This opinion will be unpublished and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
A15-0965
Fred E. Friedrichs, et al.,
Appellants,
vs.
Lake Washington Sanitary District,
Respondent.
Filed April 4, 2016
Affirmed
Stauber, Judge
Blue Earth County District Court
File No. 07-CV13-4757
Karl O. Friedrichs, Friedrichs Law Office, P.A., Mankato, Minnesota (for appellants)
Benjamin D. McAninch, Paul R. Shneider, Blethon, Gage & Krause, PPLP, Mankato,
Minnesota (for respondent)
Considered and decided by Connolly, Presiding Judge; Stauber, Judge; and
Bjorkman, Judge.
UNPUBLISHED OPINION
STAUBER, Judge
Appellant-property owners challenge a district court decision upholding a special
assessment following annexation of the property into respondent sanitary-sewer district
and construction of a sanitary sewer on the property. We affirm because the district court
did not err by ruling that appellants failed to rebut the presumption that the sanitary sewer
specially benefitted appellants’ property and because the evidence as a whole fairly
supports the assessment method used by respondent.
FACTS
The Tri-Lakes area “is a regional recreational resource” that is used by adjacent
landowners and the public. It encompasses properties located around Ballantyne Lake,
Duck Lake, and Madison Lake near Mankato. In 2008, respondent Lake Washington
Sanitary District (District) was approached by a group of landowners from the Tri-Lakes
area who knew that their lakes had water-quality issues related to the use of antiquated
septic systems on surrounding residential properties and that the lakes were not compliant
with Minnesota Pollution Control Agency (MPCA) regulations.1 They wanted the
MPCA to annex 380 property parcels for inclusion in the District in order to address
those issues. Despite the objections of appellants Fred E. Friedrichs and Kari L.
Friedrichs and a small minority of other property owners, the District decided to petition
the MPCA for annexation of the Tri-Lakes properties into the District in order to
undertake a sanitary-sewer-improvement project. Following a public hearing, the District
board voted to approve the petition after concluding that the sanitary-sewer project would
be a permanent solution to the Tri-Lakes water-quality problems.
Appellants challenged the petition before an administrative law judge (ALJ), and
then before the MPCA, which ultimately approved the petition. The ALJ considered
whether annexation of the Tri-Lakes properties was administratively feasible, would
1
Madison and Duck Lakes were deemed “impaired” by the MPCA.
2
promote “public health, safety and welfare,” and could be “effectively accomplished on
an equitable basis.” In comprehensive findings, the ALJ noted that nearly half of the
properties were noncompliant or likely noncompliant with environmental standards, or
did not have records identifying the types of wastewater systems in current use. The ALJ
found that “[a] significant number of the parcels within the proposed annexation area
have wastewater systems that were installed prior to 1996.” The ALJ also fully
addressed alternatives for wastewater treatment in the Tri-Lakes properties, including
“(1) holding tanks for seasonal cabins; (2) individual septic systems (with and without
pre-treatment); (3) cluster systems; and (4) the establishment of a sanitary sewer system.”
After examining each alternative, including environmental considerations as well as cost,
the ALJ concluded that a pressure-based sanitary-sewer system with grinder stations
would be optimal for the Tri-Lakes properties.
Following annexation of the properties into the District, the District determined
the special assessments to be levied on each Tri-Lakes property for the sanitary-sewer
project (project) after holding a public hearing on November 25, 2013. The total amount
of the special assessments for the project was $7,694,233.23; the individual assessment
for appellants’ property was $26,459.55. This sum included a private service charge and
ring charge, regionalization, interim and long-term financing costs, and design and
construction services.
Appellants challenged the tax levy for the special assessment in district court,
arguing that the special assessment exceeded the benefit to their property from the
project. In a bench trial held on March 5, 2015, the district court heard testimony from
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appellant Fred E. Friedrichs and others on the assessment costs and property valuation
differences associated with the project. Friedrichs testified that he built a house on his
0.8 acre parcel in 1997 and installed a septic system that, at that time, was compliant with
all regulations, that the septic system was compliant in 2011 when last inspected, and that
his enjoyment of his property was negatively affected by the noise from the grinder pump
installed on his property. He further testified that the improvement did not increase the
value of his property.
The district court also heard testimony from real-estate specialists and others
regarding whether the project affected the value of the Friedrichs’ property. The
Friedrichs called Jim Pfau, a residential realtor, who testified that buyers are not
generally concerned about whether septic systems are compliant and that the increase in
the market value of the Friedrichs’ property from the project was $5,000. Pfau
admittedly does not specialize in lake-area real estate and has never sold property in the
Tri-Lakes area.
The Friedrichses also called Timothy McPartland, a property appraiser, who
appraised Friedrichs’ property and concluded that there was no difference in the value of
their property due to the improvement.
