This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C0-01-370

C2-01-371

 

Betty Dwyer,

Appellant  (C0-01-370),

 

Paul and Barb Smith,

Appellants (C2-01-371),

 

vs.

 

Spring Lake Township,

Respondent.

 

Filed November 20, 2001

Affirmed in part, reversed in part, and remanded

Toussaint, Chief Judge

 

Scott County District Court

File No. 1999-04740, 1999-04741

 

Steven J. Quam, Fredrikson & Byron, P.A., 1100 International Centre, 900 Second Avenue South, Minneapolis, MN 55402 (for appellants)

 

Peter B. Tiede, Louise Toscano Seeba, 444 Cedar Street, Suite 1800, St. Paul, MN 55101 (for respondent)

 

            Considered and decided by Toussaint, Chief Judge, Lansing, Judge, and Kalitowski, Judge.

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

            Appellants challenge the sewer-related special assessments against their properties levied by respondent township, alleging that (a) the district court misapplied Minn. Stat. § 444.075 (2000) to omit consideration of the cost to connect the properties to the new sewer line in addressing whether the benefit to the properties exceeded the cost; (b) the court erred in adopting appraisal values using a paired-sale analysis applying a date different than the valuation date; (c) the court erred in increasing the value of the special benefit to appellants’ properties on the basis of assumed failing septic systems; and (d) the township illegally added the cost of temporary easements of appellants’ properties only to appellants rather than all properties benefited by the easements.  We affirm in part, reverse in part, and remand.

FACTS

            On February 25, 1999, respondent Spring Lake Township (the township) levied special assessments against properties located on South Shore Drive IN Spring Lake, Minnesota.  The improvement project underlying the special assessment included installing municipal sewer and water lines, constructing storm sewers, putting in new streets, and installing curbs, gutters, and street lights.  The total special assessment levied against appellant Betty Dwyer’s property was $27,924.  The total special assessment levied against appellants Barb and Paul Smith’s property was $24,587.  Appellants and ten other property owners appealed the assessments pursuant to Minn. Stat. § 429.081 (2000) to the district court, claiming the assessment amount was unconstitutional and determined in an arbitrary, capricious, and unreasonable manner; the assessments exceeded the benefits of the improvements; and the total costs of the improvements were not proportionately distributed among all benefited properties.

            The township filed a motion for partial summary judgment.  The district court granted the township’s motion and determined that the only issue for trial was whether the benefit received by the property owners was less than or equal to the amount of the assessment.  All 12 appeals were consolidated for trial.

            At trial, appellants called Frank Wicker, a member Appraisal Institute (MAI) appraiser, to testify regarding the amount of special benefit the property owners received from the improvement project.  He used February 25, 1999, as the valuation date.  He determined that the value of the buildings would remain the same, regardless of the improvements, and therefore assessed the increase in special benefit to the land by comparing the parcels to before-and-after-improvement values of similar vacant land.  He only used comparable properties around Spring Lake.  He found that the special benefit was equal to $69 per lakeshore front foot.  Wicker determined that the Smith property received a special benefit of $4,830 and that the Dwyer property received a special benefit of $5,175.  Wicker’s conclusions took into consideration only whether the comparable properties had improvements of public water and sewer, not the additional improvement of new bituminous roads, curbs, etc.

            The township called Frank Bakke, a septic-system inspector, to testify regarding some of the septic systems at issue in this matter.  The record does not show that Bakke inspected the appellants’ septic systems and does not state whether their systems were failing.  Bakke did testify, however, that septic systems built before the early 1970’s were designed and operated differently from septic systems built today and that some systems built prior to 1970 would not pass today’s standards.

            The township also called Don Sterna, the township’s engineer, to testify regarding the Sewer Access Charges (SAC), Water Access Charges (WAC), and Trunk Access Charges (TAC) that the property owners had to pay before they could use the new sewer and water systems.  Sterna testified that the hook-up fees would cost roughly $7,611 plus approximately $1,500 to cover the cost of putting in the pipe connection from the house to the property line.  These fees are in addition to the levied special assessment.

            The township also called appraiser Richard Luebben to testify regarding the special benefit the properties received from the improvement project.  Luebben also used February 25, 1999, as the valuation date.  He appraised the properties before the improvements by comparing them to similar properties with well and septic systems and after to similar properties with municipal sewer and water services, all at their highest and best use.  He did not value them as vacant lots.  He did a paired-sale analysis using dates other than February 25, 1999, as the date to determine the difference in value between Spring Lake and Prior Lake properties so they could be used as comparables.  He determined that the Dwyer property received a special benefit of $24,000 and the Smith property received a special benefit of $26,000.

            The district court adopted Luebben’s testimony to determine the special benefit of the improvements.  Because appellants’ properties have septic systems from before the 1970’s, which would most likely not pass today’s standards, the court also adopted Luebben’s testimony that a failing septic system would cost $3,500 to correct and therefore increased the value of the benefit of the improvements accordingly.  Many of the after comparable properties used by both Wicker and Luebben had already paid their hook-up fees.  The district court found that the Smith property received a total value benefit of $29,500 and that the Dwyer property received a total value benefit of $27,500 but was assessed $27,924.  The court ordered the township to reassess the Dwyer property in accordance with its findings.

