This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1009

 

Donald Steinke, et al.,
Appellants,

vs.

Columbus Township,
Respondent.

 

Filed June 12, 2007

Affirmed

Minge, Judge

 

Anoka County District Court

File No. C9-04-011328

 

Christopher K. Wachtler, Elizabeth A. Clysdale, Collins, Buckley, Sauntry & Haugh, P.L.L.P., W-1100 First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101 (for appellants)

 

Paul D. Reuvers, Pamela J.F. Whitmore, Iverson Reuvers, 9321 Ensign Avenue South, Bloomington, MN 55438 (for respondent)

 

            Considered and decided by Stoneburner, Presiding Judge; Minge, Judge; and Crippen, Judge.*

 

 

 

U N P U B L I S H E D  O P I N I O N

 

MINGE, Judge

 

Appellant-landowners assert that the district court erred in upholding special assessments against their properties, arguing that the assessments are invalid because their properties did not benefit from the improvement.  We affirm.

FACTS

 

Appellants Donald Steinke, Gerald Schmieg, Daniel Mike, and Samuel Furrer own separate parcels of land on the east side of Interstate 35 in respondent Columbus Township near Forest Lake.  The highest and best use of the land is commercial development.  In 2000, respondent commenced proceedings to install key, sanitary-sewer trunk lines (project) for a three-square-mile area (area), which included appellants’ land.  The area contains numerous parcels of land, including the site of a Gander Mountain store that opened in September 2003 on the west side of the Interstate.[1]  Although the project did not extend actual sewer service to appellants’ parcels, the area is within the boundary of the region provided sewer service by Metropolitan Council Environmental Services, and it is the first step in bringing such service to the area. 

In October 2004, the Columbus Township Board (the board) held a special assessment hearing, which all appellants attended.  The board adopted an assessment roll and passed a resolution to assess all of the properties in the area, including appellants’, for a portion of the cost of the project.  The assessment was approximately 3.6 cents per square foot of “developable land.”  Appellants appealed the assessment to the district court, arguing that their properties received no benefit from the project. 

At trial, the parties presented conflicting testimony about whether appellants’ properties received a benefit from the project.  Appellants testified personally and had an expert witness; respondent presented testimony from the township engineer, members of the town board, and expert witnesses.  Ultimately, the district court found that appellants’ properties benefited from the project and concluded that the assessments are valid.  This appeal followed.

D E C I S I O N

 

The fundamental issue in this case is whether the district court erred in determining that the assessments are valid.  At the outset, appellants argue that they presented sufficient evidence that their properties did not receive a net benefit to overcome the presumption that the assessment role is valid.  We will discuss that assertion as a part of the larger issue of benefit. 

“A special assessment is a tax, intended to offset the cost of local improvements such as sewer, water and streets, which is selectively imposed upon the beneficiaries.”  Dosedel v. City of Ham Lake, 414 N.W.2d 751, 755 (Minn. App. 1987).  A municipality may assess “[t]he cost of any improvement, or any part thereof . . . upon property benefited by the improvement, based upon the benefits received.”  Minn. Stat. § 429.051 (2006).  “A municipality’s power of assessment, however, is limited by three conditions: (1) the land must receive a special benefit from the improvement being constructed; (2) the assessment must be uniform upon the same class of property; and (3) the assessment may not exceed the special benefit.”  David E. McNally Dev. Corp. v. City of Winona, 686 N.W.2d 553, 558 (Minn. App. 2004) (citing Carlson-Lang Realty Co. v. City of Windom, 307 Minn. 368, 369, 240 N.W.2d 517, 519 (1976)). 

An assessment is presumed to be legally valid, and the introduction of an assessment roll into evidence constitutes prima facie proof that the assessment does not exceed the benefit to the property.  Carlson-Lang, 307 Minn. at 370, 240 N.W.2d at 519.  Appealing parties can overcome this presumption only by introducing competent evidence that the assessment is greater than the benefit.  Id.; McNally, 686 N.W.2d at 559.  If overcome, the district court must weigh the evidence and make a factual determination of whether the landowners received a special benefit.  Carlson-Lang, 307 Minn. at 370, 240 N.W.2d at 519-20.

Property owners receive a benefit where there is an increase in market value of the property as a result of the improvement.  Id. at 369, 240 N.W.2d at 519.  Such a benefit is measured by determining “what a willing buyer would pay a willing seller for the property before, and then after, the improvement has been constructed.”  Id.  If an assessment exceeds the benefit conferred, it constitutes a taking.  Id. at 370, 240 N.W.2d at 519.  “Although the law does not define how property is classified for assessment purposes, the municipality has an obligation to evaluate and determine the reach of the benefit from the improvement.”  McNally, 686 N.W.2d at 560.  “In doing so, the municipality has substantial discretion as long as its decision is fair.”  Id. 

In determining whether an assessment is valid, a property owner is qualified to testify regarding the value of a property, but a district court is not bound by the testimony of any particular witness.  Dosedel, 414 N.W.2d at 756.  The district court is in the best position to assess witness credibility.  Id.

