This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA IN COURT OF APPEALS A15-0762
CLino LLC, et al., Appellants,
vs.
City of Lino Lakes, Respondent.
Filed March 28, 2016 Affirmed Reilly, Judge
Anoka County District Court File No. 02-CV-11-7763
Daniel J. Beeson, Jay P. Karlovich, Darcy M. Erickson, LeVander, Gillen & Miller, P.A., South St. Paul, Minnesota (for appellants)
Joseph J. Langel, Christian R. Shafer, Ratwik, Roszak & Maloney, P.A., Minneapolis, Minnesota (for respondent)
Considered and decided by Stauber, Presiding Judge; Connolly, Judge; and Reilly,
Judge.
UNPUBLISHED OPINION
REILLY, Judge
In this special assessment appeal, appellant-landowners argue that a special
assessment levied by respondent city (1) was not authorized under Minnesota Statute
Chapter 429; (2) violated their constitutional rights to equal protection and due process of law; (3) operated as an illegal traffic impact fee; and (4) imposed a cost that exceeded the
benefit of the improvements received. We affirm.
FACTS
The present dispute arises out of a fee assessment imposed by the City of Lino Lakes
(the city) against property-owners for improvements to the Interstate 35E (I-35E) and
County State Aid Highway 14 (CSAH 14) interchange in Anoka County, Minnesota.
ALino, LLC, BLino, LLC, and CLino, LLC (appellants) own property in the northwest,
northeast, and southeast quadrants of the interchange.
In 2004, the city conducted an alternative urban area-wide review (AUAR) to assess
infrastructure improvements and the approximate cost of improvements. The AUAR
recommended reconstructing the CSAH14/I-35E interchange to provide for additional
traffic capacity, including adding traffic lanes and expanding capacity on the highway
ramps. The city’s community development director testified that the city’s inadequate
infrastructure and inability to accommodate traffic were holding up future development in
the area. In 2009, the city council retained engineering firm SRF Consulting (SRF) to
perform a feasibility study and draft a preliminary improvement plan for the interchange.
The city sought to determine “what type of infrastructure improvements may be necessary
if development occurred and what the approximate cost of those improvements would be.”
The city held two preliminary meetings with local property-owners, including appellants,
to share information about the process. The city informed property-owners that there
would be a public hearing to discuss the process and methodology.
2 The city and SRF discussed “hundreds” of different variations of possible
assessments during the feasibility-study process. Costs were allocated based on future land
use projections from the comprehensive plan and generalized into four categories:
commercial, industrial, land-use, and institutional. Initially, SRF assessed the parcels of
land based on aerial photography of the properties, which identified the gross area for each
parcel minus wetlands and other nondevelopable portions of land, to find the “net
developable area.” The feasibility study proposed a “total reconstruction” of the existing
interchange into a partial cloverleaf configuration, the widening of CSAH 14 from two
lanes to four lanes, and the replacement of the existing CSAH 14 bridge over I-35E, along
with other improvements.
The city held a public hearing in July 2009 to present the feasibility study to
property-owners and to explain the methodology behind the assessment-calculation. The
city invited property-owners to ask questions or provide additional information. Several
property-owners provided input to the city regarding their specific parcels, appellants did
not provide additional data to the city. The city collected the information received from
property-owners and “evaluated, researched, and incorporated” the data into the final
assessment roll. The city altered some of the assessments based upon updated information
provided by property-owners to correct errors in the original assessments and to correct for
wetland delineation, easements, and right-of-way dedications.
In October 2011, the city issued a final property assessment roll and levied
assessments of approximately $4.2 million against 55 parcels of land. Appellants were
assessed a total of $644,526. Appellants appealed the city’s special assessment to the
3 district court under Minn. Stat. § 429.081. Following a four-day court trial, the district
court issued its thorough and thoughtful findings of fact, conclusions of law and order,
determining that appellants’ property increased in market value following the interchange
project and “received a special benefit in excess of the special assessment levied against
them.” The district court affirmed the special assessments levied by the city, and this
appeal follows.