            Appellants moved to amend the findings of fact and conclusions of law.  The district court found that Luebben did include the value of hook-up in the after comparables and amended its findings to reflect that point.  The court found, however, that the hook-up fees should not be part of the assessment amounts because hook-up fees are separate and apart from an assessment and cannot be included in the total assessment levy.  The court did not grant appellants’ other motions.  This appeal follows.

D E C I S I O N

I.

Hook-Up Fees

            Appellants argue that the district court erred in its conclusion that hook-up fees cannot be considered as part of the levied assessment under Minn. Stat. § 444.075, subd. 3 (2000).  Appellants contend that because they must pay the hook-up fees before they can use the municipal water and sewer system, the fees should be considered in determining the special benefit received by the improvements.  They assert that a special benefit is determined by the increase in the fair market value of the property from the improvements based on County of Ramsey v. Town of White Bear, 469 N.W.2d 479, 482 (Minn. App. 1991), review denied (Minn. July 24, 1991).  Market value is the price a willing buyer not required to purchase the property would pay a willing seller not required to sell it.  Id.  Appellants support their point with the example that if a buyer has the choice between two identical properties and one property has already paid its hook-up fees while the other one has not, the buyer would consider that factor in deciding which property to purchase (i.e., purchase the property that already paid the fees or reduce the price accordingly on the property that has not paid the fees).

            The Minnesota Supreme Court has stated “connection charges are not assessments and may be imposed on top of prior assessments.”  Nordgren v. City of Maplewood, 326 N.W.2d 640, 642 (Minn. 1982) (citation omitted).  Municipalities may finance the cost of improvements primarily from taxes or special assessments.  Minn. Stat. 444.075, subd. 2 (2000).  Municipalities also “may impose just and equitable charges for the use and for the availability of the facilities and for connections with them.”  Minn. Stat. § 444.075, subd. 3 (emphasis added).

            Under Minn. Stat. § 444.075, subd. 3, charges for use are listed and treated separately from the cost of financing the improvements.  Subdivision 2 only addresses assessments and subdivision 3 only addresses charges and fees for connecting to and using the actual services.  Subdivision 3 only discusses assessments when it states that

[c]harges for connections to the facilities may * * * be fixed by reference to the portion of the cost of connection which has been paid by assessment of the premises to be connected.

 

The language allows assessments to be used in calculating the connection charges.

            Here, the hook-up fees go to various governing bodies such as the county, the township, the City of Prior Lake, and the Metropolitan Council.  Some of the fees are charged by these bodies to the township, which then passes them on to the property owners as permitted under Minn. Stat. § 444.075, subd. 3.  The cost of constructing the improvements is separate from the hook-up charges and can be treated accordingly.

            The district court stated in its memorandum attached to its order regarding the amended findings that Minn. Stat. § 444.075, subd. 3, “clearly states that hook-up fees are separate and apart from an assessment and cannot be included in the total assessment levy.”  (Emphasis added.)  Therefore, it concluded that it could not take into account the hook-up fees in determining the increase in market value of the properties.  While the statute does treat the assessment and hook-up fees separately, the language of the statute does not mandate that the hook-up fees cannot be considered in analyzing the benefit to the property.  Appellants point that a potential buyer would take the unpaid fees into account on two otherwise identical properties is valid and while not a determinative point, is persuasive.  Including the hook-up fees as part of the levied assessment affects the properties’ final assessment.  We conclude that the district court’s decision not to include the fees in the assessment was an error and therefore reverse on this point.

II.

Paired-Sale Analysis Date

Appellants contend that because the district court adopted the appraisals put forth by Luebben, Luebben’s paired-sale analysis should have been based on the valuation date of February 25, 1999, rather than February 19, 1998, and is therefore a reversible error.  Luebben’s paired-sale analysis was used for comparing the value of Spring Lake properties to Prior Lake properties as of February 19, 1998.   Appellants claim that the difference of valuation dates in the after comparables of Prior Lake resulted in a $30,000 difference in value (as of February 19, 1998), rather than a $40,721 difference of value (as of February 25, 1999).  They claim this would have reduced the special benefit to appellants’ properties.  They assert that February 25, 1999, should have driven all aspects of Luebben’s appraisals.

            Appellate review of a special assessment determination consists of

a careful examination of the record to ascertain whether the evidence as a whole fairly supports the findings of the district court and whether these in turn support its conclusions of law and judgment.

 

Carlson-Lang Realty Co. v. City of Windom, 307 Minn. 368, 373, 240 N.W.2d 517, 521 (1976) (citation omitted).

            Luebben testified that he could have used the February 1999 date in determining the location adjustment, but that he used other dates, from January 1998 to near the end of 1999 in order to minimize the number of adjustments in the appraisal, thereby keeping the final appraisal value as reliable and accurate as possible.  He stated that he chose a date that he found to be most reasonable.  He testified that the more adjustments he uses, the less reliable his results are.  Appellants did not put forth any testimony to refute Luebben’s reasoning for using February 1998 for this one purpose.  Luebben, however, still used February 25, 1999, as the valuation date for the final appraisal. 

