City cannot be sued for failure to enforce subdivision ordinance requiring developer provide improvements

by Gary Taylor

Nelson, et al., v. City of Hampton
(Iowa Supreme Court, August 26, 2011)

A rather complicated twenty year history associated with the platting and development of a residential neighborhood on the northwest edge of Hampton boils down to this:  Three separate subdivisions, each connected by streets dedicated within each subdivision, were planned.  As the project proceeded plans changed, and at a point in 2000 the city and developer reached an agreement that, among other things, obligated the city to surface a 300-foot portion of dirt road that connected one subdivision to the existing street network -which passed both within and outside the boundaries of the subdivision plat – and assess the cost to adjacent landowners.  When the city moved forward with the resurfacing project they prepared an assessment plat and schedule that assessed the adjacent landowners amounts ranging from about $4,000 to 9,000.  The landowners contested the assessments in district court, making three claims: (1) the assessments were void because they were contrary to a city ordinance that requires subdividers to “make and install” the grading and improvement of streets within the final plat of a subdivision by “surfacing or causing to be surfaced the roadways” per ordinance standards; and in the alternative, that (2) the assessments exceeded the special benefits conferred upon the adjacent properties in violation of Iowa law.  The district court rejected both claim, and this appeal to the Iowa Supreme Court ensued.

Agreement contrary to ordinance. The Supreme Court first noted that the legislature has given cities statutory authority to both assess property owners the costs of public improvements based on the benefits they receive from those improvements (Iowa Code Chapter 384) and to charge developers with installing public improvements through the plat approval process (Iowa Code Chapter 354).  Given that both alternatives exist for getting streets constructed, the Court viewed the core question to be whether the city was under a mandatory obligation to enforce the ordinance directive requiring subdividers to “make and install” improvements.  To decide this the Court examined whether the ordinance directive was mandatory or directory, and to decide this the Court will look at whether failure to mandate performance under the ordinance would undermine the purpose of the ordinance itself.  The purpose of the ordinance, as set out in the city code, is to “establish minimum standards for the design, development and improvement of subdivisions” and to make adequate provisions “for public services.” The court concluded that the provision requiring subdividers to install improvements was not mandatory because the end result (a paved road) could be accomplished just as satisfactorily by the city through the assessment process.  In either case, the cost is ultimately borne by the landowners in the subdivision.  In this particular case the agreement allowed for the recoupment of street costs from landowners outside the subdivision who nonetheless benefit from the street.  This result is also consistent with a long line of cases that have sanctioned cities’ decisions to waive plat approval standards when strict adherence to the standards would thwart the objectives of the ordinance.

Special benefits conferred.  The Court further found the amount of the special assessments to be reasonable.  It noted that the law “not only presumes the assessments are correct, but also that they do not exceed the special benefit derived.”  Despite the landowners’ assertions that they would not use the street and it provided them with no additional access, the Court found special benefit in the increase in property values that resulted, and in the transformation of a dirt road into a paved road (despite the landowners’ personal satisfaction with a dirt road).

The district court ruling was affirmed.





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