Special assessment for new road overturned

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“Purpose alone is not conclusive. The court must also consider the effect of the improvement by analyzing (1) the type of benefits conferred, and (2) their extent. This consideration should bear the greatest weight.” Hon. Thomas Cane Wisconsin Court of Appeals

Where a city inadvertently landlocked a public park from vehicular access, and had to build a road to access it, it was error for the trial court to determine on summary judgment that the road was a local improvement, the costs of which could be recouped via special assessments on the property owners who abutted the road, the Wisconsin Court of Appeals held on Nov. 11.

In 1997, William L. & Frances L. Genrich purchased a two-acre parcel of land in the City of Rice Lake located on Kern Avenue off a T-intersection with South Street. The property included two structures, a residence and an airplane hangar, which were not connected to water or sewer utilities, and a private roadway with access to Kern Avenue. They paid less than $90,000 for the property.

The Genrichs’ property was zoned residential at the time of purchase but was subsequently rezoned commercial. East of the Genrichs’ property is a public park, Moon Lake Park. The park is comprised of several soccer fields and restroom facilities.

The City created the park in 1998 from an abandoned airport, and, like the Genrichs’ property, this land was not serviced by public utilities.

Through a series of land transactions involving properties surrounding the park, the City inadvertently landlocked its park from vehicular traffic.

To provide access to the park, the City purchased a parcel of land north of the Genrichs’ property to construct an extension and improvement of South Street. The project consisted of a 528-foot paved extension of the street with curbs, gutters, and sidewalks, along with the installation of public water utilities including sanitary and storm sewers to serve the park and the surrounding properties.

Pursuant to sec. 66.0703, the City levied special assessments against the properties abutting the street. Using the “front-foot” method for valuation, the City assessed the Genrichs’ property $44,612.

The Genrichs appealed the levy, but Barron County Circuit Court Judge Fred-erick A. Henderson granted summary judgment to the City, finding that the Genrichs’ property was benefited by the improvements.

The Genrichs appealed, and the court of appeals affirmed in part, and reversed in part, in a decision by Judge Thomas Cane, holding that summary judgment was proper only as to the assessment for the sidewalk.

Question of Fact

The court concluded that it was error for the trial court to fail to first consider whether the public improvement was local or general. A general improvement is one that confers a substantially equal benefit and advantage to the property of the whole community, or benefits the public at large, while a local improvement, “although incidentally beneficial to the public at large, is primarily made for the accommodation and convenience of inhabitants in a particular locality and confers ‘special benefits’ to their properties.”

General improvements must be funded by general taxes and comply with the rule of uniformity, whereas local improvements may be financed by special assessments levied against individual properties and are not limited by the rule of uniformity.

Citing Duncan Develop. Corp. v. Crestview San. Dist., 22 Wis.2d 258, 265, 125 N.W.2d 617 (1964), the court noted that whether an improvement is general or local is a question of fact.

Standard

The court then reviewed guidelines for determining the factual question.

The Genrichs argued that the City’s purpose for initiating the improvements is the controlling factor, while the City argued the central issue should be on the benefits conferred by the improvement.

The court rejected both approaches and held, “the City’s purpose for making the improvements is relevant to resolving the nature of the improvement, but not determinative because the court must also consider the benefits the property receives.”

Noting that a local improvement is one “primarily made” for the convenience of inhabitants of a particular locality, the court held that a trial court must decide what the primary purpose for the improvements was and who the primary objects of that purpose were.

The court stated, “the City’s purpose for initiating improvements must be for reasons of accommodation and convenience (the ‘what’ question), and the object of the purpose must be primarily for the people in a particular locality (the ‘who’ question) for an improvement to fall within the local improvement category.”

The court found support for this conclusion in McQuillin on Municipal Corporations, which states: “[I]f [the improvement’s] primary purpose and effect are to benefit the public, it is not a local improvement.” 14 McQuillin Mun. Corp. sec. 38.11.

The court concluded, “While this highlights purpose as a relevant and necessary consideration in the examination, it also confirms, contrary to what the Genrichs suggest, that purpose alone is not conclusive. The court must also consider the effect of the improvement by analyzing (1) the type of benefits conferred, and (2) their extent. This consideration should bear the greatest weight (cites omitted).”

Turning to benefits, the court stated that, while general improvements grant substantially equal benefits and advantages to the property of the whole community or otherwise benefits the public at large, local improvements confer “special benefits” on property in a particular area. The court defined “special benefits” as those that have the effect of furnishing an “uncommon advantage” that either increases the services provided to the property or enhances its value.

The court added that for a benefit to be “special,” it must differ in kind, rather than in degree, from those enjoyed by the general public, and the accrual of that benefit must be “certain,” and not contingent on unplanned future action by the City. Also, the court must view the benefits and their effect in light of the highest and best possible use of the property.

Applying those principles to the case at bar, the court concluded summary judgment was improper for several reasons. First, the record of the City’s deliberations suggests that the City’s purpose was primarily to provide access to the park, and not to accommodate and convenience the surrounding properties.

Second, a question of fact is present whether the Genrichs’ property received special benefits, because a realtor for the Genrichs submitted an affidavit stating that, in his opinion, the improvements provided no benefit to the property, and could even be detrimental to its value.

Thus, factual questions were present, and the court held summary judgment inappropriate.

Sidewalks

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Nevertheless, the court held that the City was entitled to partial summary judgment with regard to the special assessment levied for the sidewalks.

Sec. 66.0907(3)(f) provides that a property does not have to receive a special benefit from a sidewalk in order for the City to impose a special assessment for its costs.

Reasonableness

Issuing guidance for remand, the court instructed that, even if the trial court finds that the improvements were local, rather than general, the assessment must still have a reasonable basis.

The Genrichs argued that the assessment must be reasonable in proportion to the benefits conferred, while the City argued that it need only show that the method used to value the assessment was reasonable.

The court agreed with the Genrichs, and held that the reasonableness inquiry has two parts: it must be reasonable in relation to all affected properties; and the results on a specific property must be in proportion to the benefits conferred. The court noted, however, that, because the assessment was levied pursuant to the City’s police powers, the assessment can exceed the monetary value of the benefits conferred.

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David Ziemer can be reached by email.