Opinion ID: 901966
Heading Depth: 1
Heading Rank: 4

Heading: Constitutional Requirements for Special Assessments

Text: [¶ 10.] The constitutional analysis of special assessments stems from the constitutional provisions prohibiting the government from taking private property without just compensation. Norwood, 172 U.S. at 279, 19 S.Ct. at 190-91. The Fifth Amendment of the United States Constitution provides that [n]o person shall be . . . deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation. U.S. Const. amend. V. The South Dakota Constitution provides that [p]rivate property shall not be taken for public use, or damaged, without just compensation, which will be determined according to legal procedure established by the Legislature[.] S.D. Const. art. VI, § 13. Furthermore, the South Dakota Due Process Clause provides that [n]o person shall be deprived of life, liberty or property without due process of law. S.D. Const. art. VI, § 2. The United States Supreme Court explained the application of the Fifth Amendment to a government's special assessments: In our judgment, the exaction from the owner of private property of the cost of a public improvement in substantial excess of the special benefits accruing to him is, to the extent of such excess, a taking, under the guise of taxation, of private property for public use without compensation. Norwood, 172 U.S. at 279, 19 S.Ct. at 191. Thus, if a local public improvement confers a special benefit on private property, a special assessment can be constitutionally imposed if the assessment does not exceed the benefit received. [¶ 11.] A public improvement is considered local if it benefits adjacent property, as distinguished from benefits diffused throughout the municipality. Ruel v. Rapid City, 84 S.D. 79, 85, 167 N.W.2d 541, 544 (1969). The classification as a local improvement depends on the character and nature of the improvement. We have said, [t]he primary purpose of the improvement is largely determinative and classification depends `upon the nature of the improvement and whether the substantial benefits to be derived are local or general in their nature.' Id. at 86, 167 N.W.2d at 544. If the project is general in nature, the cost cannot be assessed against adjacent property. If the project is local in nature, the cost can be assessed against the adjacent property but only if the property receives a special benefit. Whether a project is local or whether property receives a special benefit are factual inquiries. Subject to court review, a city's decision to impose a special assessment should be founded on those inquiries. See Norwood, 172 U.S. 269, 19 S.Ct. 187. [¶ 12.] The South Dakota Legislature has authorized municipalities to impose special assessments on landowners for local public improvements. See SDCL ch. 9-43; Brookings v. Assoc. Developers, Inc., 280 N.W.2d 97 (S.D.1979). Special assessments are imposed to defray the expenses of a local municipal improvement on the theory that the property has received special benefits from the improvements in excess of the benefits accruing to property or people in general. NEBCO, Inc. v. Bd. of Equalization of City of Lincoln, 250 Neb. 81, 547 N.W.2d 499, 503 (1996). This Court has previously described municipal special assessments: Special assessments are understood to refer to money raised or levied for some local municipal purpose to which the funds so collected are to be specifically applied in making the local improvements. The assessment is not laid upon a whole community, but only on a small and defined part thereof; and, while a tax is levied upon all property of a state, county, city, or town without any reference to special benefits to the individuals taxed, special assessments are presumed to be made on account of special benefits to the property assessed, conferred by the improvements for which the special tax is levied. Winona & St. P.R. Co. v. City of Watertown, 1 S.D. 46, 44 N.W. 1072, 1073 (1890). Some public improvement projects may involve both general and local benefits. In those cases, only part of the cost of the project can be assessed against the adjacent property owners, and the rest is funded by the city. See Des Moines Union Ry. Co. v. City of Des Moines, 459 N.W.2d 271, 272 (Iowa 1990). [¶ 13.] A municipality's power to impose special assessments is limited by the constitutional requirement that the project confer a special benefit on the assessed property. In Haggart v. Alton, this Court stated that it is settled by the decisions of this Court, sustained by the great weight of authority, that special assessments. . . [are] lawful and constitutional only when founded upon special benefits accruing from the improvement for which the . . . assessment is laid. 29 S.D. 509, 137 N.W. 372, 375 (S.D.1912). This statement is consistent with the United States