Title: American Oil Company v. City of St. Cloud

State: minnesota

Issuer: Minnesota Supreme Court

Document:

206 N.W.2d 31 (1973) In re Appeal from Adoption of an Assessment against Lands in the City of St. Cloud, Stearns County, Minnesota, by the AMERICAN OIL COMPANY, et al., Appellants, v. CITY OF ST. CLOUD, Respondent. No. 43613. Supreme Court of Minnesota. March 23, 1973. *33 James W. Hoolihan, St. Cloud, for appellants. Richard J. Ahles, City Atty., Thomas L. Dueber, Sp. Asst. City Atty., St. Cloud, for respondent. KNUTSON, Chief Justice. This is a consolidated appeal from judgments of the district court in effect affirming assessments by the city of St. Cloud for the construction of a sanitary sewer in said city. The facts are not in dispute. Upon the petition of Delco Development Company for the construction of a sanitary sewer to serve a new area it was developing, the city proceeded to furnish such service. Located in the Delco area was a shopping center. Extending out from the Delco land there were about 500 acres not yet served by a sanitary sewer. Appellants in this proceeding own land in that area. The land owned by appellants was largely vacant farmland at the time of the assessment, but it was estimated that it would soon be developed and the city engineer and the council came to the conclusion that about one-half of the area would be developed as residential and the other half as industrial property. Shortly before the assessment, the entire tract was annexed to the city, and at the time of such annexation and at the time of the assessment all of the land involved in this proceeding was zoned as single-family residential. Anticipating that when the whole tract was developed it would require sewer service, the city built a 21-inch trunkline as part of the extension of the sewer to the Delco property. Had it not been for the projected necessity for sewers in the rest of the land involved, an 8-inch trunkline might have been sufficient. But the council, after considering the recommendation of the city engineer, concluded that it would be far cheaper to install a 21-inch trunkline at the time the sewer to the Delco property was built than to build a duplicate system later when sewers were needed to serve the remaining part of the area. Public hearings were held, both on the project before the city determined to proceed with it and on the assessment after the project was completed. The total cost of the project was $138,319.20. Of this amount the sum of $40,908.90 was assessed against the property that was immediately serviced by the sewer and the balance, amounting to $97,410.30, was assessed against the balance of the 500 acres in the amount of $195 per acre for indirect benefits although the sewer was not yet extended into the area, nor were there plans to extend the sewer in the immediate future. The trial court found, and the evidence amply sustains this finding, that all of the property was benefited by more than $195 per acre. From the testimony of the city engineer it is to be gathered that the actual benefit to some of the property was much greater than $195 per acre but that the minimum benefit to any of the property was at least that amount. The city engineer testified that the city could not assess the property benefited more than $195 per acre for the reason that the city would then make money on the project, which it could not do, and for that reason it was decided that all of the property would be assessed at the same rate. Apparently, it is the contention of appellants that this method of assessment was improper for the reason that some of the parcels would benefit more than others by the trunkline that was built, and that some of the land would not benefit at all because it was too far away. It is apparent from reading a rather lengthy record that the city council thoroughly considered the matter before it decided to proceed with the construction of the then oversized trunkline in order to service the whole area, when it became necessary, without building a duplicate system. The assessment for the property immediately benefited was based on the cost of a 12-inch trunkline; the assessment for the property indirectly benefited was based *34 on the additional cost of putting in the 21-inch trunkline that would be sufficient to serve the area assessed for indirect benefits when such service became necessary. The testimony of the engineer in that respect is as follows: We think the testimony of the engineer probably explains the thinking of the council better than we can express it. He testified: With respect to the area assessed for indirect benefits, the engineer testified: 1-2. Apparently, appellants contend that inasmuch as the property involved is all zoned as single-family residential and, furthermore, that the city has no immediate plans for extending sewer service into the area assessed for indirect benefits, no benefits are received that would increase the market value of the property. We think this position is untenable. While present use may be considered, it is not controlling. See Village of Edina v. Joseph, 264 Minn. 84, 95, 119 N.W.2d 809, 817 (1962), where we said: The evidence in this case sustains a finding that the area assessed for indirect benefits is of such a nature that the whole area will reasonably soon be developed for either residential or industrial use. When such development occurs, the whole property will require sewer service. In Quality Homes, Inc. v. Village of