SCOTUSblog recaps this week’s Supreme Court arguments

SCOTUSblog provided good previews of this week’s oral arguments, discussed in this blog on Tuesday, and a post-argument recap of the St. Johns Water Management takings case.

Koontz v. St. Johns Water Management preview
Koontz v. St. Johns Water Management recap of arguments

City of Arlington v. FCC preview

This week at the U.S. Supreme Court

This is an important week for land use at the U.S. Supreme Court.  On Wednesday the Court will hear arguments in the case of City of Arlington, TX v. Federal Communications Commission, a Federal Telecommunications Act case that was discussed previously in this blog. For the Oyez Project summary of the case go here.

Another case with potentially much broader implications is being argued today.  That case is Koontz v. St. Johns River Water Management Authority.  The Oyez Project summary is here.  An article from the Orlando Sentinel can be found here.  As a University of Florida law professor aptly stated in the Orlando Sentinel article, the case “doesn’t really reduce itself very well for a newspaper article.”  The essential facts:  The landowner sought permits to prepare his land for development by filling in wetlands. He was told by the St. Johns River Water Management District that he could build on about 3 acres of the parcel if he left the rest of the property alone and paid around $10,000 to restore some wetlands in a state-owned wildlife preserve nearby.  He rejected the second part of that offer and sued St. Johns when it denied his requests for a development permit, arguing that the it had stripped his land of much of its value as a result of the denial. He won in state court and won again when the district took the case to an appeals court. Then, last year, the Florida Supreme Court sided with the water district. (For the lawyers, and non-lawyer land use law fanatics among you, the Florida Supreme Court case can be accessed here).

The U.S. Supreme Court certified the following legal questions:

1. Whether the government can be held liable for a taking when it refuses to issue a land-use permit on the sole basis that the permit applicant did not accede to a permit condition that, if applied, would violate the essential nexus and rough proportionality tests set out in Nollan u. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994); and
2. Whether the nexus and proportionality tests set out in Nollan and Dolan apply to a land-use exaction that takes the form of a government demand that a permit applicant dedicate money, services, labor, or any other type of personal property to a public use.

Potentially at stake is the practice of requesting developers to pay for off-site improvements as a condition of development approval.  Also raised is the question of whether decisions made during the pre-permit negotiation phase can give rise to takings claims.

US Supreme Court says no bright-line exception to the Takings Clause for temporary flooding caused by Corps action

by Gary Taylor

Arkansas Game and Fish Commission v. United States
(U.S. Supreme Court, December 4, 2012)

The Arkansas Game and Fish Commission owns a wildlife management area along the Black River that that is forested with multiple hardwood oak species and serves as a venue for recreation and hunting. In 1948, the U. S. Army Corps of Engineers constructed the Clearwater Dam upstream from the management area and adopted the Water Control Manual, which sets seasonally varying rates for the release of water from the dam. Periodically from 1993 until 2000, the Corps, at the request of farmers, authorized deviations from the Manual that extended flooding into the management area’s peak timber growing season. The Commission objected to the deviations on the ground that they adversely impacted the management area, and opposed the Corps’ proposal to make the temporary deviations part of the manual’s permanent water-release plan. After evaluating the effect of the deviations, the Corps abandoned the proposed Manual revision and ceased its temporary deviations.

The Commission sued the United States, alleging that the temporary deviations constituted a taking of property that entitled the Commission to compensation. The Commission maintained that the deviations caused sustained flooding during tree-growing season, and that the cumulative impact of the flooding caused the destruction of timber in the Area and a substantial change in the character of the terrain, necessitating costly reclamation measures. The Court of Federal Claims’ entered a $5.8 million judgment in favor of the Commission; however, this judgment was reversed by the Court of Appeals. The Court of Appeals acknowledged that temporary government action may give rise to a takings claim if permanent action of the same character would constitute a taking. It held, however, that government-induced flooding can give rise to a taking claim only if the flooding is “permanent or inevitably recurring.”

