April 9, 2012
Dear City Attorney:
You have the following question: Can the city impose “special assessments” on property owners
of the city to help fund parks and fire department improvements?
The answer is apparently yes, but there are some drawbacks to using that method.
There are several general special assessment statutes in Tennessee, but with the exception of
the statues that apply to central business improvement districts [Tennessee Code Annotated, S 7-84-101
et seq.], only two that expressly apply to municipalities (and counties): Tennessee Code Annotated, § 732-101 et seq. authorizes special assessments for streets, alleys, highways or other public places;
Tennessee Code Annotated, § 7-33-301 authorizes special assessments for streets, sidewalks, sewers,
etc. However, the City is chartered under the General Law Mayor-Aldermanic Charter, § 6-2-201(3) of
which gives cities so chartered the authority to, “Make special assessments for local improvement.”
Under Tennessee case law special assessments can to be authorized by municipal charter.
On that point, the Tennessee Supreme Court in City of Nashville v. Madison Park Land Co., 155
Tenn. 382. 293 S.W. 533 (1927), upheld a Nashville City Charter provision authorizing “the board of
public works of the city to improve or reconstruct any street, including improvement by widening, ‘and
to cause two-thirds of the cost or expense of the aforesaid work and improvements to be assessed
against the property abutting to said street, avenue, alley, highway or other public place or places to
improved.’” [At 535] Other provisions of the charter contained detailed instructions about how the
assessments were to be made, and gave the assessed property owners the right to a hearing to
challenge the assessments, or the amount of their assessment.
But a serious problem with authority to levy special assessments under the General Law MayorAldermanic Charter is that the charter is completely silent as to how special assessments are made and
challenged.
Provisions for special assessments were contained in the City of Toledo’s City Charter, but the
charter contained no instructions on how special assessments were to be made and gave the assessed
property owners no right to challenge the assessments. The U.S. Sixth Circuit Court of Appeals in
Anderson v. Messenger, 158 F. 250 (1907) spoke at length of the distinction between tax assessments
and special assessments, and said:
… Under the general grant to municipalities of the power to tax, no
authority to levy special taxes for particular purposes is included. There
must be special authority, and provision must be made for safeguarding
the rights of those affected by its exercise; and further, the exercise
must be pursued in all essential particulars in accordance with the lines
prescribed. The citizen is not now under the obligation of the general
law nor directed by it how and when he is to protect himself against the
invasion of his private rights. As the power to levy tribute for such
improvements is not conferred by a general grant but only b special
grant, its exercise must be conform therewith, and it is a reasonable
rule, the proceedings being in vitum, that not only the power conferred
for the protection of individual rights, but that the provisions shall be
strictly complied with. The grant may refer to and adopt the provisions
of the general law, and in such cases the latter, so far as they extend,
are to be read as part of the grant, but not otherwise or further. These
propositions are believed to be so well established, and the
consequence is that if the special law fails to make the necessary
provisions, or if provided, they are not followed, any proceedings
thereunder are void. This distinction between general taxes and special
assessments is universally recognized….
The extent to which the land is benefitted and therefore of the
assessment to be levied upon the owner is of prime importance to him.
An opportunity must therefore be provided for him to be heard before
some tribunal having authority to determine it, upon the question of
the extent of the benefit. The provisions of section 28 of the charter of
the city of Toledo, Local Law of 1836-37, p.40, do not provide for any
such hearing. The only notice of hearing provided for by any part of the
charter relating to this subject is contained in section 28 which is this:
[Section 28 provides for damages to be awarded to assessed property
owners suffering construction damages]. The damages here spoken of
are such as the several parcels sustain by reason of the proceedings.
They have no relation to the value of the benefits for which the several
parcels are assessed. [At 256]
As noted above the special assessment provision of the General Law MayorAldermanic Charter is barren of any provisions providing how special assessments may
be made or providing for the rights of the property owner whose land is subjected to
special assessments. A strong argument can be made under Anderson v. Messenger
such a barren special assessment statute is void.
Even if it were assumed that the statute is valid, City of South Fulton v. Parker,
stands for the proposition that a city cannot impose a lien on property for which the
special assessment is not paid where the special assessment statute (in this case a
private act) did not contain any special assessment collection or enforcement
procedures. However, the court did hold that in such cases special assessments could
be collected as an action on debt, levied against the property. The court contended that
under that interpretation of the special assessment private act, there was little
difference between the collection of property taxes and special assessments. But the
court itself acknowledged that no lien attached to the special assessments. Further, the
court held that a penalty for the non-payment of the assessment, which was set by
ordinance, was invalid for not being authorized by the private act. That holding appears
to support the holding n Anderson v. Messenger that a private act barren of provisions
protecting the rights of property owners cannot be supplied by ordinance.
Statute is void is said in City of Nashville v. Roberts, 160 Tenn. 612, 27 S.W. 1086 (1930),
that:
The power to assess all or a portion of the cost of a local improvement
against property deemed to be specially benefitted thereby is one
which is subject to great abuse; and while the constitutionality of such
power has been recognized by this court since Arnold v. Knoxville, 115
Tenn. 225, 90 S.W. 469, 3 L.R.A. (N.S.) 837, 5 An. Cas. 881, we deem it
essential to the protection of the property rights of citizens that
legislative directions as to the manner of its exercise shall be
substantially followed. [At 1088]
The private act in this case required that a resolution and notice of a hearing describing the
improvement to be made be published. That was not done, and the court held that, “The petitioner was
entitled to have the assessment purged of the cost of widening the street, upon her showing that the
inclusion of such cost in the assessment by the city was illegal and beyond the authority conferred upon
the city by law….” [At 1088]
Of course, another problem is that the basis of the special assessment must be the benefit to
the property owner of the improvement in question. Arnold v. Mayor, Etc., of City of Knoxville, 115
Tenn. 195, 90 S.W. 469 (1905) upheld the concept of special assessments against a challenge that they
were violated the Tennessee Constitution. In doing so , it cited many authorities supporting the
proposition that "special assessments rest upon the ground that special burdens may be imposed for
special or peculiar benefits accruing form public improvement…a burden ought to be imposed on the
whole for the benefit of a few….” [At 471-473] The court concluded that, “It is well to remark that the
owner to assess is not unrestricted as to amount but must be measured by the benefits received, or
reasonably anticipated, and the property owner must have an opportunity to be heard in regard to the
assessment… [At 473]
The court upheld both the public act that authorized the special assessments (Acts 1905,
Chapter 278] and “the ordinances in question…” [At 477] However, I checked the Acts 1905, chapter
278, and it expressly provides for the establishment of improvement districts by ordinance. It may be
that an ordinance setting out the nuts and bolts of a special assessment program is acceptable, but in
light of the above cases, it can be argued that the ordinance cannot supply the legislative outline of the
special assessment program.
I am not sure how the city would establish a special assessment program for parks and the fire
hall. It seems to me that that it would be difficult to pinpoint how any particular property owner or class
of property owners would benefit from the parks or fire hall, particularly the former. Tennessee’s
special assessment statutes found at Tennessee Code Annotated,§§ 7-32-101 et seq. and 7-33-101 et
seq., respectively use that front footage, and the value added measure of benefit to the property.
Arnold cites the U.S. Supreme Court’s approval of the fixing of special assessments, “either according to
value, or superficial area, or frontage.” [At 474]
Sincerely,
Sidney D. Hemsley
Legal Consultant