For the District, the district court heard valuation testimony from four witnesses.
Lawrence Maruska, the District chair who became a board member in 2002, stated that
the project was the most cost-effective method of obtaining a permanent solution to
environmental issues associated with wastewater in the Tri-Lakes area. Maruska also
testified that, over time, the value of the Tri-Lakes properties would increase by at least
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the amount of the special assessments, “and in some cases even more.” He further
testified that the administration of the special assessments for the project was fair. He
noted that the Friedrichs’ opposition to the project had added over $150,000 to its overall
cost.
Chuck Vermeersch, an engineer who worked as a project manager and calculated
the individual assessments for the project, testified that the new sewer system was the
most cost-effective method of treating wastewater for the Tri-Lake properties. He also
explained each charge for individual properties and how they were calculated to be fair to
each property owner. Vermeersch further testified that the placement of the grinder
pump on the Friedrichs’ property was done with their consent.
Finally, Richard Draheim, an area real-estate broker who specializes in lake
property sales, testified. He stated that the value of the Friedrichs’ property would
increase $26,459.55 because of the sewer-improvement project, enumerating the factors
he considered in arriving at this figure.2 Draheim conceded that he is not a licensed real-
estate appraiser.
The district court also considered the deposition testimony of Peter Otterness, a
former county employee who worked as an environmental-health specialist in septic-
system compliance. He stated that two properties on the street where the Friedrichs live
failed compliance inspections and have septic systems that predate 1996 regulations.
2
Although appellants characterized Draheim’s testimony as stating that the value of the
improvement to the parcel would be realized in 10 to 30 years, what he actually said was
that he would “be surprised” if the value was not realized sooner.
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In reaching its decision to uphold the special assessment, the district court
specifically credited Draheim’s experience and testimony and noted that “[a]ll three real
estate experts agreed that bringing a failing septic system into compliance and cleaning
up improper wastewater discharge would increase the value of a property,” that the
sanitary-sewer system installed would provide a long-term cost-effective solution in the
Tri-Lakes area, and that the Friedrichs’ property was specially benefited by the
improvement. The district court affirmed the levy of $26,459.55 against the Friedrichs’
property for the special assessment. The Friedrichs appealed.
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); see Minn.
Stat. § 429.051 (2014) (“The cost of any improvement . . . may be assessed upon property
benefited by the improvement . . . .”). Minn. Stat. § 429.081 (2014), permits any person
aggrieved by adoption of an assessment to appeal the levy of the assessment to the
district court.
A limitation on a municipality’s power to levy a special assessment is that “(1) the
land 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.” David E. McNally Dev. Corp. v. City of Winona, 686
N.W.2d 553, 558 (Minn. App. 2004). A “[s]pecial benefit is measured by the increase in
the market value of the land owing to the improvement.” Carlson-Lang Realty Co. v.
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City of Windom, 307 Minn. 368, 369, 240 N.W.2d 517, 519 (1976). Market value is
typically proved by having an “appraiser determine[] what a willing buyer would pay a
willing seller for the property before, and then after, the improvement has been
constructed.” Carlson-Lang Realty Co., 370 N.W.2d at 369, 240 N.W.2d at 519. “Until
it is proven to the contrary, [the municipality] 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.” Id. The presumption of
a special assessment’s legality may be overcome by “introducing competent evidence
that the assessment is greater than the increase in market value of the property due to the
improvement.” Tri-State Land Co. v. City of Shoreview, 290 N.W.2d 775, 777 (Minn.
1980). “If the assessment is set higher than the special benefit conferred, it is a taking
without compensation to the extent of the excess.” Carlson-Lang Realty Co., 307 Minn.
at 370, 240 N.W.2d at 519.
Our scope of review of a district court decision addressing a challenge to the
validity of a municipal assessment, “is 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 supports its conclusions of law and judgment.” Id. at 373, 240
N.W.2d at 521. This court must affirm the district court’s findings of fact unless they are
clearly erroneous. Nelson v. City of St. Paul, 256 N.W.2d 639, 640 (Minn. 1977).
I. Assessment’s presumption of legality
Appellants argue that the district court erred by relying on the testimony of
respondent’s valuation witnesses because their testimony lacked the specificity required
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for the district court to conclude that appellants’ property would benefit from the
sanitary-sewer improvement. Given that the special assessment is presumed by law to be
valid, the first question is not whether the special assessment was supported by sufficient
evidence, but whether appellants overcame the presumption of validity with competent
evidence showing that the property did not benefit from the improvement. See Buettner
v. City of St. Cloud, 277 N.W.2d 199, 204 (Minn. 1979) (stating with regard to the
special-benefit presumption, “[a] presumption makes a prima facie case which is
dispositive in the absence of evidence; it disappears when adverse evidence on the
question of value is introduced”); see also American Bank of St. Paul v. City of
Minneapolis, 802 N.W.2d 781, 789 (Minn. App. 2011) ( “For the purpose of establishing
a prima facie case that an assessment is valid, a calculation based on the cost of the
improvement is deemed reasonably related to the value of special benefits.” (quotation
omitted)).