The U.S. Supreme Court disagreed.  Citing back to Penn Central the Court noted that takings claims most frequently turn on situation-specific factual inquiries, as opposed to bright-line legal tests. The Court cited its own cases that affirmed that government-induced flooding, and seasonally recurring flooding, can constitute takings. The Court has also ruled that takings temporary in duration can be compensable. None of the Court’s previous decisions authorizes a blanket temporary-flooding exception to the Court’s Takings Clause jurisprudence.  The Court interpreted The Corp’s primary argument as being that reversing the Court of Appeal’s decision risks disrupting public works dedicated to flood control. While the public interests in this case are important, the Court did not consider them to be categorically different from the interests at stake in the many other Takings Clause cases in which the Court has rejected similar arguments.  The Court declined to address the Corps alternative argument that damage to property, however foreseeable, is collateral or incidental; it is not aimed at any particular landowner and therefore is not compensable under the Takings Clause because it was first tendered at oral argument and not aired in the courts below.

Because the Federal Circuit rested its decision entirely on the temporary duration of the flooding it did not address other factors relevant to the takings inquiry, such as the degree to which the invasion is intended or is the foreseeable result of authorized government action. the character of the land at issue, the owner’s “reasonable investment-backed expectations” regarding the land’s use, and the severity of the interference. Thus, remand to address these issues was warranted.

Overflights from airport should not be examined using regulatory takings standards

by Kaitlin Heinen

Robert E. Brenner v. City of New Richmond
(Wisconsin Supreme Court, July 17, 2012)

The New Richmond Regional Airport is owned and operated by the City of New Richmond. In September 2006, the Airport began a construction project to extend its main runway by 1500 feet, which was completed in June 2007.  To make the runway extension possible, the City had acquired, by direct condemnation, 62 acres of land from the Wickenhausers, whose land bordered the north end of the Airport. Also acquired by the City was a 3.813-acre avigation easement over parts of the remaining 80 acres of the Wickenhausers’ property. (An avigation easement is an “easement permitting unimpeded aircraft flight over the servient estate.”) This 3.813-acre avigation easement covered the airspace above the Wickenhausers’ personal residence and dairy barn.  The Wickenhausers asked the City to condemn the entire 142.5 acres of their property—which the city declined to do. In addition, Robert E. Brenner’s house is 816 feet from the extended runway, and Allan and Susan Seidlings’ home is 1503 feet from the extended runway. Like the Wickenhausers, Brenner and the Seidlings asked the City to condemn their land after learning of the extension—their requests were also declined. As result of their denied condemnation requests, all three parties alleged inverse condemnation under Wis. Stat. §32.10.

Collectively, the landowners’ testimonies complained of noise, dust, dirt, flashing lights, disruptions of sleep, diminished enjoyment of the property, safety concerns, direct over-flights, and decreases in property value. Brenner, the Seidlings, and the Wickenhausers argued that the Airport’s runway extension amounted to a compensable taking of an easement, since they have suffered adverse effects as a result of increased aircraft over-flights. In opposition, the City testified that the Airport had installed a blast pad to control dust and erosion. Additionally, the circuit court found that the medical helicopter and a jet that formerly used the Airport are no longer hangared there. However, the circuit court also found conflicting information that aircraft usage had increased by two-thirds since the runway’s extension. Brenner, who is a licensed pilot himself, testified that some pilots did not follow standard traffic patterns and submitted video evidence of this. The City objected, claiming that they cannot be held responsible for what pilots do illegally. (However, the Wisconsin Supreme Court reasoned that because the Airport is owned by the City, the City is liable for aircraft using the Airport–the City is in a far superior position to enforce FAA flight standards as opposed to neighboring landowners.)

The circuit court relied on the real estate appraiser’s determination that the extended runway reduced the Wickenhausers’ property value, at most, by 20%. Then citing the United States Supreme Court’s decision in United States v. Causby, the circuit court ruled that for a taking to have happened, the property owner must have been deprived of all or practically all beneficial use of the property.  The Wisconsin Court of Appeals reversed, holding that this case is a physical occupation case, and the standard used by the circuit court involves regulatory takings, which does not apply. The case was remanded back to the circuit court, and the Wisconsin Supreme Court accepted the Airport’s petition for review.

The Wisconsin Supreme Court addressed the two conflicting standards at issue here: “(1) whether the over-flights are low enough and frequent enough to have a direct and immediate effect on the use and enjoyment of the property, or (2) whether the over-flights deprive the property owner of all of substantially all beneficial use of property?”