Supreme Court's holding in Norwood: It is one thing for the legislature to prescribe it as a general rule that property abutting on a street opened by the public shall be deemed to have been specially benefited by such improvement, and, therefore, should specially contribute to the cost incurred by the public. It is quite a different thing to lay it down as an absolute rule that such property, whether it is in fact benefited or not by the opening of the street, may be assessed by the front foot for a fixed sum, representing the whole cost of the improvement, and without any right in the property owner to show, when an assessment of that kind is made, or is about to be made, that the sum so fixed is in excess of the benefits received. 172 U.S. at 279, 19 S.Ct. at 190-91. [¶ 14.] Determining whether a project confers special benefits requires a finding that the assessed property receives a benefit above and beyond or differing from the benefit enjoyed by the general public. In Hawley, this Court set out the applicable law and constitutional requirements for special assessments in South Dakota. Hawley recognized that [s]pecial assessments can be sustained only upon the theory that the property assessed receive some special benefit from the improvement differing from the benefit that the general public enjoys. 276 N.W.2d at 705. In Ruel, this Court said that a special benefit had to be above and beyond that enjoyed in common with the public at large or the rest of the community. 84 S.D. at 85, 167 N.W.2d at 544 (1969). [1] [¶ 15.] Whether a property receives a special benefit above and beyond or differing from the general public is often driven by opinion and conjecture of the property owner on the one hand and the city on the other. See Hawley, 276 N.W.2d at 707. This Court has said that the special benefits must be actual, physical and material and not merely speculative or conjectural. Ruel, 84 S.D. at 87, 167 N.W.2d at 545. Even so, this Court has recognized that an exact and actual monetary benefit to property may be difficult to measure and at most can only be estimated with a fair degree of exactness. Hawley, 276 N.W.2d at 706. One obvious indicator that property receives a special benefit is if the public project enhances its market value. Id. Future prospects and reasonable expectations of the future use may be another indicator. Id. Other courts have found a special benefit when the property realizes aesthetic enhancement. See Town of Tiburon v. Bonander, 103 Cal.Rptr.3d 485, 180 Cal. App.4th 1057 (2009); City of Winter Springs v. State, 776 So.2d 255 (Fla.2001); Des Moines Union Ry., 459 N.W.2d 271. [¶ 16.] When a special assessment is challenged in circuit court, a city's findings are presumed correct. Hawley, 276 N.W.2d at 706. The property owner has the burden of going forward with evidence sufficient to overcome the presumption as well as the ultimate burden of persuasion. South Dakota's rule on presumptions imposes on the party against whom it is directed the burden of going forward with evidence to rebut or meet the presumption. SDCL 19-11-1; In re Estate of Dimond, 2008 SD 131, ¶ 9, 759 N.W.2d 534, 538 (discussing SDCL 19-11-1). This rule requires that substantial, credible evidence be introduced to rebut the presumption. SDCL 19-11-1. This Court has explained the rule's application: Reading this statute as a whole, therefore, we deduce that the substantial, credible evidence requirement means that a presumption may be rebutted or met with such evidence as a trier of fact would find sufficient to base a decision on the issue, if no contrary evidence was submitted. But mere assertions, implausible contentions, and frivolous avowals will not avail to defeat a presumption. What may suffice as substantial, credible evidence will, of course, vary depending on the nature of the presumption. A presumption implementing vital public policy, like the presumption of legitimacy, for instance, would require weighty evidence to surmount it. Conversely, a presumption established primarily as a procedural device may require some lesser quantum of substantial, credible evidence for rebuttal. Dimond, 2008 SD 131, ¶ 9, 759 N.W.2d at 538 (citations omitted). In the context of rebutting special assessments, this Court has required weighty evidence in that it should be strong, direct, clear and positive. Hawley, 276 N.W.2d at 705 (citing Meyer v. City of Oakland Park, Fla., 219 So.2d 417, 420 (Fla.1969)). Here, the Petitioners also have the ultimate burden of persuasion to prove by clear and convincing evidence that the property did not receive a benefit over and above or differing from the benefit received by the general public. [2] See Dimond, 2008 SD 131, ¶ 9, 759 N.W.2d at 538; In re Tax Assessment of Foster Found.'s Woodlands Retirement Cmty., 223 W.Va. 14, 672 S.E.2d 150, 163 n. 20 (2008).