            Neither party cites any caselaw, nor does there appear to be any on point, addressing whether a date other than the valuation date can be used in doing a paired-sale analysis.  Using February 1998 in the location adjustment of the paired-sale analysis was a matter of professional opinion.  The district court stated that Luebben’s appraisals were “reliable, more objective, and based on multiple characteristics which take into account the specific items to be compared on each individual property.”  Therefore, the district court’s decision to adopt Luebben’s appraisals that used the February 19, 1998, location adjustment is within its range of discretion.  Cf. State ex rel Trimble v. Hedman, 291 Minn. 442, 192 N.W.2d 432, 440 (1971) (stating appellate courts usually defer to district court’s determination of weight and credibility of  expert witnesses).

III.

$3,500 Addition in Special Benefit

            Appellants contend that the district court erred in increasing the value of the special benefit to their properties by $3,500 on the assumption that they had failing septic systems. They assert that the septic systems on the comparable properties used to determine the before value of their properties were just as old as theirs and therefore, the impact of the age of the septic system on the value of the property should be the same.  Appellants argue that

[t]o conclude based on the age of the septic system reduced [their] properties by $3,500, but that equally old septic systems did not affect the value of the comparable sales, is inconsistent.

 

They assert that the record does not support the district court’s conclusion and therefore should be reversed.

            Bakke, the septic-system inspector, testified when asked which of the systems failed, that it was “the Coddingtons, the DeJoys, Judisches, and the Olsons.”  He did not identify appellants’ properties as having failing or passing systems.  He did not testify specifically about appellants’ systems.  Bakke did testify that some systems built prior to the early 1970’s would not pass under today’s standards.  Appellants stipulated  that their systems were installed prior to 1970, that they did not know of anything done to their systems before they purchased their homes, and have not done anything to improve them. 

            Review of the court’s findings show inconsistencies in its determinations regarding many property owners’ septic systems.  Testimony showed that the Coddingtons’, DeJoys’, Judisches’, and Olsons’ systems failed inspection; however, the district court found they each had systems that were not failing and therefore did not add $3,500 to the benefit determination.[1]   The court found that two other property owners did not have failing systems, which is supported by the record, and did not add $3,500 to the special benefit amounts for their properties.  The court assumed, however, that five property owners, including appellants, had failing systems—although the record does not state that they had failing systems, only that appellants had systems older than 1970—and added $3,500 to the special benefit determinations.  These determinations are inconsistent with the record.  Therefore, we conclude the district court erred in adding $3,500 to appellants’ properties and reverse on this point.


IV.

Assessment for Easements

            Appellants claim that the township used an illegal method to allocate the special assessment by adding the cost of the temporary easements over their properties rather than to all the properties affected by the improvements. 

            The test for determining whether a special assessment is proper is

whether the improvement for which the assessment was levied has increased the market value of the property against which the assessment operates in at least the amount of the assessment.

 

In re Am. Oil Co. v. City of St. Cloud, 295 Minn. 428, 434, 206 N.W.2d 31, 35 (1973).   Further,

            [s]pecial assessments are presumed to be valid if the land receives a special benefit from the construction of the improvement, if the assessment is uniform upon the same class of property, and if the assessment does not exceed the special benefit to the property. 

 

Buzick v. City of Blaine, 505 N.W.2d 51, 53 (Minn. 1993) (emphasis added) (citation omitted).  See also Carlson-Lang, 307 Minn. at 369, 240 N.W.2d at 519 (stating assessed land must receive special benefit, assessment must be uniform on class of properties, and assessment cannot exceed special benefit).

            Appellants rely on City of Duluth v. Davidson, 97 Minn. 378, 107 N.W. 151 (1906), to support their argument that the assessments should be uniform on all properties benefited from the improvement.  In Davidson, property owners were assessed for a sewer system based on whether they had a rock (gravel) lot or nonrock lot.  Id. At 381, 107 N.W. at 152.  The property owners with rock lots were assessed more than the nonrock lot owners.  Id.  The supreme court concluded that the assessments needed to be uniform on all property owners that benefited from the improvement, not according to how much it cost to construct the project across the individual properties.  Id. at 384, 107 N.W. at 154.  Even though Davidson is based on a city charter, it is consistent with current caselaw. 

            It is not clear from the record whether the special benefit of the easements was specific only to the Smith and Dwyer properties rather than all the properties.  It is reasonable, however, to assume that the benefits received by the temporary easements were enjoyed by all the properties involved, not just the Smith and Dwyer properties.  We reverse and remand to establish on the record the special benefit of the easements to the parties’ properties.

            Affirmed in part, reversed in part, and remanded.



[1]  In fact there was a stipulation offered by an attorney, who apparently represented Olsons, which stated that after the court determined the special benefit, the court would add $3,500 to the benefit for a known failing system of the specific property such a stipulation does not appear anywhere regarding appellants’ properties, however, the district court did add $3,500 to appellants’ special benefit determinations for assumed failing systems.