The United States Supreme Court’s previous decisions in Causby and Griggs are the controlling law with respect to takings of private property by aircraft over-flights. Causby involved frequent, regular aircraft over-flights over a personal residence. The aircraft in this case flew so low (even though the altitudes were approved at that time in 1923) that they barely missed the tops of the trees and killed the landowner’s 150 chickens who fatally flew into the walls of their enclosures from fright. The Supreme Court recognized that Congress placed navigable airspace into the public domain; however, The Court also acknowledged that property owners must be allowed to have control of the immediate reaches of enveloping atmosphere above their property, which includes the super-adjacent airspace below the altitude that is set as navigable. The Court thus established a test to determine whether or not a taking had occurred: over-flights by government aircraft do not constitute a taking unless they are so low and so frequent as to be a direct interference in the enjoyment and use of the property. This is the standard that should be applied wherever Causby is cited as the controlling law in a case. The Wisconsin Supreme Court concluded that the Causby standard is the appropriate standard that must be applied in this case. The determination of whether or not the aircraft over-flights have been low enough and frequent enough to have a direct effect on the use and enjoyment of the land should govern fact-findings and rulings of the circuit court. If this standard is satisfied, the government has taken an easement without paying just compensation. The Wisconsin Supreme Court declared that the circuit court had erred in applying a regulatory taking standard, and that the case must be remanded to them to apply this correct Causby standard.

Conditional use permit requirement did not constitute a taking

by Victoria Heldt

Peter J. Butzen, D/B/A Falls Metals, Inc. v. City of Sheboygan Falls
(Wisconsin Court of Appeals, February 29, 2012)

Peter J. Butzen owns a piece of property within the City of Sheboygan Falls that is zoned C2 commercial.  He operated a scrap metal recycling business on the land during the 1990s which grew in size to the point that it appeared to be a junkyard.  In January 2000 the City decided the use of the land exceeded the scope of what was permitted in the C2 district.  It advised Butzen to clean up and make some modifications and apply for a conditional use permit, which Butzen did in February.  In April 2000 (before it considered Butzen’s application) the City amended the ordinance under which Butzen applied with Ordinance 11.  This ordinance eliminated all permitted uses in C2 zoning districts unless the owner received a conditional use permit.  The City advised Butzen that if he performed the specified cleanup actions, the committee would recommend his permit application be granted.  Butzen was given several deadlines through 2001 to complete the cleanup, but never completed the actions.

In November 2007 Butzen filed for a conditional use permit but was denied since the application was incomplete.  In July 2008 the Supreme Court decided Town of Rhine v. Bizzell in which it concluded that a zoning provision such as Sheboygan Falls’ Ordinance No. 11 is unconstitutional on its face if it precludes any use as of right in a zoning district and if the limitation bears no substantial relation to the public health, safety, morals or general welfare.  In response, the Sheboygan Falls passed a moratorium on development in its C1, C2, and C3 zoning districts to prevent any further development until it decided how to move forward after the Town of Rhine ruling.

Butzen continued to use his property and filed a complaint seeking a judicial determination regarding the constitutionality of Ordinance 11 and questioning the validity of the City’s moratorium.  The circuit court, following the lead of the Supreme Court in the Town of Rhine case, declared Ordinance 11 to be unconstitutional.  It did, however, uphold the validity of the moratorium.  Butzen filed an inverse condemnation complaint asserting that the City’s actions amounted to a taking of his property.  He also raised a substantive due process claim under 42 U.S.C. §1983 that the City’s efforts to enforce the ordinance violations were arbitrary and capricious.  The circuit court found that he did not sufficiently establish either of the claims and that they were barred by a statute of limitations.  This appeal followed.

On appeal, Butzen focused only on the “takings” claim.  He asserted that “because of the Town of Rhine ruling, Ordinance No. 11 unconstitutionally eliminated all use of his C2-zoned property without a conditional use permit, resulting in a regulatory taking.”  According to statute, a regulatory taking occurs when a regulation denies a landowner all or substantially all practical uses of his or her property.  The Court noted that Butzen overlooked two key findings within the circuit court’s rulings.  First, the denial of Butzen’s permit was based on the ordinance in effect prior to Ordinance 11, so the determination of Ordinance 11 as unconstitutional was not relevant to his claimed injury.  Second, the fact that Butzen needed a conditional use permit to run the scrap metal shop did not deprive him of “substantially all” beneficial uses of the property since he could still conduct other business there.  The Court concluded Butzen did not sufficiently show that a regulatory taking occurred and affirmed the circuit court’s decision.