DECISION
Municipalities have the power to levy special assessments on property-owners for
capital improvements. Minn. Stat. § 429.021, subd. 1 (2014). “A special assessment is a
tax, intended to offset the cost of local improvements such as sewer, water and streets,
which is selectively imposed upon the beneficiaries.” Dosedel v. City of Ham Lake, 414
N.W.2d 751, 755 (Minn. App. 1987). “The cost of any improvement, or any part thereof,
may be assessed upon property benefited by the improvement.” Minn. Stat. § 429.051
(2014). However, a municipality’s power of assessment is limited by three conditions:
“(1) the land must receive a special benefit from the improvement being constructed;
(2) the assessment must be uniform upon the same class of property; and (3) the assessment
may not exceed the special benefit.” David E. McNally Dev. Corp. v. City of Winona, 686
N.W.2d 553, 558 (Minn. App. 2004) (citing Carlson-Lang Realty Co. v. City of Windom,
307 Minn. 368, 369, 240 N.W.2d 517, 519 (1976)). “A city is presumed to have legally
assessed its property until proven to the contrary, and the introduction of its assessment
roll into evidence constitutes prima facie proof that the assessment does not exceed the
special benefit.” Id. at 559.
4 A person aggrieved by a city’s imposition of an assessment may appeal to the district
court. Minn. Stat. § 429.081 (2014). The district court may affirm the assessment, set it
aside, or order a reassessment. Id. The scope of our review of a special assessment is not
specified in the statute, Buettner v. City of St. Cloud, 277 N.W.2d 199, 202 (Minn. 1979),
and, on appeal, we therefore conduct “a careful examination of the record to ascertain
whether the evidence as a whole fairly supports the findings of the district court and
whether these in turn support its conclusions of law and judgment.” Carlson-Lang, 307
Minn. at 373, 240 N.W.2d at 521. We view the testimony in the light most favorable to
the prevailing party and will not reverse the district court’s factual findings unless they are
“manifestly contrary” to the evidence. G.C. Kohlmier, Inc. v. Albin, 257 Minn. 436, 442-
43, 101 N.W.2d 909, 914 (1960); see also Ewert v. City of Winthrop, 278 N.W.2d 545, 549
(Minn. 1979) (rejecting a district court’s factual findings only “if they are not fairly
supported by the evidence as a whole”); Buettner, 277 N.W.2d at 203 (applying “clearly
erroneous” standard of review). Ultimately, “the burden of proof rests upon the objector
to demonstrate [a fee assessment’s] invalidity.” Joint Indep. Sch. Dist. No. 287 v. City of
Brooklyn Park, 256 N.W.2d 512, 516 (Minn. 1977).
Appellants challenge the assessment on four grounds: first, that the city failed to
comply with statutory authority of Minnesota Statute Chapter 429; second, that the city
violated appellants’ constitutional rights to equal protection and due process of law by
imposing a non-uniform special assessment; third, that the assessment was an illegal
attempt to impose a traffic impact fee disguised as a special assessment; and lastly, that the
5 district court erred in determining that assessments levied against appellants’ parcels
exceeded the benefit of the improvements received. Each argument is addressed in turn.
I.
Appellants contend that the city failed to comply with the statutory requirements of
chapter 429 because it levied a special assessment for an interregional freeway interchange
as a local improvement and did not provide methodology material supporting the
assessment. Appellants first raised this argument in a summary-judgment motion, which
the district court rejected. On appeal from a dispositive motion, the interpretation and
construction of statutes is an issue of law subject to de novo review. Harris v. Cty. of
Hennepin, 679 N.W.2d 728, 731 (Minn. 2004) (citation omitted). “The object of statutory
interpretation ‘is to ascertain and effectuate the intention of the legislature.’” Id. (quoting
Minn. Stat. § 645.16 (2002)).
Chapter 429 authorizes a city to levy a special assessment for “any improvement
. . . upon property benefited by the improvement.” Minn. Stat. § 429.051. “Improvement”
is defined as “any type of improvement made under authority granted by section 429.021.”
Minn. Stat. § 429.011, subd. 5 (2014). Section 429.021 contains 21 kinds of specific,
assessable improvements, including:
To acquire, open, and widen any street, and to improve the same by constructing, reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking strips of any material, or by grading, graveling, oiling, or otherwise improving the same, including the beautification thereof and including storm sewers or other street drainage and connections from sewer, water, or similar mains to curb lines.
Minn. Stat. § 429.021, subd. 1.
6 Appellants cite to Peterson v. City of Elk River for the proposition that a project may
only be financed by a special assessment if it is a “local improvement” under Minn. Stat.
