Court Opinion

ID: 9687346
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:25:43.088437+00
Date Added: 2024-06-11T18:18:26.313160
License: Public Domain

■ BLATZ, Chief Justice
(dissenting).
I respectfully dissent. The majority holds that Minn.Stat. § 273.11, subd. 17 (1998), does not limit market value reductions for stigma associated with contaminated property. Because the plain language of subdivision 17 contemplates reductions resulting from the presence of contaminants, and stigma is such a reduction, I would reverse the tax court and hold that subdivision 17 limits all such reductions — including 1 stigma — to the cost of cleaning up contaminated property.
Before discussing the merits of the majority decision, however, I must express my concern with the court’s consideration of this case at this time. In addition to the inappropriate procedural posture as noted by the majority in footnote 7, there have been no findings of fact as to the amount of stigma associated with the subject property in the contested tax year, or to any of the other value 'considerations necessary to deciding this case. Amazingly, the record does not even include an estimate of market value for the contaminated property at issue. All we know is that' the parties have apparently stipulated that the unimpaired market value of the property is $1,336,600, the clean-up costs have been projected to be $560,000, and the stigma impact “could possibly exceed $500,000.” Therefore, we do not know if the stigma value will even exceed the cost of clean-up, a key assumption of fact integral to the majority’s reasoning.1
*82If on remand the tax court finds there to be little or no stigma associated with this contaminated property, that finding alone could render the issue before us moot. Thus, what we have before us is, in essence, an advisory opinion, something the “judicial function does not comprehend.” Izaak Walton League of Am. Endowment, Inc. v. State, Dep’t of Natural Resources, 312 Minn. 587, 589, 252 N.W.2d 852, 854 (1977). Nonetheless, the court might be well advised to decide the issue presented under the judicial economy exception of Tarutis v. Commissioner of Revenue, 393 N.W.2d 667, 669 (Minn.1986), and Brookfield Trade Ctr., Inc. v. County of Ramsey, 609 N.W.2d 868, 873-74 n. 6 (Minn.2000), if only to prevent the tax court from proceeding along its present course.
Turning to the issue before us, the majority writes that the plain language of Minn.Stat. § 273.11, subd. 17, is determinative in this controversy. I agree that the language of subdivision 17 is clear. It states:
In determining the market value of property containing contaminants, the assessor shall reduce the market value of the property by the contamination value of the property. The contamination value is the amount of the market value reduction that results from the presence of the contaminants, but it may not exceed the cost of a reasonable response action plan or asbestos abatement plan or management program for the property.
Minn.Stat. § 273.11, subd. 17(a) (emphasis added); see also Minn.Stat. § 270.93 (1998). Market value loss due to contamination is caused by several factors such as stigma, liability to the public, and clean-up costs. See Peter J. Patchin, Valuation of Contaminated Properties, Appraisal J., Jan. 1988, at 11. In other words, stigma is one contributor to market value reduction. Thus while the majority concludes that because stigma is not specifically mentioned in subdivision 17 it must be excluded from that statute, I reach the opposite conclusion. Because the statute does not specifically exclude stigma, it limits the market value reduction — whether it results from stigma or clean-up costs or something else — to the response action plan costs.2
The majority’s reasoning in support of its interpretation of the plain meaning does not withstand scrutiny. First, the majority assumes that “contamination value” equates to “clean-up costs” just because the legislature chose to limit contamination value to the costs of the response action plan. Subdivision 17 provides that the contamination value “may not exceed the cost of a reasonable response action plan.” This language would be rendered superfluous if the contamination value was *83simply the cost to clean-up the contamination. See Minn.Stat. § 645.17(2) (1998) (providing that it must be presumed that the legislature intended the “entire statute to be effective and certain”). Rather, this language demonstrates that the legislature contemplated that while clean-up costs might contribute to a reduction in the market value of the property, clean-up costs and contamination value are not synonymous.
The companion contamination tax provisions at Minn.Stat. §§ 270.91-98 (1998) also contradict the majority’s equating of contamination value with clean-up costs. For instance, Minn.Stat. § 270.93 states:
The contamination value of a parcel of property is the amount of the market value reduction, if any, that is granted for general ad valorem property tax purposes for the assessment year because of the presence of contaminants. The contamination value for a property may be no greater than the estimated cost of implementing a reasonable response action plan * * *.
In other words, the legislature recognized that a property may not have any contamination value due to the presence of contaminants.