Statute of limitation runs on claims resulting from stormwater discharge

by Victoria Heldt

Charles Tsamardinos and Suzanne Tsamardinos v. Town of Burlington
(Wisconsin Court of Appeals, December 7, 2011)

Charles and Suzanne Tsamardinos own a residential property in Burlington.  They brought a claim for inverse condemnation against the Town of Burlington, arguing that the increased presence of draining water on their property after the development of Villa Heights Subdivision constitutes “physical occupation” by the Town, and results in a taking.  Storm water from Cedar Drive and from Villa Heights Subdivision flows through a culvert, across their property, and into Brown Lake, and that by this action the Town “has incorporated part of their property into its storm water management system.”  They provided two expert witnesses, the first being Hey and Associates, Inc.  The company reported that the problem was indeed due to water flowing through the culvert under Cedar Drive and that the Town was responsible for the drainage system.  Jendusa Design, the second expert witness, similarly described the source of the problem and reported that the flooding had been occurring over the past eight years. The district court denied the claim, finding that a legal taking did not occur, and further finding that the claim was barred by the statute of limitations.

On appeal, the Court of Appeals ruled against the Tsamardinos on the grounds that the statutes of limitations had expired regarding the issue. First,  Wis Stat. §88.87(2)(c) states that a property owner has three years to file a complaint if a government agency has damaged property due to negligent construction a highway or railroad grade (this would include the culvert).  Since the culvert was constructed 24 years prior, and flooding problems had been occurring for at least 8 years according to the expert witnesses, the Tsamardinos filed the complaint too late.  In response to the alternative claim that the water run-off is due to the development of the Villa Heights subdivision, the Court found that claim to be barred as well.  The governing statue requires a complaint to be filed within ten years of completion of the improvement on the property.  Since Villa Heights was recorded in 1948 and graded in the mid-1960’s, the ten year period had expired.  The Tsamardonoses argued that they should be permitted to file a complaint outside the ten year required period since the time limit does not apply to those affected by negligence in maintenance.  The Court concluded that their problem was not the result of negligent maintenance, but of the development of the subdivision, they were subject to the ten year limit.

The Court affirmed the lower court’s decision in favor of the Town of Burlington.

Demolition is abatement of a nuisance, not a taking requiring condemnation

by Victoria Heldt

Hendrix Roosevelt v. City of Detroit
(Michigan Court of Appeals, October 13, 2011)

This case deals with the demolition of a building in Detroit, Michigan.  In 2003, the City sent a dangerous building violation notice to the owners of the building after they discovered it was dilapidated, only had a half roof, and was open to trespass.   After a hearing was held, a demolition notice was sent.  At the time, Roosevelt was not on record as an owner of the building, so he didn’t receive these notices.  In 2005, Roosevelt filed a demolition deferral application and listed the building’s address as the place to send him notice.  The City granted the deferral on the condition that the building not is kept open to public trespass.  If the condition was not met, the building would be demolished without further notice.  A notice was sent to the building addressed to Roosevelt, but it was returned as Roosevelt had moved from the building.  In 2006 the City inspected the building and found it was in violation of the deferral agreement.

Roosevelt filed another deferral request in 2007 and provided 258 Riverside Drive as an address at which to reach him.  The City denied the request and sent notice both to the building’s address and to the alternative address Roosevelt provided.  Both notices were returned in the mail.  In September of 2007 the building was demolished.  Roosevelt filed a claim arguing that the demolition of the building violated the Michigan constitution, violated federal due process, and was the result of gross negligence by two City employees.  The court dismissed the federal claim and remanded the case to the circuit court to resolve the remaining claims.  On both of these claims the circuit court granted summary judgment for the City.  In 2010 the City petitioned to reopen the case in order to present a counterclaim for demolition costs.  The petition was granted, and when Roosevelt failed to oppose the demolition costs, the court awarded demolition costs to the City.  All claims made their way to the Michigan Court of Appeals.

As for the state constitution claim, the Court of Appeals laid out three main reasons why the claim was properly dismissed by the circuit court.  First, monetary damages are reserved for plaintiffs with no other avenue of relief.  Roosevelt’s first line of relief would have been via a federal due process claim, which was alleged and was denied.   The Court also noted that the City’s actions did not constitute a “taking.”  A “taking” occurs when the government confiscates property for public use.  In these instances, the government must go through the proper condemnation process.  An exception exists, however, if the property is causing a public nuisance.  Nobody has the right to use their property as a nuisance; therefore it is not considered a “taking” if the government uses its power to stop a public nuisance.  Roosevelt’s building was considered a public nuisance since it “imperiled the health, safety, and welfare” of the neighborhood.  Thus, the government did not commit a “taking” when it demolished the building.  The Court’s final point regarding this claim was that Roosevelt cannot claim a due process violation if he actually received notice.  The fact that he filed petitions for demolition deferral was evidence that he knew of the demolition plans.  Consequently, there was no due process violation.

In regards to the gross negligence claim against the municipality’s employees, the Court noted that governmental employees are protected from lawsuits if they were “acting within the scope of their authority, were engaged in the exercise or discharge of a governmental function, and their conduct did not amount to gross negligence that is the proximate cause of the injury or damage.”  In this case, the Court focused on the phrase “proximate cause.”  The Court concluded that this phrase is to be interpreted as the “most immediate and direct” cause of the action (in this case, the demolition of the building) and that it refers to one cause.  In this case another cause existed in correspondence with the demolition, namely Roosevelt’s failure to uphold the conditions of the deferral.  As a result of those factors, the employee’s actions are not deemed gross negligence.

Finally, Roosevelt challenged the circuit court’s action in assessing the demolition costs to him since state statute specifies that a judgment lien, and not a personal judgment, should be granted in demolition costs.  The Court agreed with Roosevelt and found that the trial court abused its discretion in awarding the city a personal judgment against Roosevelt.  After affirming the district court’s decisions regarding the constitutional claim and the gross negligence claim, it remanded the case for the granting of a judgment lien.

Whether condemnation of avigation rights was sufficient to avoid takings claim requires further fact finding

by Melanie Thwing

Brenner, Wickenhauser and Seidling v. City of New Richmond

(Wisconsin Court of Appeals, May 10, 2011)

Robert Brenner, Steven and Cristy Wickenhauser and Allan and Susan Seidling (landowners) all own land in the vicinity of the New Richmond Regional Airport in the City of New Richmond, WI. In 2007 the City extended the main runway by 1,500 feet. Sixty-two acres of the Wickenhausers’ land was condemned by the City as well as condemning an avigation easement over another four acres.

The avigation easement alone prohibits buildings and trees exceeding between twenty-six and thirty-eight feet tall depending on the location. This easement states it is for the use and benefit of the public and includes the right to cause sound, noise, vibration and dust that is inherent with the operation of aircrafts. It goes on to state that the noise impacts may be “annoying” to land users.

After experiencing the runway expansion’s effects that included odors, dust, vibrations, sound, low overhead flights, and runway strobe lights the landowners filed an inverse condemnation claim in circuit court under Wis. Stat. § 32.10, claiming that the operation of the airport deprived them of all property rights (not just those condemned through the avigation easement). The circuit court found that because the landowners had not been deprived substantially of all beneficial use of the properties there was no taking.  The landowners appeal to the Wisconsin Court of Appeals, arguing that the circuit court applied the wrong standard when it concluded there no taking.

Wis. Stat. § 32.10 allows landowners who believe property has been taken by the government to bring an inverse condemnation claim for compensation. It is intended to deal with eminent domain, where the government occupies private property and plans to continue this occupation. The facts must show either an actual physical taking or a government-imposed restriction that deprives the owner of beneficial use of his property.  According to the Wisconsin Court of Appeals this essentially means that landowners do not need to demonstrate that they have been deprived of all or substantially all beneficial use. The court points that if this were the case then public entities would rarely be required to compensate landowners.