Ultimately, a district court must base its determination on the validity of an assessment on an independent consideration of all the evidence.  Buettner v. City of St. Cloud, 277 N.W.2d 199, 203 (Minn. 1979).  “Where the issue presented to the district court is the regularity of the assessment process or other determinations within the municipality’s discretion, such as what property is benefited and the prorated division of the cost, the district court should not upset the [municipality’s] finding unless it is clearly erroneous.”  McNally, 686 N.W.2d at 559-60 (citing Buettner, 277 N.W.2d at 203).  “In these situations, we examine the record to determine whether the evidence as a whole fairly supports the findings of the district court and whether the findings support the [district] court’s conclusions of law and judgment.”  Id. at 560 (citing Carlson-Lang, 307 Minn. at 373, 240 N.W.2d at 521).

Here, the board adopted the assessment roll, which placed the burden on appellants to present sufficient evidence to the district court in order to rebut the presumption of validity.  Id. at 559.  Appellants testified that much of the land was being farmed and that they had no plans to develop it.  Appellants also testified that even if they did wish to receive sewer service, the project did not extend actual service to their properties, and they received no benefit from the construction of core elements of a future sewer system.  Finally, appellants testified that because there is not a water system in place, any possible benefit depends on the construction of additional township public works projects.  Appellants’ expert appraiser testified that based on these considerations and his evaluation of the situation, the project did not benefit appellants’ parcels. 

Based on this record, we conclude that appellants’ presentation was adequate to overcome the prima facie validity of the assessment roll.  Although the district court erred in indicating that the assessment roll was valid on its face, the record indicates that the district court did not rely on the presumption of validity but also weighed the evidence presented by both parties and concluded that the assessment was valid because appellants received a net benefit to their properties.  We turn to consideration of the larger question of whether this conclusion was erroneous. 

The district court found the following:

            Appellants’ properties received the following benefits from the Sewer Project: (1) sewer system capabilities to properties that only had septic sewers; (2) an increase in available sewage output capacity from the properties; and (3) an increase in the fair market value of these lands since a willing buyer will pay more money to Appellants for their land with the ability to hook up to the sewer.

 

Although appellants and their expert appraiser testified that they received no benefit from the sewer project and that the properties were no longer marketable, respondent’s witnesses testified that appellants’ parcels received a benefit from the project.  The township engineer, for example, testified that sewer service is necessary for any commercial development of the area, that having trunk lines in place is a prerequisite for later installation of lateral hookups, and that the construction of the trunk lines benefits the entire area.  One of respondent’s expert appraisers testified that the existence of core utilities makes any commercial property more marketable; another testified that the benefit to appellants was “at least equal to but likely significantly greater than the assessment amount.” 

Appellants argue that respondent’s witnesses provided inaccurate conclusions because they could not perform a before-and-after analysis of comparable properties.  One of respondent’s experts admitted that she had not considered projects that only consisted of the core sewer component and without water or lateral sewer components.  But this expert did discuss numerous comparables, considered the lack of additional water and sewer components, and concluded that the market would consider even the initial component as a net benefit when a water system and lateral sewer services were reasonably anticipated.  The expert indicated that an assessment of 3.6 cents per square foot was fair and that prospective commercial buyers would find the claim “laughable” that construction of a core sewer system would not increase the value of commercial property by that amount.

Appellants argue that they did not receive a benefit because they could not directly access the sewer system as a result of the improvements.  This court has recognized that “the cost of the improvement may be assessed upon property benefited by the improvement whether or not the property abuts on the improvement.”  McNally, 686 N.W.2d at 560 (quotation omitted).  Although appellants could not immediately connect to the sewer system, they could petition the board for full sewer service or for water or other municipal services.  One board member estimated that the board had turned down only one such petition in the last 15 years.  The record does not support appellants’ contention that their opportunity to hook up to the sewer system was so speculative that they received no benefit from the project.[2]

Appellants also argue that based on the rule established in Ewert v. City of Winthrop, 278 N.W.2d 545, 549 (Minn. 1979), the district court should have invalidated the assessment because the board failed to determine the value of the special benefit before adopting the assessment.  In Ewert, the supreme court indicated that the failure of a municipality to determine the amount of special benefits prior to adopting an assessment “would have allowed the district court to reverse.”  Ewert, 278 N.W.2d at 549.  But Ewert does not require the district court to reverse the assessment; it simply recognized that under the facts presented, reversal was a possible result.

Finally, appellants argue that any benefits they received are speculative and can  not justify the assessment.  See In re Village of Burnsville Assessments for Improvement No. 70TS-8 for Sanitary Sewer, 287 N.W.2d 375, 377 (Minn. 1979) (stating that “the future development of the property in question remains uncertain,” which leaves an assessment “too speculative”).  Here, the district court heard testimony that the market value of appellants’ property will benefit at this time from the construction of trunk lines for the sewer system.  In addition, the district court received maps and heard testimony from board members and appraisers that the area is near the junction of Interstates 35W and 35E; that an exit is nearby; that the area, including appellants’ properties, was ripe for development; and that development of the area had begun. 

After hearing the testimony and reviewing the exhibits, the district court found respondent’s witnesses, especially the experts, more credible, it found respondent’s arguments more persuasive, and it upheld the assessments.  We defer to the credibility determinations and conclude that based on the record, including respondent’s history of providing utility services, its plan to construct a water system, and the testimony of its experts, that the evidence supported the board’s determination that appellants’ properties received a net benefit from the improvement in question and that the district court did not err in upholding the assessment.

            Affirmed.

 

Dated: