SPECIAL ASSESSMENTS
JIM WAINWRIGHT
AHLERS & COONEY, P.C.
100 Court Avenue, Suite 600
Des Moines, IA 50309-2231
jwainwright@ahlerslaw.com
April 4, 2014
What are special assessments?
- charges to owners of real property by a
governmental agency for street, sewer,
water, or drainage improvements that
benefit their property.
• The underlying principle is that an
assessment should be less than or equal
to the “benefits” conferred on property
from nearby improvements.
• In practice, application of this principle is
very difficult.
• Why?
– the concept of "benefit" and
– the government is bound to observe due
process of law.
Special v. General Benefit
• If a public improvement directly benefits a
property by providing a service, improving the
appearance or increasing the value of that
property, then the law provides that the
property may be specially assessed at least
for a part of the cost of the improvement.
• A complex body of law has been written by the
legislature and confirmed by the courts to assure
that all affected property owners are treated
equally and fairly.
• Recent cases suggest even the courts struggle
with special assessment law
• Iowa Code Chapter 384 permits a city to
assess private properties for the cost of
public improvements.
• However, the costs assessed to a property
must not exceed the special benefit
conferred upon the property by the
improvements.
• the assessment may not exceed 25% of
the value of the property.
• These limitations ensure that individual
property owners do not subsidize the
general benefits enjoyed by the public
resulting from the improvements.
• Street paving projects
– usually confer both general and special
benefits
– the abutting property owners are not required
to pay for the general benefits accruing to the
community at large.
• What public improvements can be paid for
by special assessments?
a. Sanitary, storm and combined sewers.
b. Drainage conduits, channels and levees.
c. Streets
d. Street lighting fixtures, connections and
facilities.
e. Sewage pumping stations, and disposal
and treatment plants.
And many others….
• A city may assess the cost of the following to private
property within the city:
– the cost of construction and repair of public
improvements within the city,
– and main sewers, sewage pumping stations, disposal
and treatment plants, waterworks, water mains,
extensions, and drainage conduits extending outside
the city.
• How are special assessments initiated?
1. Petition and Waiver
2. Council action
PETITION AND WAIVER?
• Property owners may initiate a plan for a
public improvement to be paid for in whole
or in part by special assessments, by written
contract to be approved by the city and
signed by all of the owners of record of all
property affected by the proposed
assessment.
• Council Action?
• The Council shall arrange for engineering
services to prepare the plats, schedules,
estimates of cost, plans, and specifications
and to supervise construction of the
proposed improvement.
• How?
• Adopt a preliminary resolution by the vote
of a majority of all the members of the
council.
• The preliminary resolution shall contain
the following:
a. A description of the types or alternate types of
improvement proposed.
b. The beginning and terminal points or general
location of the proposed improvement.
c. An order to the engineer to prepare
preliminary plans and specifications,
estimated total cost of the work, and a
plat and schedule, and to file them with
the clerk.
d. A general description of the property or a
designation of the lots which the council
believes will be specially benefited by the
improvement.
3. The preliminary resolution may also contain the
following:
a. A statement of the proportion of the total cost
which the council proposes to assess against
specially benefited property.
b. A short and convenient designation for the
public improvement by which it may be
referred to in all subsequent proceedings.
4. A preliminary resolution may include more
than one improvement or class of
improvement.
What property is subject to
assessment?
• All property, public and private, which receives a
benefit may be assessed,
– except highways, streets and alleys and property
owned by the United States
• Schools, churches, county and state lands
are normally subject to assessment.
• Railroads and railway property are also
assessable with special provisions for
track crossings.
Who Determines which property to
assess and the amount of the
assessment?
• The City Council with the aid of the Engineer.
• The Council instructs the Engineer as to
the boundary of the benefited district.
• This may be in the form of past policy such
as assessing to the middle of a block or
some other general policy.
• In addition, the Council will also instruct
the Engineer as to the costs which are to
be assessed to these benefited property
owners.
• The City Council also values the property
to be assessed.
• The Council may appoint a three member
appraisal committee knowledgeable in real
estate values within the City to aid them in
appraising the property.
• This valuation is reported to the Engineer
and is shown on the Plat and Schedule (of
assessments).
• The valuation does not affect property tax
valuations
• it does not affect the assessment,
• except to the extent that it places a ceiling on the
assessment - which may not exceed 25% of the
valuation fixed by the Council.
• Property owners must be notified of
pending public improvements to be
assessed.
• All Council meetings and proceedings are
open to the public.
• All owners of property subject to
assessment must be notified by certified
mail at least fifteen days prior to the date
of a public hearing.
• Property owners and interested citizens may file
written objection with the City Clerk, and/or may
appear personally to make oral objection to the
project, costs, or proposed assessments.
• Failure to receive official notice does not
nullify the assessment proceedings if an
honest attempt has been made to notify
the affected property owners.
• How and when are the assessments paid?
• If the Council adopts the "Resolution of
Necessity" and later awards contracts for actual
construction, then the assessments will be due
and payable after construction is completed.
• Property owners are again notified by
certified mail, when the Council has levied
the final assessments
• and that the assessments are due and
payable for a 30 day period without penalty or
interest at the office of the City Clerk.
• Those assessments which are not paid during
the thirty day period are then listed on the
County Auditor's tax rolls and are collected in
annual installments along with interest - at
present not exceeding 9 % per annum.
• The Council determines the number of annual
installments (not to exceed fifteen (15) years) in
which the assessments are collected.
• The assessments are collected with property
taxes by the County Treasurer with the taxes
payable July 1, and due by September 30 of
each year.
• The unpaid assessments may be paid in full with
accrued interest at anytime should the property
owner wish to do so.
• If the assessment installments are not paid
when due, they are subject to collection
with penalty the same as delinquent
property taxes and are a lien on the
property.
• Legal Challenges
• The Courts have established a number of
presumptions to guide their review of a
city's special assessment for public
improvements.
• The city council's determination that
property will be specially benefited by an
improvement is conclusive.
• A property owner cannot generally argue
that he has not received any benefit from a
public improvement;
• rather, a property owner must show that
the benefit received was not as great as
that determined by the city.
• Courts have traditionally presumed that
the amount of the city's assessment is
correct and does not exceed the special
benefit conferred on the property by the
improvement.
• Not anymore!
• The burden is on the protesting property
owner to show his assessment is
excessive by evidence which includes
proof of the actual benefit to his property.
• In the absence of such evidence, the
assessment must stand.
• If the property owner carries his burden,
the court may reduce the amount of the
assessment.
• Mathematical and analytical certainty is
usually impossible in these cases.
• Courts must rely on approximations to
determine the correct amount of the
assessment.
• The ultimate question is whether the
assessment “represents a fair proportional
part of the total cost.”
• A property can be assessed for
improvements based on the benefit to the
future use of the property.
• In considering the benefits flowing from a
special improvement, Courts will consider
future uses and expectations as well as the
present use to which the property is put.
• Agricultural properties do not receive the
same immediate benefit from public
improvements as does other land.
• It is for this reason the legislature created
an agricultural deferment.
• AGRICULTURAL DEFERMENT
– agricultural landowners may defer payment of
a special assessment until such time as the
property is no longer classified as agricultural
land.
• Potential legislative changes
• In 2013, HF 588 was introduced.
– It would radically change the manner in which
Cities specially assess
– Introduces a new 3 part “benefit” analysis
– Individual, area, and community benefits
– Requires additional notice, publication, and
procedural steps
– No activity this session
QUESTIONS?
Contact Information:
Jim Wainwright
jwainwright@ahlerslaw.com
515-243-7611