Under § 32.10 (6g) the loss of air rights is identified as a compensable loss. The City acknowledges this, but argues that a taking occurs only if flights have a direct, immediate, and substantial effect on the enjoyment of the land. In this case the FAA-approved flight paths do not fly over the landowners’ homes.  The Court disagreed with the city’s argument because it fails to to take into account that flight paths may cross above other portions of the landowners’ properties (not just their homes) and ignores the finding of the circuit court that the space above the homes are in fact used by airplanes and helicopters regardless of the identified routes of the FAA-approved flight paths.

The actual determination of whether a taking has occurred depended on further fact finding. The Court of Appeals remanded the case to the circuit court for fact finding to determine whether there was a partial taking.

Issues of fact exist in takings claims over airport regulations

by Melanie Thwing

Interstate Companies, Inc v. City of Bloomington
(Minnesota Court of Appeals, November 9, 2010)

The Galarneau’s own two separate properties in Bloomington, Minnesota. These properties are leased to Interstate, Inc. and are used for office space, service repairs and other various things. These properties are located next to the Minnesota-St. Paul International Airport, and close to the Mall of America and the light rail line.

The airport itself has specific areas zoned as “safety zones,” which regulate buildings and building height to insure the safety of the airport as well as individuals. Originally the Galarneau’s buildings were zoned in Safety Zone C, which is not as restrictive as others. However, in 2004 construction of a new airport runway was proposed and the Joint Airport Zoning Board adopted a new zoning ordinance. This ordinance re-assigned the Galarneau’s property to Safety Zone B, which is more restrictive. Further, the buildings currently occupied by Interstate, Inc now fall only 2,500 feet from the completed runway, which causes disruptions in business operations.

The true effect of the new zoning ordinance was felt in 2005, after the appellants sought to build a hotel on their property. The permit was denied because the new structure would violate height restrictions. The Galarneau’s brought two issues to the district court: 1.) Whether the zoning amendment to reclassify the property to Safety Zone B was regulatory taking, 2.) Whether the Minnesota Airport Commission’s (MAC) use of its property amounted to an inverse condemnation or a taking through deprivation of practical enjoyment of the Galarneau’s property.  The district court granted summary judgment in favor of MAC, and the Galarneau’s appealed to the Minnesota Court of Appeals

Under the first issue, both the United States and Minnesota Constitutions explicitly state that no private property can be taken without just compensation. Further, the Minnesota Constitution specifies property cannot be taken, destroyed or damaged without compensation. Precedent in Penn Central states the Court must look at the economic impact of the zoning ordinance for the individuals.  Following the Penn Central precedent, under  McShane v. City of Fairbault the Minnesota needs to examine if there was a substantial decline in market value because of an ordinance to benefit, “a specific public or governmental enterprise.” If so, then compensation is required. Although at the district court hearing a market study was presented which showed a significant lose in market value, the district court rejected it.

Further, under Penn Central the court must look at the investment-backed expectations of the Galarneaus. This would be the primary expectation of Galarneaus regarding the use of their property when the property was first purchased. The Galarneaus argue that because of the high level of residential and industrial use when the property was bought they expected to develop along these same lines. The Court of Appeals states that there was a reasonably different expectation when the property was located in the original safety zone.

Finally under Penn Central the court must decide whether the new regulations place a burden on only a few landowners. McShane explains that enterprise regulations are placed specifically for the government enterprise, which gives benefit to the general public, but burdens on a few individuals. If, in fact, the burden is falling on a few landowners the Supreme Court of Minnesota held that the public has then essentially acquired a free easement. The Court of Appeals ultimately found that there was a large decline in market values,

Considering the questions raised under the Penn Central analysis, the Court of Appeals found the district court’s summary judgment inappropriate.

On the second claim, the appellants argue that the district court erred in finding that MAC’s use of the property could not be a taking through deprivation of practical enjoyment. For this claim to hold true, there must be a substantial invasion of property rights and measurable lowering of market value. The district court held that the appellants failed to prove substantial invasion, even though they turned in records of noise, disruption to telephone calls, and employee fears from low flying air-crafts. According to the Court of Appeals it was inappropriate for the district court to grant summary judgment on this issue because disputed questions of fact existed. 

The Court of Appeals reversed the district court’ summary judgment on both claims, and remanded the case back to the district court.

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.