In addition, the legislative history leads to the conclusion that stigma is included in the contamination value. The first court decision in Minnesota to apply the concept of stigma was Westling v. County of Mille Lacs, Nos. C5-92-341 & C7-92-342, 1993 WL 35155, at *1-3 (Minn. Tax Ct. Peb. 10, 1993), where the value of a property was reduced from nearly $1,000,000 to $100 for tax assessment purposes due to stigma and costs to cure contamination on the property, even though the property generated $144,000 in annual rent for the owners and served as security, in part, for a $1,000,000 mortgage on the property. See Westling II, 543 N.W.2d at 92-93. Immediately following the filing of that decision, a bill proposing a contamination tax was introduced in the Minnesota legislature. See 1 Journal of the House of Representatives 183, 191 (78th Minn.Leg. Feb. 18, 1993). At the hearings on the bill, the Westling case result was noted as the impetus for a contamination tax to-recover lost property taxes from productive and valuable, although contaminated, properties. See Hearing on H.F. 427, H. Comm, on Taxes, 78th Minn. Leg., Mar. 26, 1993 (audio tape).
The assessors who spoke at the hearings on the bill explained the complications in valuing contaminated property. See id. Bob Hanscom, from the Hennepin County Assessor’s Office, stated: “It’s often difficult to identify the loss in value due to contamination. It isn’t necessarily just the cost to clean it up. It’s this stigma issue out there * * * .” Id. These comments comport with Patchin’s description of the loss in value for contaminated properties as caused by various factors, such as stigma and clean-up requirements. See Patchin, supra, at 11. Accordingly, the legislature’s use of the broad language “market value reduction that results from the presence of contaminants” clearly was meant to include stigma.
Finally, while I agree with some of the majority’s conclusions, I do not agree that they support the holding that stigma is separate from and independent of contamination value. Like the majority, I con-cludé that the contamination tax, and thus the contamination value described in Minn. Stat. § 273.11, subd. 17, applies only to property that is actually contaminated.3 I also agree that it may be possible for stigma to attach to a property whether or not contaminants are present. I do not agree, however, that these must be mutually exclusive conclusions. Simply because stigma may attach to uncontaminated or *84formerly contaminated properties does not mean that stigma was not included in this legislative response to the valuation of contaminated properties.4 In fact, to read stigma out of the statute is to unnecessarily limit the definition of contamination value and to ignore the context within which the statute was adopted.
Critically, the issue before us is the application of subdivision 17 to a contaminated property which is subject to a response action plan and which may be affected by stigma — not the applicability of that statute or of stigma to uncontaminated or formerly contaminated properties. Given that this is the central issue, it is critical to focus on the fact that in the case before us we have a contaminated property on the Superfund list. It is a property for which we do not know the market value, the stigma value, or the actual clean-up costs. Nonetheless, the majority has decided that a reduction in its value caused by an unknown stigma is not capped by the cost of the estimates of the response plan costs. Although that holding is advisory in and of itself, the majority then goes on to decide that for uncontaminated property, value may be reduced for stigma. These facts are not before us.5
In addition to holding that contamination value includes stigma, I would hold that Minn.Stat. § 273.11, subd. 17, does not violate the Uniformity Clause of the Minnesota Constitution nor the Equal Protection Clause of the United States Constitution. These issues, as well as a claim that the tax was a governmental taking, were decided by Westling v. County of Mille Lacs, 581 N.W.2d 815 (1998) (Westling III). In Westling III, we held that the contamination tax provisions at Minn. Stat. §§ 270.91-98, which accompanied Minn.Stat. § 273.11, subd. 17, in the 1993 bill, are constitutional. See Westling III, 581 N.W.2d at 823-24. Although we did not expressly refer to Minn.Stat. § 273.11, subd. 17, that provision is clearly encompassed by the decision. First, the contamination tax is applied to the “ ‘market value reduction, if any, that is granted for general ad valorem property tax purposes * * * because of the presence of contaminants.’ ” Westling III, 581 N.W.2d at 818 (quoting Minn.Stat. § 270.93). Second, we recog*85nized that the contamination tax “applies only to property that has been reduced in assessed value due to the presence of environmental contamination.” Westling III, 581 N.W.2d at 821. Finally, after concluding that the contamination tax violated neither the Uniformity Clause of the Minnesota Constitution nor the Equal Protection Clause of the U.S. Constitution, we held that Westling’s argument that “the imposition of a contamination tax in excess of the value of their property constitutes a governmental taking without compensation, is * * * without merit.” Id. at 822. Thus, because these constitutional arguments were made and decided by us in Westling, there is no need to revisit them here.
Given the record before us and our clear precedent, I would spurn the respondent’s invitation to unravel the statutes and our precedent interpreting it. Accordingly, I would reverse the tax court’s grant of partial summary judgment and remand for further proceedings.

