Gerald L. Rehbein v. City of Lino Lakes

• Court: Court of Appeals of Minnesota
• Decided: March 28, 2016
• Docket: A15-923
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn.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 A15-0923

Gerald L. Rehbein, et al., Appellants,

vs.

City of Lino Lakes, Respondent.

Filed March 28, 2016 Affirmed Kalitowski, Judge

Anoka County District Court File No. 02-CV-11-7762

Thomas J. Rooney, Larry W. Neilson, Rooney & Neilson, Ltd., White Bear Lake, Minnesota (for appellants)

Joseph J. Langel, Christian R. Shafer, Ratwik, Roszak & Maloney, P.A., Minneapolis, Minnesota (for respondent)

Considered and decided by Bjorkman, Presiding Judge; Halbrooks, Judge; and

Kalitowski, Judge.

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. UNPUBLISHED OPINION

KALITOWSKI, Judge

This appeal involves a special assessment levied by respondent City of Lino Lakes

in 2011 against parcels owned by appellants Gerald L. Rehbein and Rehbein Properties

(Rehbein). After a bench trial following his challenge to the special assessment, Rehbein

argues that the district court erred in (1) determining that the project was an authorized

local improvement under Minn. Stat. § 429.021 (2014), (2) finding that the project

conferred a special benefit on Rehbein’s parcels, and (3) finding that a temporary access

road conferred a special benefit. We affirm.

DECISION

“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). A city’s power to

impose special assessments is limited in three ways: (1) the land must receive a special

benefit from the new improvement, (2) the assessment must be uniform upon the same

class of property, and (3) the assessment may not exceed the special benefit. Carlson-Lang

Realty Co. v. City of Windom, 307 Minn. 368, 369, 240 N.W.2d 517, 519 (1976). An

assessment set higher than the special benefit conferred constitutes a taking without

compensation to the extent of the excess. Id. at 370, 240 N.W.2d at 519.

A “[s]pecial benefit is measured by the increase in the market value of the land

owing to the improvement.” Id. at 369, 240 N.W.2d at 519. An appraiser determines

market value by identifying “what a willing buyer would pay a willing seller for the

2 property before, and then after, the improvement.” Id. “[M]arket value may be calculated

on the highest and best use of the land.” Anderson v. City of Bemidji, 295 N.W.2d 555,

560 (Minn. 1980).

After an assessment is adopted, an aggrieved person, who makes a timely objection,

may appeal to the district court. Minn. Stat. § 429.081 (2014). At the district court, “the

city is presumed to have set the assessment legally, and thus introduction of the assessment

roll into evidence constitutes prima facie proof that the assessment does not exceed [the]

special benefit.” Carlson-Lang Realty, 307 Minn. at 370, 240 N.W.2d at 519. The

aggrieved person overcomes the presumption by introducing competent evidence that the

assessment is greater than the increase in market value of the property due to the

improvement. Id. “When evidence is also received that the assessment is equal to or less

than the increased market value, the district court must make a factual determination.” Id.

at 370, 240 N.W.2d at 519–20.

When reviewing the decision of the district court, this court conducts “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.” Id. at 373, 240 N.W.2d at 521. Testimony is considered in the light most

favorable to the prevailing party, and the district court’s findings “will not be reversed on

appeal 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).

The project at issue in this case involved the reconstruction of an interchange

between a major north-south corridor, I-35E, and the primary east-side corridor running

3 through Lino Lakes, County State Aid Highway 14 (CSAH 14). Lino Lakes has limited

access to the interstate, and CSAH 14 is the principle interchange for any development or

activity that takes place in that corridor. The project resulted in changing the interchange

at CSAH 14 and I-35E “from a two-lane undivided bridge and diamond interchange to an

interchange and bridge with expanded capacity.”

