Take care of your property or it may cost you

Minn. Stat §429.101 grants the government the ability to collect unpaid special/service charges as a special assessment against the property benefited for all or any part of the cost of:

(1) snow, ice, or rubbish removal from sidewalks;

(2) weed elimination from streets or private property;

(3) removal or elimination of public health or safety hazards from private property;

(4) installation or repair of water service lines, street sprinkling or other dust treatment of streets;

(5) the trimming and care of trees and the removal of unsound trees from any street;

(6) the treatment and removal of insect infested or diseased trees on private property, the repair of sidewalks and alleys;

(7) the operation of a street lighting system;

           

(8) the operation and maintenance of a fire protection or a pedestrian skyway
             system;

(9) inspections relating to a municipal housing maintenance code violation;

(10) the recovery of disbursements for payment of utility bills and other services, even if provided by a third party, necessary to remedy violations; or

(11) the recovery of delinquent vacant building registration fees under a municipal program designed to identify and register vacant buildings.

This means, for example, if you allow weeds to grow in your lawn in violation of city code the city can specially assess your property for the cost of the removal.

Normally for a special assessment the government can only assess an amount not exceeding the “benefit” conferred to the property as a result of the project or act.  A “benefit” is conferred if there is an increase in the fair market value of the property due to the project or act.  An example is when a city resurfaces a road and makes available water and sewer for adjoining properties. The city can assess only as much as the market value of the property has increased due to this project.  As a result, the government cannot assess more than the benefit.  This is called the “special-benefit” standard.  The recent controversy is whether under Minn. Stat. §429.101 does the special benefit standard apply?  This is significant because if it does apply, in a Minn. Stat. §429.101 situation, then in order to assess you the city must prove there is a special benefit, e.g., the city must prove that the assessment does not exceed the market value increase due to the cutting of tall grass and removal of weeds.  This is a hard burden for the city because the normal maintenance of a lawn not easily quantifiable.  If does not apply then the City may collect the unpaid charge as a special assessment against the property regardless of special benefit.  In that situation it would be subject to a “reasonableness” standard, i.e., does the charge bear a reasonable relationship to the regulatory expense.  Needless to say, any challenge under the reasonableness standard would be hard to maintain.

In the recent case of American Bank of St. Paul v. City of Minneapolis, ____ N.W.2d ____, 2011 WL 3241803 (Minn. Ct. App.  Aug, 1, 2011), the Court was faced with resolving this controversy.  In that case the basement of the property included an areaway, which is a below grade area that extends beneath the street.  The areaway is allowed as long as it does not interfere with the “public good”, such as street paving, curbs, gutters and streetscape.  In 2005 it was determined that the areaway interfered with the reconstruction of the street.  The city ordered it removed by the property owner or the city would have it removed.  The property owner was unable to obtain financing to remove the areaway so the city had it removed and assessed the costs of the removal against the property.  The property owner’s lender, the Plaintiff, foreclosed on the mortgage and became the successor in title.  The Plaintiff challenged the assessment for the removal claiming that it exceeded the benefit conferred.  The city countered by claiming that the special benefit test did not apply because the property received a service in the form of the removal of a nuisance or illegal condition.  The district court ruled in favor of the city and the Plaintiff appealed.

At the appeal, the Plaintiff contended that the purpose of an assessment appeal would be undermined without application of the special-benefit standard because the city’s assessment amount would never be challenged.  The Court of Appeals disagreed stating that the assessment collected under the city’s police powers is subject to fairness and due process protections:  (1) the city may provide a property owner the option to perform and finance the work without city involvement; (2) if applicable, the city must abide by bidding laws and hire the lowest responsible bidder; and (3) the property owner may challenge the reasonableness of the regulatory service fee.  In other words, the special benefit standard does not apply in a Minn. Stat. §429.101 service charge.