§ 429.021. 312 N.W.2d 243, 245 (Minn. 1981). However, Peterson is distinguishable. In
that case, the supreme court ruled that a city could not levy a special assessment for railroad
crossing safety signals because they were not one of the specifically enumerated
improvements contained in Minn. Stat. § 429.021. Id. By contrast, Minn. Stat. § 429.021
expressly authorizes the city to impose a special assessment to “acquire, open, and widen
any street.” Minn. Stat. § 429.021, subd. 1; see also Vill. of Edina v. Joseph, 264 Minn.
84, 86-88, 119 N.W.2d 809, 812 (1962) (affirming assessment for street improvements
along one of city’s “main . . . traffic arteries” including bridge work); EHW Properties v.
City of Eagan, 503 N.W.2d 135, 139-40 (Minn. App. 1993) (affirming special assessment
where city widened existing roadway to improve access to “major arterial roadway”);
Black’s Law Dictionary 1557 (9th ed. 2009) (defining “street” as “[a] road or public
thoroughfare used for travel in an urban area[.]”)). We conclude under our de novo review
that Minn. Stat. § 429.021 encompasses improvements to the city’s principal interchange
at I-35W/CSAH 14.
Next, appellants argue that the city failed to comply with chapter 429’s procedural
requirements by withholding the methodology used to calculate the assessment. A
“reasonable estimate of the total amount to be assessed, and a description of the
methodology used to calculate individual assessments for affected parcels,” must be shared
at a feasibility hearing. Minn. Stat. § 429.031, subd. 1(b). “No error or omission in the
report invalidates the proceeding unless it materially prejudices the interests of an owner.”
7 Id. Appellants argue the city intentionally omitted the methodology for applying
assessments and changed its methodology after the feasibility hearing, resulting in
prejudice. The district court rejected this argument on the grounds that the city
“sufficiently placed Appellants on notice regarding what factors the City was considering
in reaching the ultimate assessment amount” and that “the information presented at the
feasibility hearing was sufficient to qualify as a description of the City’s assessment
methodology” as required by Minn. Stat. § 429.031, subd. 1(b). Our review supports the
district court’s finding. The city informed landowners in its feasibility study that “[c]osts
were allocated to the appropriate parcel based on future land use projections,” generalized
into “four categories,” and that “[e]xisting uses were taken into account that fall within the
affected area.” The feasibility study reported that the city determined a cost-per-square-
foot value. A real estate appraisal firm confirmed the assessment methodology and
reviewed the proposed special assessment amounts for each property. The city discussed
the feasibility study and the methodology at a public hearing. The record demonstrates
that the city properly informed property-owners what factors it would consider in
calculating the assessment totals.
Moreover, appellants have not demonstrated prejudice. Prior to undertaking the
feasibility study, the city met with appellants and other property-owners to provide them
with information about the upcoming proposals. At the public hearing, the city invited
property-owners to ask questions or provide additional information about their parcels, and
several landowners took advantage of that opportunity. Appellant did not provide
additional information to the city relating to the proposed assessment or to the quality of
8 their developable land. In Hartle v. City of Glencoe, the supreme court ruled that a
modification between an estimate given at a public hearing and the final assessment roll
did not require a second hearing or invalidate an assessment where landowners present at
the hearing “were aware of the total cost of the improvement project prior to its adoption
and had ample opportunity to voice any objections they might have had at that time.” 303
Minn. 262, 264, 226 N.W.2d 914, 917 (1975). Under similar reasoning, we determine that
appellants had the same opportunity to provide additional information to the city as the
other property-owners. Appellants’ failure to do so does not invalidate the assessment roll.
II.
Appellants argue that the final assessment violated appellants’ constitutional
guarantees of uniform taxation, equal protection, and due process of law because it resulted
in variations in the assessments imposed on properties of the same class. The Minnesota
Constitution provides that “[t]axes shall be uniform upon the same class of subjects and
shall be levied and collected for public purposes.” Minn. Const. art. X, § 1. The Equal
Protection Clause of the Fourteenth Amendment guarantees that no state can “deny to any
person within its jurisdiction the equal protection of the laws.” U.S. Const. amend. XIV,
§ 1. “In the context of special assessments, this requirement had traditionally been
considered in conjunction with the statutory requirement [of chapter 429] that special
assessments be based upon the benefits received by the property assessed. In other words,
Minnesota law requires that the assessments on the various properties be roughly
proportionate to the benefits accruing to each as a result of the improvement.” Anderson
v. City of Bemidji, 295 N.W.2d 555, 559 (Minn. 1980) (citation and quotation omitted). A
9 district court considers “the comparative benefits accruing to the various lots” in making
this determination. Id. at 560. A reviewing court will affirm the city’s assessment unless
it is clearly erroneous. Buettner, 277 N.W.2d at 203.