Lino Lakes commissioned an Alternative Urban Areawide Review to analyze

development, which found “degraded mobility” at the intersection between CSAH 14 and

the on/off ramps of I-35E. The study also analyzed the then-current on/off ramps and gave

them an E and F. F is the lowest “level of service” rating available. According to the

study, “transportation infrastructure can [generally] function at [levels of service] as low

as D or E and still be considered an acceptable operating condition during peak hours in

urban areas.” But a traffic engineer testified for the city that a level of service F “is

considered an extreme failure situation with extremely significant delay.” As found by the

district court, the “Interchange Project was considered nonessential for statewide

development purposes, according to the Minnesota Department of Transportation, but

necessary for local economic growth.”

The cost of the project, approximately $22 million, was shared between Lino Lakes,

Anoka and Washington Counties, the cities of Centerville, Hugo, and Forest Lake, and the

town of Columbus. Lino Lakes ultimately assessed its total share of the project,

$4,207,861, against 55 parcels of land near the interchange. Rehbein owns six of those

parcels, which were assessed a total of $500,951 for the project. Lino Lakes levied

$262,092 against the three and a half parcels comprising Clearwater Creek, which is

4 located on the southwestern quadrant of the interchange. $102,518 was assessed against

Acton, which is comprised of one and a half parcels immediately south of Clearwater

Creek; and $136,092 was levied against one parcel of land, Belland, which is in the

northwest quadrant of the interchange.

Beginning in August 2006, Rehbein entered into a series of purchase agreements

with Ryan Companies for the sale of property that included Clearwater Creek, which

expressly acknowledged the interchange project. As found by the district court,

The extended purchase agreement negotiations were due, in part, to the City’s extensive search for project funding, the recessionary market, as well as negotiations between the City and Ryan Companies regarding the design of the Interchange Project and potential impacts on the portion of the Rehbeins’ property subject to the purchase agreement.

The district court also found that the Minnesota Department of Transportation had no plans

to improve the interchange before 2020.

Furthermore, the district court found that “[c]ontemporary correspondence shows

that development of Clearwater Creek was bound up with the Interchange Project” and that

the “Rehbeins were so assured of Ryan Companies’ purchase of Clearwater Creek that they

were ultimately absent from discussions with the City about the Interchange Project,

leaving all the details in the hands of Ryan Companies.”

The plans for the interchange project also included providing new access to

Clearwater Creek, which would improve access to the property directly from CSAH 14.

Northern Lights Boulevard was built as a temporary roadway to secure new access to

Clearwater Creek, with the understanding that a permanent road would be constructed

5 when and if Clearwater Creek was developed and the developer paid for the road.

Clearwater Creek was not developed, and Anoka County closed Northern Lights Boulevard

in 2012, restoring the original access point.

Rehbein appealed the special assessment to the district court and moved for

summary judgment, arguing that the special assessment was invalid as a matter of law

because (1) Lino Lakes lacked the statutory authority to assess the costs of an interregional

interchange because it is not a local improvement and because the relevant statute does not

include interchanges in its exhaustive list of authorized projects, and (2) the interchange

project confers only a general benefit to the public and not a special benefit that could be

financed by special assessments.

In a thorough, well-reasoned order, the district court denied the summary-judgment

motion, concluding that although the relevant statute does not expressly include freeway

interchanges, the interchange project was composed of a series of local improvements that

were either explicitly named in the statute or fall under the statutory category of street

improvements.

In response to Rehbein’s special-benefits argument, the district court determined

that the condemnation cases cited for the proposition that proximity to interchange projects

does not confer special benefits as a matter of law are not controlling. The district court

concluded that a special-benefits determination is fact-specific, requiring an inquiry into

whether the interchange project would result in a special benefit. Thus, at trial, the issue

was the amount of special benefit the subject properties received by virtue of the

6 interchange project, as compared to the amount assessed against each of the subject

properties.

