during testimony, her actions and conduct showed otherwise. Her testimony could not override her acts and conduct inconsistent with the stated intent.

The evidence also supported the conclusion that the Township accepted the dedication of the road.  It maintained the road since 1927, provided gravel, grading, and construction, and installed a cattle guard and a culvert.  Although the maintenance was not routine or consistent, the evidence established that the Township maintains some other Township roads only when requested by residents.  The fact that the Township declared Lawton Road a “No Maintenance Road” in 2005 further demonstrated that the Township accepted it as a public road.

The Court found that the district court did not err in determining Lewton Road was a public road under common law dedication. The decision was affirmed.

Zoning Board of Adjustment properly carried out its role in approving application for CAFO

by Andrea Vaage

Grant County Concerned Citizens & Tyler v Grant County
South Dakota Supreme Court, June 24, 2015

Teton LLC applied for a conditional use permit to construct a confined animal feeding operation (CAFO) to house 6,616 swine larger than 55 pounds (“finisher” swine according to the Zoning Ordinances of Grant County (ZOGC)) and 1,200 swine smaller than 55 pounds (“nursery” swine in the ZOGC). The proposed operation would classify as a Class A CAFO-the largest possible designation under the ZOGC.  The Grant County Board of Adjustment (BOA) approved the permit after a hearing attended by 200 individuals. Grant County Concerned Citizens (GCCC) appealed.  Several procedural events are not included here, but the case eventually made its way to the South Dakota Supreme Court.  The Court’s conclusions on GCCC’s claims follow.

After the circuit court made a decision affirming the Board’s decision, GCCC submitted an affidavit signed by Tyler explaining the purpose of the excavation was to obtain water for his horse herd. The Board and Teton moved to strike the affidavit from record, upon which the circuit court granted the motion.

Private well. Under the ZOGC, a CAFO cannot be constructed within 2,640 feet of a private well. The ZOCG does not provide a definition of a “well,” however, SDCL 46-1-6(18) defines “well” as “an artificial excavation or opening in the ground, made by means of digging, boring, drilling, jetting, or by any other artificial method, for the purpose of obtaining groundwater.” GCCC claimed that the BOA’s decision improperly allows a CAFO within 2,640 feet of a well on neighbor Tyler’s property; however, the evidence showed that the well was actually dug on or just before the day of Teton’s application and that the excavation produced 12 gallons of water that day. The Board determined the Tyler’s constructed the well in order to frustrate the Teton’s application and as such the excavation did not meet the definition of “well.”  The Court affirmed, concluding that the BOA’s finding that the purpose of the excavation was to frustrate the CAFO application was material to the statute’s definition of “well” when the definition requires a well to be dug “for the purpose of obtaining groundwater.”  It was irrelevant that the excavation actually obtained 12 gallons of water.

Manure management and operation plan. Section 1034(4) of the ZOCG stipulates that the proposed CAFO must provide a manure management plan. GCCC contests that Teton’s did not find adequate acreage on which to spread manure, because Teton “significantly overstated” the amount of land on which it could apply manure.  The Court concluded that the Board made proper factual determinations on this issue, noting that ZOCG offers little in the way of specific requirements for a manure management and operation plan.

Failure to give notice to Melrose Township. The access road to the CAFO was jointly maintained by two townships. One of the two townships, Melrose Township, was not notified of the proposed CAFO by Teton.  Section 1304(12)(K) of the ZOCG requires “Notification of whomever maintains the access road (township, county and state).” An individual at the hearing for the permit testified that both townships had known about the proposed CAFO and decided not to upgrade the access road. It is irrelevant that the township was not notified by Teton, because the township had actual notice of the proceedings as evidenced by this individual’s testimony.

Nutrient management plan.  GCCC asserts that the proposed CAFO would not be able to obtain the water required to operate as evidenced by Teton’s nutrient management plan.  The Court considered this argument waived because the ZOGC’s requirements related to nutrient management plans do not address the water requirements of a CAFO.

GCCC made a number of other similar claims, but the Court found nothing in the record to suggest in these or any of the discussed claims that the Board did not regularly pursue its authority. The Supreme Court affirmed the ruling of the trial court.

Improper ex parte contact only invalidated vote of commissioner making the contact

by Hannah Dankbar

Doug and Louise Hanson v Minnehaha County Commission
(South Dakota Supreme Court, October 29, 2014)

Eastern Farmers Cooperative (EFC) applied for a conditional use permit to build an agronomy facility. The facility would store, distribute and sell a variety of farm products, including anhydrous ammonia. The land the facility would sit on, and the surrounding area is zoned as A-1 Agricultural. The Minnehaha Planning Commission recommended approving the permit with ten conditions, even though local residents, including the Hansons, voiced their objections at the Planning Commission hearing because of safety and aesthetic concerns. The Hansons appealed to Minnehaha County Commission. In anticipation of the appeal one of the county commissioners (Kelly) toured an agronomy facility near Worthing, South Dakota. The facility was owned by EFC, but it is unclear if the commissioner knew this when he set up the tour. The County Commission held its hearing and approved the permit by a unanimous vote.  Commissioner Kelly disclosed at the hearing that he had touring the Worthing facility, and that he was impressed by its safety measures. The Hansons appealed to the circuit court. The court held that the Commissioner Kelly’s vote did not count due to the improper ex parte communication, but the other votes were not affected and so the approval of the permit stood. The Hansons appealed the decision.

The Hansons claim that they were denied due process in two ways: (1) that the Minnehaha County Zoning Ordinance (MCZO) does not provide adequate criteria upon which to base a decision to grant a conditional use permit, and (2) that Commissioner Kelly’s participation in the appeal to the County Commission denied them a fair and impartial hearing,

In giving counties ability to control their own zoning, counties must put in place criteria for determining when conditional use permits may be granted.  The Minnehaha County Zoning ordinance delineates three general criteria applicable to every conditional use permit application, and an additional six applicable to the types of agricultural uses at issue in this case.  The South Dakota Supreme Court noted that zoning ordinances are presumed to be constitutional, and that to overcome this presumption the challenging party must show the ordinance is arbitrary, capricious and unconstitutional. Abstract considerations are not sufficient. The South Dakota Supreme Court rejected the Hanson’s argument because they failed to show any way in which the standards in the ordinance did not pass muster.

2. The Hansons argue that the EFC should be required to “begin anew” with the permitting process because the votes of the other commissioners were influenced by the statements of Commissioner Kelly  To meet their burden, however, The Supreme Court stated that the Hanson’s must actually show that either Commissioner Kelly’s actions were sufficient to taint the entire preoceeding or that one or more of the other commissioners should be disqualified individually.  The Hanson’s failed to produce any evidence of any influence Kelly’s actions may have had on the other commissioners.  The court concluded that invalidating Kelly’s vote alone was a sufficient remedy.  With that vote invalidated, the Commission still approved the conditional use permit 3-0.

 

Rejection of amendment to zoning ordinance not subject to referendum

by Melanie Thwing and Gary Taylor

Grant County Concerned Citizens v. Grant County Board of Commissioners
(South Dakota Supreme Court, February 2, 2011)

Grant County Concerned Citizens proposed an amendment to the zoning code of Grant County, South Dakota as allowable under SDCL 11-2-28 . This amendment would increase setbacks for Class A, B, C, and D Concentrated Animal Feeding Operations. The amendment was referred to the Planning and Zoning Board for review and recommendation. The Planning and Zoning Board took testimony, deliberated, and ultimately voted unanimously to reject the proposed amendment.  At the County Commissioners’ meeting public comments were again received.  A motion to approve the amendment died for lack of a second, and therefore the amendment was officially rejected.

The petitioners then filed a petition under SDCL 11-2-22 and SDCL §§ 7-18A-15 to -24 to refer the amendment to a public vote. At the next County Commissioners meeting, the request for a referendum petition was rejected on the grounds that the matter was not one that could be referred to the voters under state law.

The petitioners appealed the denial of the referendum in circuit court, which issued a letter agreeing with the Board. It agreed that the amendment was not a legislative decision and could not be referable to a referendum.

The petitioners appeal to the Supreme Court arguing that a proposed amendment to a zoning ordinance that has been rejected by the county commission is referable to a referendum vote.

SDCL §11-2-22 states:

The comprehensive plan, zoning ordinance, and subdivision ordinance may be referred to a vote of the qualified voters of the county pursuant to §§ 7-18A-15 to 7-18A-24.  The effective date of the comprehensive plan, zoning ordinance, or subdivision ordinance on which a referendum is to be held shall be suspended by the filing of the referendum petition until the referendum process is completed.”

The court determines that the language of the statute does not contemplate referring to the referendum process a proposed amendment that was rejected, as suspension of the effective date of the plan or ordinance implies that there must be some affirmative action.

Even if the rejected amendment could be construed to fall under SDCL §11-2-22, it would still need to be consistent with §§ 7-18A-15 to 7-18A-24. These state that an ordinance must be “adopted by a board of county commissioners” to qualify for a referendum.  In this case the board rejected, and did not adopt the amendment.

Further, §§ 7-18A15.1 limits the referendum process to only issues of legislative decisions of a board. It defines a legislative decision as one, “that enacts a permanent law or lays down a rule of conduct or course of policy for the guidance of citizens or their officers.  Any matter of a permanent or general character is a legislative decision [.]”  Using this definition, the circuit court came to the conclusion that the decision was not legislative because it enacted nothing. The Supreme Court agreed with this decision, stating that for the action to be eligible for referendum it must be an affirmative action that effects some change in an existing ordinance , ultimately it must change the “status quo.”

The court held that the process of referendum is present to serve as a constitutional right for the people to have an act submitted for their approval, which without the action would become law. It is also a means to stop laws which are not in effect to give the people an additional way of expressing their views on a legislative proposition. The circuit court was correct in their decision.

Evidence did not support denial of permit for video casino

by Melanie Thwing

M.G. Oil Company v. City of Rapid City
(Supreme Court of South Dakota, January 26, 2011)

M.G. Oil Company, who owns and operates 25 local businesses, applied to the City of Rapid City, South Dakota for a conditional use permit (CUP) to operate a video lottery casino with an on-sale liquor establishment. This casino would be placed in a newly constructed strip mall that is zoned commercial. After correct completion of the application and notification process the Growth Management Department and other agencies including the police department reviewed the application. It was recommended for approval with stipulations about maintenance of the facility.

Although there is another video lottery casino just north of the property, the Growth Management Department stated that they found no undue concentration “which would cause blight or deterioration or diminish land values in the surrounding area;” standards required to be addressed by the Rapid City zoning ordinance.  Even given this Mario Rangel, a nearby property owner, appealed the decision.  Mr. Rangel stated he wanted the city to support “positive” development.  The issue was placed on the City Council’s agenda.  The matter was eventually sent to the Legal and Finance Committee so that the public would have additional time to comment.

At the next Legal and Finance meeting the applicant, six proponents, and two opponents commented on the proposal. One opponent spoke about safety concerns in the area, but was unsure if the increase of crime she experienced was directly related to the existing video casino located only a block away. To this claim M.G. Oil presented the security measures of the company. This included at least six security officers, with at least two having a history in law enforcement. Also, two women employees of M.G. Oil spoke on behalf of the effectiveness of the security.

Alderman Kroeger voiced his opinion that the area did not need a new casino a block away from an existing one, even though there were greater concentrations of casinos in other parts of town. Due to this, another alderman requested the police department present an analysis of the relation between calls to the police for service and casinos. The proposal was thus returned without recommendation to the City Council to allow time for this analysis. Ultimately, the police chief stated that the results for casinos were “statistically neutral.”

Before the proposal was voted on, the City Attorney told the council that they would have to make a finding based on the ordinance if they wished to deny the application. This falls under SDCL 11-4-4.1 which states:

“The approving authority shall consider the stated criteria, the objectives of the comprehensive plan, and the purpose of the zoning ordinance and its relevant zoning districts when making a decision to approve or disprove a conditional use permit.”

Given this, Alderman Kroeger again spoke on the issue, stating that he would deny the license because he believed it would cause blight and diminish property values but gave no facts to support this. Alderman Olson also stated she would vote to deny the CUP because the neighborhood was entitled to positive growth, and that as member of the City Council they were entitled to use discretion when determining an undue concentration, regardless of the fact that there were more casinos in other areas. The CUP was ultimately denied on the grounds that it would cause an undue concentration of casinos, resulting in blight and deterioration, and substantial diminution of property values.

M.G. Oil filed a writ of mandamus with the circuit court.  After noting that a writ of mandamus is an appropriate remedy to compel performance of discretionary functions when the particular entity (in this case, the City Council) abused its discretion, the circuit court reversed the decision of the City Council and ordered the city to approve the CUP. The court stated: (1) there was no evidence up0n which the City Council could make a determination that the CUP would substantially diminish or impair property values, (2) no evidence to prove blight, (3) the decision of the City Council was “arbitrary, capricious, and an abuse of discretion.”

The City appealed to the Supreme Court arguing that the circuit court abused its discretion when it found that the City Council acted arbitrarily and capriciously. The Supreme Court made the following observations concerning the circuit court’s analysis:

The Rapid City zoning ordinance states that a CUP, “must be issued if… the proposed use will not create an undue concentration of similar uses.” The circuit court found no evidence from the council meetings that approving the CUP would result in an undue concentration of video casinos. 

Although at the motion hearing the City Council had heard testimony about concerns of adding an additional establishment with a liquor license in the area, the circuit court could not find in the record that the City Council considered this when looking for a claim of undue concentration. All the record showed was Alderman Olson’s statement about discretion when determining an appropriate concentration for an area. There is no substantial evidence that the CUP would diminish property values, and even Alderman Kroeger, a realtor, never addressed this subject.

Further, mere opinions presented through public comment do not, by themselves, satisfy the standards required in the zoning ordinance. The Supreme Court has always held, “[predictions] and prophecies by neighboring property owners that a building when completed will likely become a nuisance and annoyance… [cannot]  serve as a legal reason for [local governments] to deny a … permit to persons otherwise entitle thereto.”

Finally, there is no proof that the casino would cause blight. The casino itself was intended to be a high-end establishment, with a short bar to deter patrons from staying long periods of time and no alternate form of entertainment other than the video casino games. The court fails to see how this would cause blight.

City Council records prove that the criteria in ordinance SDCL 11-4-4.1 was only considered at the end of the discussion, and the language was merely repeated when the decision was issued.

The Supreme Court concluded that the factual record was insufficient to support the City Council’s decision. Based on this the circuit court was correct in their findings, and did not abuse its discretion.

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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