Appellants argue the city deviated from its assessment methodology and treated
other properties in the same classification differently. Appellants’ properties are classified
as commercial property stage 1A. Appellants presented evidence that other properties
within this classification received reductions in the final assessment roll to account for
wetlands and easements on their land. The district court rejected appellants’ constitutional
challenge and reasoned that “[t]he failure by Appellants to submit any information to the
City between the preliminary assessment roll and the final assessment indicating any
inaccuracy in the land use, utility staging, or number of developable acres, does not render
the City’s assessment non-uniform.” We agree.
The right to uniformity and equality is the right to equal treatment in the apportionment of the tax burden. Uniformity of taxation does not permit the systematic, arbitrary, or intentional valuation of the property of one or a few taxpayers at a substantially higher valuation than that placed on other property of the same class.
In re McCannel, 301 N.W.2d 910, 920 (Minn. 1980) (quotation omitted). Here, the city
acknowledges it reassessed certain properties based upon updated information provided by
property-owners after the initial hearing. However, the supreme court recognizes that
“[a]bsolute equality is impracticable” and “the taxpayer may not complain unless the
inequality is substantial.” Id. (quotation omitted). “To show discrimination in the valuation
process, a taxpayer must demonstrate that his property was valued on a different basis than
10 other comparable property in the same taxing district, and that this other property was
systematically or arbitrarily undervalued.” Id.
Appellants have not identified evidence in the record that other properties were
“systematically or arbitrarily undervalued” as a result of the city’s adjustments to the final
assessment role. Id.; see also Buzick v. City of Blaine, 491 N.W.2d 923, 926 (Minn. App.
1992), aff’d, 505 N.W.2d 51 (Minn. 1993) (“[T]he mere fact that an assessment on one lot
is higher than another does not result in a lack of uniformity.”). The city welcomed all
property-owners to share additional information with the city regarding their land.
Appellants did not take advantage of this opportunity. Appellants have not met their
burden of establishing that the comparable properties were systematically or arbitrarily
undervalued and we conclude that the district court did not err in rejecting appellants’
constitutional challenge.
III.
Appellants claim the city’s special assessment was an illegal traffic impact fee
disguised as a lawful assessment. Traffic impact fees are costs based on the amount of
traffic generated by a piece of property and the subsequent impact to the adjacent roadway
network. The supreme court distinguishes traffic impact fees from special assessments by
noting that the “primary difference is that special assessments represent a measure of the
benefit of public improvements on new or existing development, whereas impact fees
typically measure the cost of the demand or need for public facilities as a result of new
development only.” Country Joe, Inc. v. City of Eagan, 560 N.W.2d 681, 685 (Minn. 1997)
(quotation omitted). Because a municipality is a statutory creature, its authority to impose
11 an impact fee “cannot be implied from the city’s municipal planning authority.” Id. at 683-
84.
It is undisputed that the city lacks the authority to levy a traffic impact fee.
Appellants claim the special assessment imposed in October 2011 is a traffic impact fee.
The district court rejected the argument and concluded that “it is apparent that the City did
not levy a traffic impact fee procedurally, or substantively.” The district court relied on
Country Joe to support its analysis. In Country Joe, the city adopted a resolution imposing
a “road unit connection charge” payable from developers as a condition to issuance of
building permits within the city’s borders. Id. at 682. The purpose of the resolution was
to provide “an equitable source of funding . . . in order to accommodate new development
and traffic.” Id. The road unit connection charge was not linked to a special assessment
and the funds were not earmarked for a particular project. Id. at 682-84. The city argued
that the impact fee was lawful. Id. The supreme court reserved the issue of whether impact
fees are authorized by Minnesota law but rejected the city’s argument that the fee was a
lawful impact fee, concluding that there was “insufficient evidence that the charge was
proportionate to the need created by the development upon which the burden of payment
fell.” Id. at 685-86. Appellants argue that, as in Country Joe, the special assessment was
a precondition for development approval. However, we agree with the district court that
Country Joe is distinguishable.
In this case, the city followed the process outlined in chapter 429 to impose a special
assessment, the special assessment was proportionate to the need created by the
development, and the assessment was based on the benefit received by the assessed parcels.