New Brighton, 289 Minn. 274, 183 N.W.2d 555 (1971), we reversed the trial court in part for failing to hold that nonabutting property may be assessed for part of the cost of a trunk sewer which would ultimately serve such property. We said (289 Minn. 281, 183 N.W.2d 559): In the above case we cited with approval City of St. Paul v. Sanborn, 176 Minn. 62, 222 N.W. 522 (1928). There, as in this case, the city assessed certain property for the construction of a trunk sewer even though the property was not tied into the sewer system. The district court found that the property received special benefits from the construction of the trunk sewer, but not to the extent of the assessment. The trial court reduced the assessment and the city appealed. In affirming the trial court, we said in Sanborn (176 Minn. 66, 222 N.W. 523): It follows that the test 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. The rule is stated in State ex rel. Oliver Iron Min. Co. v. City of Ely, 129 Minn. 40, 47, 151 N.W. 545, 547 (1915), as follows: In 14 McQuillin, Municipal Corporations (3 ed.) § 38.33, we find the following: *36 In Village of Edina v. Joseph, 264 Minn. 84, 99, 119 N.W.2d 809, 819, we said: 3. We must bear in mind the rule that the levying of an assessment for the improvement of property is a legislative act. In In re Assessment for Widening E. Fourth St. St. Paul, 173 Minn. 67, 70, 216 N.W. 607, 608 (1927), we said: In Quality Homes, Inc. v. Village of New Brighton, 289 Minn. 274, 285, 183 N.W.2d 555, 562, we said: See, also, In re Improvement of Third Street, St. Paul, 185 Minn. 170, 240 N.W. 355 (1932); Village of Edina v. Joseph, supra, where we refer to the levying of an assessment as a legislative act. Mr. Michael Donohue, a member of the city council who is also an attorney, testified regarding the necessity of installing the oversized trunkline at this time in order to service the area in the future when it becomes necessary: *37 While the property owners and those interested indirectly in the property testified there was no benefit to the land assessed, the only impartial expert real estate witness who was not interested in any of the land affected was called by the city. Jerome Cyphers, who both parties concede was well qualified in appraising real estate, testified that the installation of sanitary sewers would definitely increase the value of those lands which could be served in the future by the trunkline. In that respect he agreed with the city council. He testified that the improvement would increase the market value of each parcel of property assessed for indirect benefits in an amount equal to or in excess of $195 per acre and that basically all the land in the disputed area would benefit equally from the trunkline. In that respect he testified as follows: Apparently appellants' line of thinking is that the cost of the larger trunkline would have to be assessed against each parcel comparatively, based on the increased value that parcel would receive in comparison to that which other parcels would receive, even though the evidence sustains the fact that benefit to all parts of the area was at least $195 per acre. It is obvious that this line of thinking, if the court were compelled to accept it, would result in an increased assessment against some parcels in the area whereas the assessments against others might be decreased. Appellants here are all in this case together. The cases have been consolidated both in the trial court and before this court. They advance the same argument even though the result of its acceptance would hurt some and help others. Surely those property owners whose assessments might be raised would have difficulty in complaining about the assessment that was levied, which is lower than they could expect if the benefit to each parcel on a comparative basis were adopted. Those whose assessment might be lowered would benefit from such computation if it could be made. The same attorney represents all appellants, and he might find it difficult to justify a result under which some of his clients would be assessed more *38 than they are under the city's plan. However, in this case the evidence sustains the court's finding that the market value of the property affected was increased by at least the amount of the assessment. 4. While it is true that the city could have paid the extra cost of the enlarged trunk sewer out of ad valorem taxes and then assessed such cost against the property as the sewer service became available, under our laws it was not necessary for the city to do so. Minn.St. 429.051 reads in relevant part: When the sewer is finally extended from the trunkline for which the assessment is now being made, the property then serviced will undoubtedly be assessed on a front-foot basis for the sewer so established. The owners will already have been assessed for the trunkline, so that will not be repeated. In any event, if not now assessed for a share of the trunkline, they would eventually be assessed for their share as sewer service is extended to them. Under these circumstances we feel satisfied that the findings of the trial court that all the property involved was benefited more than the amount of the assessment levied against it is amply sustained by the evidence and the method of assessment is permissible under our laws. In view of our decision on the legality of the assessment we see no need of discussing other issues raised by appellants. The decision of the trial court is affirmed.