Opinion
Nos. CX-01-487, C1-01-488, C3-01-489
Filed December 11, 2001.
Appeal from the District Court, Anoka County, File Nos. C4988925, C8988930, C8988927.
David D. Meyer, Steven J. Quam, (for respondents)
Barry A. Sullivan, William G. Hawkins and Associates, (for appellant)
Considered and decided by Shumaker, Presiding Judge, Crippen, Judge, and Schumacher, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant City of Andover challenges the district court's judgment declaring invalid certain special assessments. The city contends that (1) respondents ABC Mini Storage, Kottke's Bus Service, Inc., and Edward and Jean Prater (property owners) failed to rebut the presumed validity of the assessments; (2) the district court erred in calculating the special benefit of the project to the properties by failing to make findings of the before and after market value of the properties; and (3) the court erred in determing the highest-and-best use of the properties because the court allowed the properties' present use to be the determining factor. We affirm in part, reverse in part, and remand.
FACTS
In 1995, the City of Andover undertook a road utility construction project located in an area of the city bordered by Bunker Lake Boulevard to the north, Hanson Boulevard to the east, Commercial Boulevard to the south, and Jay Street to the west. As part of the project, the city constructed two new roads: the Bunker Lake Boulevard service road, which runs east and west along the northern border of the project area, and Grouse Street, which extends from the service road running generally north and south through the middle of the project area. The city also constructed watermains and sanitary sewer lines along the length of these roads with hookup points available for the adjacent properties. Additionally, a storm water drainage system was constructed to service the entire area.
The cost of the project was approximately $950,000. About one-half this amount was financed through the use of tax increment financing. The city levied special assessments for the balance in accordance with Chapter 429 of the Minnesota Statutes. The property owners appealed the special assessment to the district court, and the cases were consolidated for trial.
At trial, the district court determined that the amount of the assessments levied against the properties exceeded the benefit conferred and declared the assessments invalid. The city appeals.
DECISION
1. The properties at issue in this appeal are nine separate although contiguous parcels. ABC owns one of the parcels, Kottke's six, and the Praters two. A municipality has the statutory authority to assess the cost of an improvement on the benefited properties. Minn. Stat. § 429.051 (1998). The power to impose special assessments is limited in that (1) the property must receive a special benefit from the improvement; (2) the assessment must be uniform upon the same class of property; and (3) the assessment may not exceed the special benefit to the property. Carlson-Lang Realty v. City of Windom, 307 Minn. 368, 369, 240 N.W.2d 517, 519 (1976). This court-imposed limitation ensures that the assessment does not result in a taking without fair compensation . Buettner v. City of St. Cloud, 277 N.W.2d 199, 202 (Minn. 1979). Because there is no dispute here regarding the uniformity of the assessment, our focus is on the amount of the assessment and special benefit.
The city contends that all three of the property owners failed to rebut the presumed validity of the special assessment. The city is presumed to have set the assessment legally and, thus, introduction of the assessment roll constitutes prima facie proof that the assessment does not exceed the special benefit. Id. This "presumption of validity," however, disappears when adverse evidence of value is introduced. Id. at 204. The city here indeed submitted a properly adopted assessment role into evidence. In response, however, all the property owners presented expert testimony from their appraiser, Peter LaSalle, who testified that the project either conferred no special benefit on the properties or conferred a benefit that was less than the amount assessed.
The city argues that LaSalle's testimony did not constitute competent evidence and, therefore, is not sufficient for rebuttal purposes. "The district court has broad discretion in ruling whether or not to admit an appraisal." Eagle Creek Townhomes, LLP v. City of Shakopee, 614 N.W.2d 246, 250 (Minn.App. 2000), review denied (Minn. Sept. 13, 2000). Any valuation method that fairly approximates the increase in a subject property's market value after an improvement may be used in an assessment proceeding. DeSutter v. Township of Helena, 489 N.W.2d 236, 238 (Minn.App. 1992), review denied (Minn. Sept. 30, 1992). The weight and credibility of expert-witness testimony is for the trier of fact to determine, and this court will not reassess the experts' opinions on appeal. Id. at 240.
We conclude the testimony presented on behalf of the property owners was sufficient to rebut the presumption of validity.
2. The city next contends that the district court erred in its benefit determinations by failing to make findings regarding the parcel's market value before and after the project.
In a special assessment appeal, the district court conducting an independent evaluation must determine whether the special assessment is valid, i.e., whether the amount of the assessment exceeds the special benefit to the property. Buettner, 277 N.W.2d at 203. "Special benefit" means the increase in market value resulting from the improvement. Carlson-Lang, 307 Minn. at 369, 240 N.W.2d at 519. Special benefits from an improvement are calculated on the market value of the land before and after the improvement based on the highest-and-best use of the land. Anderson v. City of Bemidji, 295 N.W.2d 555, 560 (Minn. 1980). Accordingly, the district court must make before and after market value findings. In Gibbish v. Village of Burnsville, the Minnesota Supreme Court stated:
Plaintiffs tried the case on the theory that various parts of the property could be appraised and others omitted and that the property could be divided into different portions for purposes of appraisal. The trial court accepted this theory in deciding the case, and made no findings of the value of the subject property prior to the improvement and subsequent to the improvement. Such findings should be made.
Gibbish v. Village of Burnsville, 294 Minn. 318, 322-23, 200 N.W.2d 310, 314 (1972). Similarly, in Peterson v. City of Inver Grove Heights, this court stated:
Having concluded that Minn. Stat. § 429.081 (1982) precluded respondent's appeal, we need not address the other issues raised. We note, however, that the trial court's failure to make findings on the before and after market value of respondent's property would have been a separate and sufficient ground for reversing and remanding this case.