Following the trial, in another detailed, well-reasoned order, the district court

concluded that each subject property received a greater special benefit than the amount

assessed against them. Specifically, the district court found that the appraisals, appraisal

methods, and appraisal witnesses provided by the city were more credible than those

provided by Rehbein. And the district court adopted the city’s appraisal conclusions, which

indicated that the project provided a special benefit to Rehbein’s parcels that exceeded the

special assessment. Specifically, the district court found that the project increased the value

of Acton by $652,145.48, the value of Belland by $415,305.40, and the value of Clearwater

Creek by $1,256,932.51.

Authorized Local Improvement

Rehbein argues that Lino Lakes was not authorized to impose special assessments

for the interchange project under Minn. Stat. § 429.021, subd. 1, because in imposing a

special assessment to fund a local improvement, a municipality is limited to “one of the

enumerated categories listed in Minn. Stat. § 429.021.” Rehbein notes that “the complete

replacement of a freeway interchange” is not listed in the statutes and, accordingly, argues

that the statute cannot properly be interpreted to authorize it. We disagree.

Minn. Stat. § 429.021, subd. 1, states, in relevant part:

The council of a municipality shall have power to make the following improvements: (1) To acquire, open, and widen any street, and to improve the same by constructing, reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle

7 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.

The term “street” is defined for the relevant chapter as “any street, alley, or public way, or

any part thereof.” Minn. Stat. § 429.011, subd. 7 (2014).

Whether a statute has been properly construed is a question of law subject to de novo

review. Allen v. Burnet Realty, LLC, 801 N.W.2d 153, 156 (Minn. 2011). “[W]ords and

phrases are construed according to rules of grammar and according to their common and

approved usage” unless they have a technical or acquired special meaning. Minn. Stat.

§ 645.08(1) (2014). For evidence of common and approved usage, we turn to dictionary

definitions. Larson v. Nw. Mut. Life Ins. Co., 855 N.W.2d 293, 301 (Minn. 2014).

Lino Lakes relies on the definition of “street” found in the Oxford English

Dictionary, noting that the United States Supreme Court has recognized that dictionary as

“one of the most authoritative on the English language.” Taniguuchi v. Kan Pac. Saipan,

Ltd., 132 S. Ct. 1997, 2003 (2012). The Oxford English Dictionary, as cited by Lino Lakes,

defines “street” as: “a paved road, a highway.” Oxford English Dictionary 874 (2d ed.

2007). Moreover, Black’s Law Dictionary defines “street” as “a road or public

thoroughfare used for travel in an urban area, including the pavement, shoulders, gutters,

curbs, and other areas within the street lines.” Black’s Law Dictionary 1557 (9th ed. 2009).

Rehbein contends that “[t]he more logical analysis would be to compare the dictionary

definition of the word ‘interchange’ with the dictionary or the statutory definition of the

8 word ‘street,’” which he reports to be: “a road junction designed so that traffic streams do

not meet.”

Upon surveying the common usage and statutory definition of the word “street,” we

conclude that the interchange project at issue qualifies as an improvement to a street under

Minn. Stat. § 429.021, subd. 1. CSAH 14, the main east/west street stretching across Lino

Lakes, is a street. And it does not cease to be a street where it crosses I-35E at the

interchange. Thus, we conclude that the district court properly determined that: “To the

extent that bridge replacement or ramp construction is not specifically delineated by statute

does not prevent these improvements from being categorized according to their true

function, as street improvements.”

Moreover, Minnesota caselaw supports special assessments for larger street-related

projects. See, e.g., Vill. of Edina v. Joseph, 264 Minn. 84, 87, 102, 119 N.W.2d 809, 812,

820-21 (1962) (affirming assessment for street improvements along one of city’s “main . . .

traffic arteries”); EHW Props. v. City of Eagan, 503 N.W.2d 135, 138-39 (Minn. App.

1993) (affirming special assessment where city widened existing roadway to improve

access to “major arterial roadway”). Thus, even if a street-related project is regional in

scale or larger than a typical municipal street, it can be properly financed by special

assessments.

Because of the foregoing caselaw and in the absence of a persuasive reason to

exclude interchanges from the statutory category of “any street,” we conclude that Minn.