12 The city classified the properties into four categories and allocated costs by calculating the
net developable area for each parcel, taking into account the gross area for each parcel
minus additional available information such as wetland delineations, easements, right-of-
way dedications, and other adjustments to developable land. The city complied with the
procedural requirements of chapter 429 by providing notice to property-owners and by
holding a public hearing. When a city complies with the numerous procedural
requirements of chapter 429, the issue of statutory authority vanishes and the city is given
leeway to levy the special assessments in any “fair” way. DeSutter v. Township of Helena,
489 N.W.2d 236, 237-38 (Minn. App. 1992); see also Continental Sales & Equip. Co. v.
Town of Stuntz, 256 N.W.2d 546, 550 (Minn. 1977) (“[A]ny method resulting in a fair
approximation of the increase in market value for each benefitted parcel may be used. A
method which on its face appears to be a fair approximation will be presumed valid, with
the burden resting upon the objector to show its invalidity.”).
Appellants contend that the city considered vehicle traffic at the interchange during
the appraisal process and submitted into evidence e-mails between the city’s community
development director and the consultants, as well as a spreadsheet detailing the costs.
Appellants allege that the spreadsheet contained a “cost factor” column which the city used
in its analysis, but later hid from the final assessment role. Even if the city initially
considered the impact of traffic at the interchange, we have previously approved the use of
traffic studies as a basis for calculating a special assessment. See EHW Properties, 503
N.W.2d at 138 (affirming special assessment where appraisers considered “average daily
traffic volume” and adjusted final assessment price for properties based on “acreage,
13 location, access, frontage, and average daily traffic”). Thus, even if the city reviewed
“average daily traffic” as one factor in calculating the assessment, the record demonstrates
that the final assessment was based upon a number of factors. We therefore determine that
the district court did not err by concluding that the city did not impose an illegal traffic
impact fee.
IV.
Appellants argue that the district court erred by determining that the project
conferred a special benefit on appellants’ property greater than the amount assessed. “An
assessment that exceeds the benefit constitutes a taking of property without fair
compensation in violation of the Fourteenth Amendment.” McNally, 686 N.W.2d at 558
(citing Carlson-Lang, 307 Minn. at 370, 240 N.W.2d at 519). The district court must
engage in an “independent consideration” of the evidence in reaching its decision. Id. at
559. On appeal, we “cannot upset this de novo review of the special assessment when the
district court’s determination is supported by the record as a whole.” Id. “Our scope of
review is a careful examination of the record to determine whether the evidence fairly
supports the district court’s findings and whether those findings support its conclusions of
law.” Id.
Appellants contend that while the project conferred a general benefit to the public,
it did not confer a benefit to appellants’ property. A municipality’s power of assessment
is limited to the extent that the assessment may not exceed the special benefit. Carlson-
Lang, 307 Minn. at 369, 240 N.W.2d at 519. “Special benefit is measured by the increase
in market value of the land resulting from the improvement.” EHW Properties, 503
14 N.W.2d at 139 (citation omitted). “An increase in market value is the difference between
what a willing buyer would pay a willing seller for the property before the improvement
and then after the municipality completes the improvement.” Id. We presume the
assessment is legal until proven to the contrary, but this presumption can be overcome if
the party appealing the assessment introduces competent evidence that the assessment is
greater than the benefit. McNally, 686 N.W.2d at 559. If the property-owner rebuts the
presumption, the burden shifts to the city and the district court must weigh the parties’
evidence and make a factual determination. Id.
The city’s expert testified that parcel A incurred a benefit of $800,000, parcel B
incurred a benefit of $940,000, and parcel C incurred a benefit of $1,050,000. The district
court found that “[e]ach quadrant of the interchange benefited by direct access to CSAH
14, substantially improved transportation infrastructure that permits more customers to
reach its eventual development as commercial property, and a shorter holding period for
development.” The district court concluded that appellants’ property received a benefit in
an amount greater than the amount of the special assessment.
Appellants challenge the expert’s testimony and argue that their appraisal expert did
not project a measureable change in the market value of the property as a result of the
interchange reconstruction. However, the “weight and credibility of the testimony,
including that of the expert witnesses, was for the trier of fact to determine.” DeSutter,
489 N.W.2d at 240 (quotation omitted). We will not “reassess the experts’ opinions on
appeal.” Id. Upon “careful examination,” Carlson-Lang, 307 Minn. at 373, 240 N.W.2d
at 521, the evidence as a whole supports the district court’s factual findings which, in turn,
15 support the district court’s conclusions of law and judgment that appellant received a
special benefit on their property greater than the amount assessed.
Affirmed.