Peterson v. City of Inver Grove Heights, 345 N.W.2d 274, 277 (Minn.App. 1984) (citations omitted); see also Edward Kraemer Sons, Inc. v. Village of Burnsville, 310 Minn. 32, 40, 245 N.W.2d 445, 450 (1976) ("since the central issue is whether or not the market value of the assessed property increased as a result of this improvement, and since no findings were made on this issue, the case must be remanded to the district court for further proceedings").
The district court did not make findings of the before and after market value for any of the properties. We conclude the district court is required to make the findings of before and after market value. We also conclude that even a determination of no special benefit requires findings of the before and after market value because this court must, among other considerations, determine whether or not the record supports the district court's findings.
3. The city also contends that the district court's special benefit determination is erroneous because the court wrongfully allowed the present use of the parcels to be the controlling factor in determining the parcel's highest-and-best use. A property's value is based on its highest-and-best use. Even when proper before and after market value findings are made, a property's present use cannot be the controlling factor in determining whether it has received a special benefit from an improvement. Eagle Creek Townhomes, 614 N.W.2d at 250; Holden v. City of Eagan, 393 N.W.2d 526, 528 (Minn.App. 1986). Rather, the test is whether the property could be used for purposes that would benefit from the improvement. Southview Country Club v. City of Inver Grove Heights, 263 N.W.2d 385, 388 (Minn. 1978). "An assessment, otherwise legal, is not void because the lot is not benefited by the improvement owing to its present particular use." Village of Edina v. Joseph, 264 Minn. 84, 96, 119 N.W.2d 809, 817 (1962) (quoting Qvale v. City of Willmar, 223 Minn. 51, 57, 25 N.W.2d 699, 704 (1946)).
The test is not whether the property is enhanced in value for the particular purposes to which it is devoted at the time of the assessment but whether it is enhanced in value for any purpose.
Village of Edina, 264 Minn. at 99, 119 N.W.2d at 819.
There is no evidence in the record indicating that the district court considered anything other than the present use of the properties when determining highest and best use. The record indicates that the court, with the exception of the Prater vacant parcel, relied solely on the property owner's present intent. A property owner's current plans and desires standing alone, however, are not the test for highest-and-best use. One must also look to what purposes the land could be used. Southview Country Club, 263 N.W.2d at 388. This is not to say that a property's present use cannot be its highest-and-best use. See id.; see also Village of Edina, 264 Minn. at 95-97, 119 N.W.2d at 817-18; Eagle Creek Townhomes, 614 N.W.2d at 250-51; Holden v. City of Eagan, 393 N.W.2d at 528-29. The district court must show that it examined more than a parcel's present use and the effect of an improvement on that present use. See Stich v. Stich, 435 N.W.2d 52, 53 (Minn. 1989) (stating that effective appellate review of exercise of discretion is possible only when district court has issued sufficiently detailed findings of fact to demonstrate that all relevant factors were considered).
The district court correctly determined that the property owners rebutted the presumed validity of the special assessments. The court erred by failing to make findings on the properties' before and after market value. It is not clear from the district court's findings whether or not the court allowed the properties' present uses to be the controlling factor in determining the properties' highest-and-best use. Accordingly, the district court's special benefit determinations regarding all the parcels are reversed and remanded for determination of highest-and-best use and for findings regarding the parcels' before and after market value consistent with the highest-and-best use re-determination.
Affirmed in part, reversed in part, and remanded.
The decision to correct the trial court's benefit determination disregards compulsory deference to the factfinder. Although before-and-after market value findings of specially assessed property are normally stated, the trial court's failure to do so here is not reversible error because the value of Kottke's land, with or without the improvements, remains the same. I would affirm the trial court's decision.
The benefits from an improvement are calculated on the market value of the land before and after the improvement, and the market value must be calculated with regard for the highest and best use of the land. Anderson v. City of Bemidji, 295 N.W.2d 555, 560 (Minn. 1980). Present use of the land is a consideration, but it is not dispositive. Id. Rather, the test is whether the land could be used for purposes [that] would benefit from the improvement. Southview Country Club v. City of Inver Grove Heights, 263 N.W.2d 385, 388 (Minn. 1978).
The trial court found that the highest and best use of Kottke's land, with or without the improvement, was also its present use as a bus terminal, and this court "may not reverse a trial court due to mere disagreement with its findings." Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 102 (Minn. 1999). And a highest-and-best-use determination that finds the land valued the same either with or without an improvement is the same as conducting a before-and-after market value determination and finding those values identical. Cases cited by the majority that call for better findings are not dispositive because they do not address the evident impact of a trial court finding of fact that improvements provide no benefit to a parcel.
Also, courts must consider the entire property when reviewing an assessment on part of a property that is devoted as a whole to a unique purpose. Southview Country Club, 263 N.W.2d at 388. The trial court considered whether Kottke's property should be appraised in pieces and properly concluded that, [g]iven the continued use as a bus service and the anticipated growth of the school district, Kottke's Bus Service could not sever and sell parcels from the whole and sustain the current bus service operation on this property. Kottke's Bus Service would not be a "willing seller" in the scenario presented by the city's assessor.
In making its determination, the trial court did not look solely at the property's current use. The court considered the anticipated expansion of Kottke's bus service, in light of the growing school district, and concluded that the property had no use for the city's improvements. The court was given evidence on the future alternative of selling off commercial sites but found, with adequate supporting evidence, that the bus-service future use of the property was its highest and best. In other words, the improvements brought no benefit to respondent's land, and a site being served by adequate services cannot be assessed for additional services. Indep. Sch. Dist. No. 709 v. City of Duluth, 177 N.W.2d 812, 815 (Minn. 1970).
Because the trial court's findings are sustained by the evidence and it is unnecessary to state a before-and-after market value analysis when the values before and after municipal improvements would be identical, I respectfully dissent.