Opinion
No. C8-97-207.
Filed August 12, 1997.
Appeal from the District Court, Becker County, File No. C4951354.
Zenas Baer, Randall Gordon Knutson, Charles Segal, (for Appellant)
Steven E. McCullough, Ohnstad Twichell, P.C., (for Respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
The owner of twenty-three undeveloped lots in a Lake Park subdivision appeals special assessments against the lots for street paving. The evidence, including the city's own evidence, demonstrates that the assessments exceeded the benefits and that the assessments were not uniformly applied. We reverse and remand.
FACTS
The disputed assessments were levied by the City of Lake Park in 1995 to offset the costs for street paving in a subdivision referred to as the Christensen Addition. Duane Gullard developed the twenty-seven lot subdivision in the 1970s. Four of the lots were improved with houses and sold; the other twenty-three lots remain unimproved and were still owned by Gullard at the time of the assessment.
The total cost for paving the subdivision was $56,347.27. The city deducted the cost of paving a roadway leading into the subdivision and assessed the remaining $40,438.17. Using a front-footage formula, the city assessed each of the twenty-seven lots, but reduced by fifty percent the assessment on the lots with houses. Keith Zachariason, Lake Park's mayor, testified that this special assessment scheme was designed to promote economic development in the city. He said that the city intended to provide incentive for future construction on the undeveloped lots by forgiving half of the remaining balance of any special assessment still owing when a new home was completed.
Gullard appealed the assessment to the district court. The district court expressed doubt about whether the benefit to Gullard's lots outweighed the special assessment but concluded that Gullard's evidence was not sufficient to overcome the presumption of validity.
DECISION
Special assessments are presumptively valid if the land assessed receives a special benefit from the improvement, the assessment is uniform as applied to the same class of property, and the assessment does not exceed the special benefit. Buzick v. City of Blaine , 505 N.W.2d 51, 53 (Minn. 1993). The special benefit is measured by the increase in the market value of the land due to the improvement. Tri-State Land Co. v. City of Shoreview , 290 N.W.2d 775, 777 (Minn. 1980). The assessment roll constitutes prima facie proof that an assessment does not exceed a special benefit, and the party contesting the assessment must introduce evidence sufficient to overcome the presumption. Buzick , 505 N.W.2d at 53. If the evidence is conflicting, it is the responsibility of the district court to determine whether the assessment exceeds the market value increase, and if so, by what amount. Schumacher v. City of Excelsior , 427 N.W.2d 235, 239 (Minn. 1988).
The first prong of the validity test is not at issue because Gullard does not dispute that the lots received a special benefit from the paving. But he disputes the remaining two prongs: that the assessment does not exceed the benefit and that it was uniformly applied.
The city presented testimony from five witnesses at the hearing. Two of the witnesses testified to issues involving engineering and the location of pipes for the sanitary sewer lines. The city clerk explained the assessment roll, and the mayor testified about the discussion surrounding the decision to pave the property and the city's interest in development. The city's only direct evidence on the benefit from the paving was provided by Ken Christianson, a licensed real estate appraiser. Christianson testified for the city that the improvement conferred approximately a $1,000 benefit to both improved and unimproved lots. Mayor Zachariason testified that he accepted Christianson's valuation.
Gullard presented his own opinion of value, estimating that the street paving had increased the value of the lots by not more than $200, but that if he tried to sell the lots he would be unlikely to "get one dollar more" for them. Gullard also presented expert testimony through Rodger Tinjum, a certified real estate appraiser. Tinjum testified that the extremely limited number of sales in Lake Park made it difficult to come up with comparable market sales data that would permit him to determine the value of the lots. He estimated that depending on the rate of sale, the lots could be benefitted between $114 and $214 each. But because of the limited sales information, Tinjum could not express a definite opinion that the lots had increased in value at all.
In determining whether the evidence defeats the presumption that the benefit exceeds the assessment, the city is not required to show that the special assessment corresponds exactly to the benefits received. Village of Edina v. Joseph , 264 Minn. 84, 98, 119 N.W.2d 809, 818 (Minn. 1962). But the assessment must be "roughly proportionate" to the benefits accruing to each property as a result of the improvement. Anderson v. City of Bemidji , 295 N.W.2d 555, 559 (Minn. 1980).
The evidence as a whole does not fairly support a finding that the lots increased in value more than $1,000. See Schumacher , 427 N.W.2d at 239 (considering evidence "as a whole" to find that street improvements increased market value); Carlson-Lang Realty Co. v. City of Windom , 307 Minn. 368, 373, 240 N.W.2d 517, 521 (1976) (reviewing court must carefully examine record to determine whether evidence as a whole supports findings). The city's own testimony establishes that the property values were not increased by more than $1,000 per lot. The assessment roll, however, demonstrates that the city assessed one unplatted parcel $3,451.47 and the remaining undeveloped lots in a range from $970.14 to $1,996.26. On many of the lots the assessment was almost twice the value of the city's admitted increase in value. On this record we cannot conclude that the city assessed the properties in a manner that was "roughly proportionate to the benefits."
On the remaining prong the evidence is also insufficient to support a finding that the assessments were uniformly applied. Special assessments are presumptively valid only if they are uniform on the same class of property. Buzick , 505 N.W.2d at 53. The assessment roll in the record shows on its face that the assessment is not uniform across the same class of properties — four lots are assessed at one-half the rate of the other lots. We recognize that the forgiven portion is absorbed by the city and is not redistributed over the undeveloped lots and that the variable assessment was intended to spur development. According to the testimony of Mayor Zachariason and the city clerk, the city hoped to encourage development in the subdivision by forgiving one-half the assessment on the property with houses and offering a future reduction on other lots when houses were completed. Although the mayor and city clerk indicated that the city council discussed generally the goal of promoting development in the subdivision, there is no evidence that the city enacted any comprehensive city-wide scheme or ordinance to promote development. It is difficult to understand how forgiving part of the assessment to the existing houses would further development. It is also difficult to accept that a street-paving project that generally benefits residents by providing better streets and reducing dust could support an assessment roll with the residents' lots being benefitted at one-half the non-resident lots. But it is unnecessary to analyze this issue further because the validity of the assessment requires that all prongs of the Buzick test be satisfied, and as we previously determined, the second prong was not established by the evidence.
We reverse and remand to the district court to make an independent finding and, if necessary, to hear additional evidence on the special benefits issue. See Schumacher v. City of Excelsior , 427 N.W.2d 235, 239 (Minn. 1988) (reversing and remanding for district court to determine constitutionally permissible assessment ceiling and remand to city council for reassessment); Tri-State Land Co. , 290 N.W.2d at 778 (instructing district court to make independent factual determination on special benefits issue).