Special assessments are used to fund all manner of local improvement projects, including road, sewer, and water improvements.  Any private landowner—residential, commercial, and even the religious—may someday receive a notice advising of a contemplated assessment against their property.  A special assessment notice is not something to be ignored.  If left unpaid, a special assessment ultimately becomes a lien against the property that may considerably drag down the land’s marketability.  Additionally, special assessments may carry significant interest that will increase the amount of the lien.

This is the second article in a series explaining the fundamentals of the most critical aspects of real estate law.  In this piece, I focus on the special assessment adoption process; the manner of preserving and perfecting an appeal of a special assessment; and the district court review process.

Limitations on the Special Assessment Power

A special assessment is a form of tax levied against land to fund an improvement.  To be legal, a special assessment must satisfy three criteria:

1. The specific land being assessed 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.

That an improvement specially benefits a particular piece of property means that it increases its market value.  Local governments use a variety of ways to determine who benefits from a particular improvement project.  Street frontage and/or the assessed property’s proximity to the improvement project are just a few ways this determination might be made.  Although a city or town may choose to hire an appraiser to determine the extent to which a particular property has specially benefitted by an improvement, there is no obligation to do so.

Filing Objections with the City and the Deadline to Appeal to District Court

A landowner is entitled to notice of a hearing at which a special assessment directed toward his or her property will be considered.  The landowner also has a right—and in most cases, if an issue is to be preserved for later court review, an obligation—to submit any objections to the special assessment prior to, or during the municipal hearing.  Written objections are generally preferred as landowners will often have only a few minutes to present objections at the municipal hearing.

If a special assessment is approved, a landowner must take prompt action to preserve the right to have a judge review the validity of the assessment.[1]  When the city adopts the assessment, to have a judge review the legality of the assessment, the landowner must do the following:

1. Within thirty days, serve an appeal notice on the mayor or the clerk of the city; and
2. Then, within ten days, file the notice of appeal with the district court.

Failure to take either of these actions may result in a court concluding that it lacks the ability to hear an appeal.[2]

Assuming that an appeal to the district court is properly made, the court process will proceed just as with any other civil action (e.g., experts are retained, motions are heard, and a trial may occur).  Unlike an appeal in an eminent domain case, there is no right to have a jury trial in a special assessment appeal.

Landowner’s Burden of Proof and the Legal Remedy

Courts will apply a legal presumption that the special assessment is valid.  The burden of proof is therefore on the landowner to show that the assessment exceeds the special benefit to the property.  The landowner may prove this by using standard appraisal techniques, such as a comparable sales analysis considering the property in the before and after condition (before and after the project is complete).   The city may also submit additional evidence in support of the assessment.  The court will then weigh the evidence and, if it agrees with the landowner that the assessment exceeds the special benefit, nullify the assessment and order a reassessment of the property.

[1]       Judicial review of a municipal special assessment is referred to as an “assessment appeal.”
[2]     The author strongly recommends consultation with a real estate lawyer to confirm that all applicable time limits are strictly followed.