Holter v. City of Mandan

• Decision Date: 22 July 2020
• Docket Number: No. 20190277,20190277
• Citation: 946 N.W.2d 524
• Parties: Deborah HOLTER, Petitioner and Appellant v. CITY OF MANDAN, a political subdivision of The State of North Dakota, Respondent and Appellee
• Court: North Dakota Supreme Court

946 N.W.2d 524

Deborah HOLTER, Petitioner and Appellant

v.CITY OF MANDAN, a political subdivision of The State of North Dakota, Respondent and Appellee

No. 20190277

Supreme Court of North Dakota.

Filed July 22, 2020

William C. Black, Bismarck, ND, for petitioner and appellant.

Malcolm H. Brown (argued), Mandan, ND, and Amy M. Oster, Bismarck, ND, for respondent and appellee.

McEvers, Justice.

[¶1] Deborah Holter appeals a district court judgment dismissing her appeal of the Mandan Board of City Commissioners’ decision to specially assess her property for street improvements. We affirm.

I

[¶2] In February 2015, a public hearing was held regarding needed repairs to streets and alleys. In March 2015, the Board adopted a resolution creating Street Improvement District No. 199 and a resolution declaring the cost of the improvements would be specially assessed against the benefited properties in the district in amounts proportionate to but not exceeding the benefits the properties received from the improvements. The improvement district included construction on streets between 4th Avenue Northeast to Mandan Avenue and between Main Street and 3rd Street Northeast in Mandan. The minutes reflect that the total cost of the project was estimated to be $3,653,297 and approximately five percent of the project would be paid by city sales tax, with the remainder to be assessed to the benefiting properties.¹

[¶3] The actual cost of the improvements was $3,316,595.73. The City paid $225,000,² and the remaining amount of $3,091,595.73 was specially assessed to the properties especially benefited by the improvements. In July 2017, the Mandan Special Assessment Commission published a notice of a meeting in August 2017 that contained the items of expense of the improvement, allocation of a portion of the cost to the City, and the net amount to be assessed. The notice provided a list of properties found to be especially benefited by the construction performed in the project and the amounts to be assessed. The notice provided:

We the undersigned, constituting the Special Assessment Commission of the City of Mandan do hereby certify that the following is a true and correct list of the particular lots of land which, in the opinion of the Commission, are especially benefited by the construction performed ... showing the amount against each lot or tract, the same is a true and correct assessment of the property there in described to the best judgement of the members of the Commission.

(Emphasis added.)

[¶4] In August 2017, the Special Assessment Commission approved the proposed assessments against the especially benefited properties and moved the decision to the Board for its consideration. The Board approved the special assessments in October 2017.

[¶5] Holter owns three undeveloped residential lots in the improvement district. Each lot was assessed $15,928.40, for a total of $47,785.20. Holter objected to the assessments against her properties, claiming they exceeded the value of the benefits they receive. She also argued the method for determining the assessments was unfair because corner lot owners and non-corner lot owners were not treated equally.

[¶6] Holter appealed the Board's decision approving the special assessments to the district court. The court twice remanded the case to the City for further findings on the value of the benefits to Holter's properties. On the second remand, the Special Assessment Commission met and determined that under the City's Special Assessment Policy, Holter's properties were benefited by the amounts assessed against them. Additional findings from the November 2018 meeting stated:

Winks [commissioner] moved in conformance with the City of Mandan's Special Assessment Policy and the methods prescribed therein, were used to decide the benefits and costs to the Holter properties/parcel number B20-1, B20-2 and B20-3 in the amount of $15,928.40 for each parcel and that the parcels are specially benefitted in that amount by reason of the improvements in Street Improvement District 199.

[¶7] The court affirmed the City's special assessments against Holter's properties. The court concluded the special assessments to Holter's properties under the City's policy were consistent with the amounts assessed to other properties and were not arbitrary, capricious, or unreasonable.

II

[¶8] Holter contends the City failed to determine the value of the benefit to her properties and her properties were assessed in an amount exceeding the benefit to the properties.

[¶9] We exercise a limited review of challenges to special assessments in part because of the separation of powers doctrine:

The special assessment commission is in essence a legislative tribunal created by legislative authority to "(1) determin[e] the benefits accruing to the several tracts of land in an improvement district by reason of the construction of an improvement and (2) assess[ ] the costs and expenses thereof against each tract in proportion to the benefit received." Accordingly, judicial review is limited to assuring that local taxing authorities do not act arbitrarily, capriciously, or unreasonably.