. This incomplete record and procedural posture contrasts sharply with the record and procedural posture of the Westling line of cases. See Westling v. County of Mille Lacs, 581 N.W.2d 815 (Minn.1998) (Westling III); Westling v. County of Mille Lacs, 543 N.W.2d 91 (Minn.1996) (Westling II); Westling v. County of Mille Lacs, 512 N.W.2d 863 (Minn.1994) (Westling I). There a full trial on the valuation issue was conducted prior,to our review of the valuation of the contaminated property. See Westling I, 512 N.W.2d at 865-*8266. Accordingly, the tax court had heard testimony from experts as to the nature and extent of contamination and the present value of the future costs of clean-up; testimony by Peter J. Patchin, an appraiser for the tax petitioners, that the property had a negative market value based on his opinions as to the unimpaired market value, the loss of value due to stigma, and the clean-up costs; and testimony by the county's appraiser whose opinions of value, unsurprisingly, differed from Patchin’s. See Westling II, 543 N.W.2d at 93; Westling I, 512 N.W.2d at 865-66. Most importantly, the tax court rendered a decision in that matter, including its findings of fact as to the value of the property, based on its findings of fact as to the valuation components. See Westling II, 543 N.W.2d at 93.

. The majority notes that in our 1996 Westling II, we affirmed a reduction in the value of a contaminated property to zero based on clean-up costs and a stigma discount. In so noting, the majority implies that this court has previously not applied Minn.Stat. § 273.11, subd. 17, to limit a reduction in market value to the costs of a response plan where a stigma reduction was also found. While true, subdivision 17 was not in effect for the tax years in question in Westling II. As we stated in our 1998 Westling III decision, Minn.Stat. § 273.11, subd. 17, which was enacted in 1993, was effective beginning with 1994 taxes, payable in 1995. The 1996 Wes-tling II case involved a tax petitioner's challenge to 1992 and 1993 assessed taxes, payable in 1993 and 1994.

. This fact makes the majority’s opinion very puzzling. In its effort to bring in uncontaminated property as a justification for reading stigma out of the statute, it ignores the fact that uncontaminated property will not have to be cleaned up and is not subject to the contamination tax.

. The majority’s statement that there is no "rational justification” for permitting uncontaminated properties, but not contaminated properties, to deduct for stigma is not supported by the law. First, subdivision 17 does not preclude all deductions for stigma; it just limits reductions in value for this difficult to define factor to the costs of a response action plan. More importantly, this assertion ignores our recent precedent in Westling III. In upholding the contamination tax scheme in Westling III, we held that there is a rational basis for treating contaminated and uncontaminated properties differently. See Westling III, 581 N.W.2d at 821. Among the reasons identified were that contaminated property may result in increased health risks and contributes to community blight and economic distress. See id. at 821. "Contaminated property thereby poses a greater burden on society than uncontaminated property.” Id. As we said in Westling III, "the presence of environmental contamination, along with the extent of responsibility for clean up, are genuine and rational bases” for treating contaminated and uncontaminated properties differently. Id.

. The majority also points to Minn.Stat. § 273.11, subd. 1 (1998), in support of its holding. Subdivision 1 provides that the "assessor shall take into account the effect on the market value of the property of environmental factors in the vicinity of the property.” Minn. Stat. § 273.11, subd. 1. The majority cites this statutory provision as support for its conclusion that "environmental (e.g.contamination) factors affecting market value, although not present on the subject property, are to be taken into account.” Again the majority's reach is beyond the scope of the issues before us. This case is about a contaminated property — not an uncontaminated property in proximity to other contaminated properties. Further, the statutes at issue are expressly concerned with environmental factors in that they recognize the effects of contamination on property values and set forth a framework to assess and tax the properties accordingly. Finally, even if subdivisions 1 and 17 of Minn. Stat. § 273.11 are in conflict, and I do not believe they are, subdivision 17 is the more specific and most recently enacted and would be applied to the subject property. See Minn. Stat. § 645. 26, subds. 1, 4 (1998).