Stat. § 429.021, subd. 1, authorized Lino Lakes to finance the interchange project with a

special assessment.

9 Special Benefit

Rehbein argues that even if Lino Lakes was authorized to impose an assessment for

the interchange project, the district court erred in concluding that his parcels received any

special benefit from the project. He contends the district court erred because the benefits

conferred by the reconstruction of the freeway interchange are general, not specific in

nature. We disagree.

A local improvement confers a special benefit on private property if it “benefit[s]

the property on which the cost is assessed in a manner local in its nature, and not enjoyed

by property generally in the city.” In re Burnsville, 310 Minn. 32, 39, 245 N.W.2d 445,

449 (1976). A municipality may not impose a special assessment that exceeds the special

benefit. Carlson-Lang Realty, 307 Minn. at 369, 240 N.W.2d at 519. “Special benefit is

measured by the increase in market value of the land owing to the improvement.” Id.

Rehbein argues that the Minnesota Supreme Court expressly rejected a claim that a

freeway interchange confers special benefits on land in its vicinity in Mattson v. Colon,

292 Minn. 189, 194 N.W.2d 574 (1972). We disagree.

In Colon, the issue before the supreme court was:

Whether, when a portion of a farm is acquired by the state for the construction of a diamond interchange forming a portion of an interstate highway, absent evidence of an actual change in the physical characteristics of the property remaining, evidence as to the remaining property’s enhanced value occasioned by its proximity to the interchange and its adaptability to a higher, better, and more profitable use creates a question of fact for the jury on the issue of special benefits.

292 Minn. at 190, 194 N.W.2d at 575 (quotations omitted).

10 The Colon court held that the freeway interchange at issue did not confer any special

benefits, so it need not determine whether the benefits should offset the condemnation

award. Id. at 199, 194 N.W.2d at 580. The supreme court reasoned that the condemnee

does not acquire any vested right in the increased traffic and that a subsequent traffic

diversion could deprive him of the gain without creating any right to compensation. Id. at

198, 194 N.W.2d at 579.

We conclude, as did the district court, that because Colon is not a special-

assessments case, it is not controlling here. Moreover, its persuasive value is limited

because, unlike the parcel in Colon, Rehbein’s parcels do not simply benefit because of the

increased traffic from an interchange project. Lino Lakes presented testimony that Rehbein

was pursuing development on the Clearwater Creek parcel that would have been stalled

until the failing interchange could be reconstructed, which the Minnesota Department of

Transportation did not have plans to do until 2020. Thus, although the interchange may

benefit the public at large, it conferred a special benefit to Rehbein’s parcels because of the

role it played in their potential development.

Rehbein also argues that, even if his parcels received a special benefit, the benefit

was less than the amount of the assessment. We disagree. In challenging the district court’s

findings regarding appraisal methods, Rehbein contends that the district court erred in

crediting the testimony of the city’s expert witnesses and by giving more weight to the

city’s evidence regarding whether further development would have been allowed without

the interchange project. But the weight and credibility of the expert testimony was for the

trier of fact to determine. DeSutter v. Twp. of Helena, 489 N.W.2d 236, 240 (Minn. App.

11 1992), review denied (Minn. Sept. 30, 1992). And this court does not reassess the experts’

opinions on appeal. Id. Rehbein has failed to show that the district court erred.

Temporary Access Road

We reject Rehbein’s argument that Northern Lights Boulevard could not be a special

benefit because it could be, and was, removed at the discretion of the county. In evaluating

a special assessment, a court must examine the impact that the specific project had on the

assessed properties and the value of those properties immediately before and immediately

after the project. Carlson-Lang Realty, 307 Minn. at 369, 240 N.W.2d at 519. Because on

the date of the evaluation Northern Lights Boulevard was in place providing access to

Clearwater Creek, the district court did not err in finding that it conferred a special benefit

to Rehbein’s properties.

Affirmed.