Court finds little special benefit to justify special assessment for road project

by Gary Taylor

Belling, et al v. City of Urbandale
(Iowa Court of Appeals, July 13, 2011)

Plaintiffs own residential acreages of various sizes along 156th Street in Urbandale. The area has experienced development over the past ten years, including the addition of a nearby elementary school. In response to the growth in the area, the City initiated a project to replace a section of 156th Street and to build new sidewalks.  The roadway project consisted of replacing the existing two-lane, twenty-four-foot wide sealcoated asphalt road with a four-lane divided parkway made up of a twenty-eight-foot wide green median between two twenty-six-foot wide sections of road. The sidewalk project added a four-foot wide sidewalk on the east side of the street and an eight-foot wide multi-use path on the west.

The only construction cost included in the roadway assessment was the cost of paving a thirty-one foot wide street. The assessment did not include other construction costs, such as grading, subgrade preparation, storm sewers, water mains, sanitary sewers, or street lights. The special assessment for the new road was spread among the property owners by the use of the modified Flint Formula, which “focuses on the frontage size and depth of the abutting property, and assigns benefit points for each tract.?  The total costs of the project were $5,991,715.77. The city assessed $1,337,726.81, approximately twenty-two percent of this cost, to the abutting landowners who were plaintiffs in the suit.

Plaintiffs brought an action against the City, contending the assessments exceeded the special benefits they received from the project. The plaintiffs testified at trial that they received very little benefit from the project. Each plaintiff also testified about numerous negative impacts of the project, including increased noise, trash, traffic, and maintenance (primarily snow removal and mowing); decreased safety, privacy, and accessibility, and potential liability. The plaintiffs testified this project produced a great public benefit for the surrounding neighborhoods and nearby school but provided very little special benefit to their properties.

The plaintiffs’ expert witness, a former engineer for the City of Des Moines, testified the City’s use of a modified version of the Flint formula in spreading assessments – referred to as the Urbandale Curve – was improper due to the irregular topographical features, size, and shape of the properties involved. He criticized the strictly mathematical approach of the formula for failing to properly account for special and general benefits. He stated bare land does not benefit unless it can be subdivided in some way, and that owners of large lots, like the plaintiffs, received no more or less special benefit than people who lived on smaller lots and incurred smaller assessments.

The City presented evidence that the Flint formula has for decades been the preferred method of spreading assessments among property owners in Iowa.  The Urbandale Community Development Director testified as to the benefits of the paving, including increased property value for the plaintiffs in “at least the amount of the assessment.” The Urbandale City Engineer testified the City used a modified version of the Flint formula, which was an accepted engineering practice. Another engineer who reviewed the assessments in this case found nothing improper in actions taken by the City.

The district court concluded the assessments were excessive and reduced them, finding the plaintiffs had proved the assessments exceeded the special benefit to their properties. The court reduced the roadway assessments by seventy-five percent and the sidewalk assessments by fifty percent. The district court also provided, “Each assessment shall be further reduced by 10% if paid in a lump sum within 90 days of the exhaustion of all appeals.” The City appealed.

Iowa Code 384.61 provides: ”The total cost of a public improvement . . . must be assessed against all lots within the assessment district in accordance with the special benefits conferred upon the property, and not in excess of such benefits.”  The Court of Appeals looked to previous cases which have established the factors to be used in differentiating between special benefits conferred uniquely on abutting landowners, and general benefits accruing to the community at large.  Those factors include:

the present and future use of the abutting property, the increase in the market value occasioned by the improvement, the size and shape of the property, the proximity of the property to the improvement, the amount of property fronting the improvement, the needs of the property owners served by the improvement, and the primary purpose behind the improvement.

The Court looked at these factors in order, finding that (1) each of the properties was at its best use; (2) the record contains no evidence that the improvement resulted in an increased market value for any of the properties; (3) the parcels at issue varied in size and shape, but all parcels were along 156th Street and were fairly large in size; (4) the land was on an asphalt sealcoated road before the paving project, and thus the project had little effect to reduce noise, dust, and maintenance costs, but did improve the aesthetic value, fire and police access, and ease in snow and ice removal; and (5) the primary purpose of the improvement was clearly to afford a general benefit to the public because the new road was considered an arterial road and was designed to handle heavy traffic from the community as a whole. The Court concluded that even after the city discounted the cost of the project in assessing the abutting landowners the assessments still exceeded the special benefits conferred on the properties.