Courts are not to act as a super grievance board, and we do not try special assessment cases anew or reweigh the evidence. Rather, we begin with the presumption that assessments for local improvements are valid, and the burden is on the party challenging the validity of the assessments to demonstrate they are invalid.

Bateman v. City of Grand Forks , 2008 ND 72, ¶ 10, 747 N.W.2d 117 (quoting Serenko v. City of Wilton , 1999 ND 88, ¶ 20, 593 N.W.2d 368 ).

[¶10] Section 40-23-07, N.D.C.C., governs a special assessment commission's decision relating to benefits and assessments:

The commission shall determine the amount in which each of the lots and parcels of land will be especially benefited by the construction of the work for which such special assessment is to be made, and shall assess against each of such lots and parcels of land such sum, not exceeding the benefits, as is necessary to pay its just proportion of the total cost of such work, or of the part thereof which is to be paid by special assessment, including all expenses incurred in making such assessment and publishing necessary notices with reference thereto and the per diem of the commission.

[¶11] This Court has stated three requirements must be satisfied for a special assessment to comply with N.D.C.C. § 40-23-07 :

The special benefit accruing to each lot or parcel of land from the improvement must be determined. The special assessment levied against each lot must be limited to its just proportion of the total cost of the improvement. The assessment against any lot or parcel of land must not exceed the benefit which has been determined to have accrued thereto.

Bateman , 2008 ND 72, ¶ 11, 747 N.W.2d 117.

[¶12] This Court looks at whether, on its face, the legislative act was arbitrary, capricious, or legally unreasonable. This Court stated in Ulvedal v. Bd. of Cty. Comm'rs of Grand Forks Cty. , 434 N.W.2d 707, 708-09 (N.D. 1989) :

Several decades ago, this court addressed the proper role of courts in reviewing a tax assessment by a local governing body. Appeal of Johnson , 173 N.W.2d 475 (N.D. 1970). In that earlier appeal, also from an assessment of real estate in Grand Forks, this court surveyed how courts in other states approached review of assessments of property for tax purposes. We concluded that "it is not for the court to substitute its judgment for that of the lawfully designated taxing authorities, ..." Id. at 484. When "there is substantial evidence to support the appraisal made by the assessing authorities and no evidence of any discrimination," id. at 484, a decision of county commissioners should be upheld.

Later, in Shaw v. Burleigh County , 286 N.W.2d 792 (N.D. 1979), this court carefully defined the scope of "de novo" review of a county commissioner's decision under NDCC 11-11-43. A decision about zoning was under review. This court recognized that it was examining the exercise of "a legislative function and not a judicial one." Id. at 795. For separation of powers reasons, we held:

"... that a ‘de novo’ hearing, as applied to judicial review of decisions of the Board of County Commissioners under Section 11-11-43, N.D.C.C., means a trial to determine whether or not the Board acted arbitrarily, capriciously, or unreasonably. Section 11-11-43, N.D.C.C., must be treated as merely providing the procedure by which the proceeding may be brought before the court to determine whether or not the Board acted properly." 286 N.W.2d at 797.

Thus, a reviewing court may not reverse a local governing body's action simply because it finds some of the material considered more convincing. Only when there is such an absence of evidence or reason as to amount to arbitrary, capricious or unreasonable action, can a reviewing court reverse. Both the district court and this court are limited to this scope of review. Shaw, supra at 797.

This limited review, carefully explained in Shaw , had been anticipated in Johnson :

"[T]he taxation of property is a legislative rather than a judicial function, ... ‘[t]he court must presume, in the absence of contrary evidence, that the assessing officers performed their duty, and the court will not set aside an assessment merely because of a difference of opinion as to value. (Citations omitted)’ " 173 N.W.2d at 481-482.

We have continued to employ this restricted concept in reviewing decisions by local governing bodies. Thus, in Haman v. City of Surrey , 418 N.W.2d 605 (N.D. 1988), we affirmed that a city's special assessment commission had not acted arbitrarily, oppressively or unreasonably in assessing benefits from water and sewer improvements. See alsoCloverdale Foods Company v. City of Mandan , 364 N.W.2d 56 (N.D. 1985).

[¶13] As such, a municipality has broad discretion to determine benefits and apportion assessments and costs to properties within an improvement district. B...