The Court reviewed the use of the Urbandale Curve method of assessing properties and found it consistent with caselaw.  Noting first that any method of assessing special benefits will necessarily draw arbitrary lines between special and general benefits, the Court went on to state that the city must “examine each affected parcel and its particular features to determine whether the assessment exceeded the special benefits conferred on the land….A practical overview of all the surrounding circumstances must be considered.”  The Court concluded that failure to do so resulted in excessive assessments on some properties. For example the owner of a single family residence should not have been assessed the same amount a nearby townhome/condominium development. “Certainly, the project conferred more benefits on an entire townhome/condominium development than it did on a single-family residence.”  The Court further observed that the potential special benefits identified by the City in effect confer very little, if any, benefit on bare land. The Court concluded it was appropriate for the district court to reduce each roadway assessment by seventy-five percent.  Following the same line of reasoning the Court also affirmed the portion of the district court’s judgment that reduced the sidewalk assessments by fifty percent.

City did not err in using Flint formula as foundation for special assessment

by Gary Taylor

Phillip Gray, et al. v. City of Indianola
(Iowa Supreme Court, May 6, 2011)

Plaintiffs own residential acreages along West Euclid Avenue in the city of Indianola. West Euclid was a gravel road until the school board decided to build an elementary school along the avenue and the city council decided to pave it. The paving project included expanding and paving the avenue, reconfiguring ditches, and installing sidewalks on both sides. The city council’s decision to pave was based on the location of the school, and none of the plaintiffs had requested that the road be paved.

The city levied a total of $360,448.81 in special assessments for the pavement of the road and $41,080.32 for the installation of the sidewalk. The assessment district included all the properties abutting West Euclid and back to a depth of 300 feet. Plaintiffs’ individual assessments ranged from $11,697 to nearly $21,000.

Iowa Code 384.61 provides that “the total cost of a public improvement, except for paving that portion of a street lying between railroad tracks and one foot outside the tracks, or which is to be otherwise paid, must be assessed against all lots in the assessment district in accordance with the special benefits conferred upon the property, and not in excess of such benefits.” [emphasis added].

Plaintiffs sued the city of Indianola, contending the assessment was excessive and that they received little, if any, special benefit from paving the road. They cited factors such as the rural atmosphere of the neighborhood of which the gravel road was a feature, increased traffic prompted by the pavement of the road, and the location of the school in the neighborhood. They opined that the expected benefits of paving a gravel road, such as reduced noise and dust, were offset by the detriment resulting from the increased traffic due to the school. The owners also testified they did not believe the sidewalk benefitted their properties at all but actually constituted a detriment because they would now be required to maintain the sidewalks, and would be exposed to potential liability from for personal injuries to pedestrians.

The owners presented the expert testimony of a former city engineer that the method utilized by the city to spread the cost of the paving project – known as the “Flint formula” which is a purely mathematical formula based on frontage feet and distance from the improvements – resulted in excessive assessments because it failed to take into account unique features of each parcel, and whether special benefits were actually conferred by the project. 

The city presented evidence that the assessments were not based entirely on the Flint formula.  The city engineer testified to deductions made for the road and sidewalk sections at intersections, the width of the street (assessments were made based on a hypothetical 25’ street instead of the actual 31’ width) and the overall thickness of the pavement, and the city manager explained deductions made at the direction of the city council including reductions to the assessment of larger lots.

The district court found the assessments to be in excess of special benefits conferred, ordered all road assessments to be reduced to an amount not exceeding $8,453.78, and ordered all sidewalk assessments to be reduced by half.  The city appealed to the Iowa Supreme Court. 

The Supreme Court observed that:

Few property owners are happy about sharing through special assessments the cost of public improvements, particularly ones that they did not ask for. It is natural for the average property owner to resent the burden thus laid upon him, and he easily persuades himself that the thing for which he is asked to pay is a detriment, rather than a benefit, to his land, and ordinarily it is not difficult for him to find plenty of sympathizing neighbors who will unite in supporting his contention.

The court determined that the city’s use of the Flint formula for assessing roadway improvements was not inappropriate because “at several points in the assessment process the city reduced the assessment …to balance the general benefits conferred upon the public with the special benefits conferred upon the abutting properties.”  The court noted that the city council’s adjustments were consistent with previous caselaw citing several factors relevant to determining special benefits, including “the present and future use of the abutting property, the increase in the market value occasioned by the improvement, the size and shape of the property, the proximity of the property to the improvement, the amount of property fronting the improvement, the needs of the property owners served by the improvement, and the primary purpose behind the improvement.”   The court further found the benefits to having a gravel road paved were numerous, “including fugitive dust control, reduced roadway noise, lower vehicle maintenance costs, aesthetic enhancements, improved drainage, decreased potential for trash accumulation due to the elimination of ditches, increased safety, easier maintenance of the property abutting the road, and decreased response time for emergency services…” and that many of plaintiffs’ complaints were in fact a result of locating the school nearby and not paving the road.  Conceding that determining special benefits “cannot be done with mathematical precision” the court concluded that the plaintiffs failed to overcome the presumption that the assessments were correct. 

The court affirmed the district court’s reduction of the sidewalk assessment, finding that the record established that the public benefit derived from the sidewalk improvements – including student and general pedestrian safety – was significant.

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.