To challenge the prima facie legality of the assessment, appellants testified that the
improvement did not increase the value of their parcel, and they offered testimony from
Pfau that the increase in market value was only $5,000, and from McPartland that there
was no difference in the parcel’s market value due to the improvement. Respondent
argues that this testimony was insufficient to rebut the presumption of legality. As
respondent points out, Fred E. Friedrichs has no experience from which to form a
competent opinion on the difference in his property’s value due to the sanitary sewer
improvement. Contrast E.H. Wilmmus Prop., Inc. v. Vill. of New Brighton, 293 Minn.
356, 359, 199 N.W.2d 435, 437 (1972) (crediting the testimony of an assessed property
8
owner who “had an extensive background in real estate and industrial development”). In
addition, Pfau has no experience selling or valuing lake property and did not sell property
in the Tri-Lakes area. For this reason, the district court did not err by declining to rely on
Pfau’s testimony in determining the change in market value to appellants’ property from
the sanitary sewer improvement project.
Moreover, the district court did not credit the testimony of McPartland. While the
district court noted that McPartland conducted “before and after appraisals” of
appellants’ parcel, the district court rejected McPartland’s use of comparable properties
because he admitted that there were too few properties from which to form a valid
comparison, the comparables did not include the 2014 selling-season sales, and the
comparables “did not consider soil maps or septic compliance in the neighborhood.” “As
fact finder, the [district] court was not bound by the testimony of an expert. Further, the
trial court is in the best position to assess the credibility of witnesses . . . .” Dosedel, 414
N.W.2d at 756; see DeSutter v. Twp. of Helena, 489 N.W.2d 236, 240 (Minn. App. 1992)
(stating that for special-benefit determination, the “weight and credibility of . . .
testimony, including that of . . . expert witnesses, [is] for the trier of fact” (quotation
omitted)), review denied (Minn. Sept. 30, 1992). In his testimony, Draheim challenged
both the validity of the comparables chosen by McPartland and some of the figures he
used to calculate market value. The district court’s conclusion that appellants did not
overcome the presumption of the assessment’s validity is supported by the evidence and
by its findings.
II. Property-value increase
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Appellants next argue that the District applied an assessment method that is void
on its face because it simply allocated costs among the Tri-Lakes parcels rather than
specifically considering the market-value increase to appellants’ parcel due to the
sanitary-sewer improvement. Under Minnesota law, “The cost of any improvement, or
any part thereof, may be assessed upon property benefited by the improvement, based
upon the benefits received, whether or not the property abuts on the improvement . . . .”
Minn. Stat. § 429.051 (2014). Once an assessment is approved, the procedure for
calculating the portion to be paid by individual property owners is the following: “the
clerk, with the assistance of the engineer or other qualified person selected by the council,
shall calculate the proper amount to be specially assessed for the improvement against
every assessable lot, piece or parcel of land, without regard to cash valuation, in
accordance with the provisions of section 429.051.” Minn. Stat. § 429.061, subd. 1
(2014).
It is well established . . . that the relative benefits from
an improvement are calculated on the market value of the land
before and after the improvement and that the market value
may be calculated on the highest and best use of the land. . . .
[A]ny method resulting in a fair approximation of the increase
in market value for each benefited parcel may be used. Thus,
as long as a valuation method fairly approximates the increase
in a parcel's market value, it may be used in an assessment
proceeding.
DeSutter, 489 N.W.2d at 238 (citations and quotations omitted). The four typical
valuation methods used to calculate market value include, “(1) the market-data approach
based on comparable sales; (2) the income-capitalization approach; (3) the reproduction-
cost, less depreciation, approach; and (4) the development-cost approach.” Eagle Creek
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Townhomes, LLP v. City of Shakopee, 614 N.W.2d 246, 251 (Minn. App. 2000), review
denied (Minn. Sept. 13, 2000).
Respondent did not offer an appraisal to establish the change in market value to
appellants’ property from installation of the sanitary sewer, but Draheim explained the
basis for his opinion that the property would increase in value at least $26,459.55, or the
amount of the special assessment. He testified that he used a software program that
produced an “RPR report” that applied data from “overall county information” and “sales
comparables” to calculate a market value for appellants’ parcel. He also offered further
testimony supportive of a determination that appellants’ property benefited from the
improvement, including that: (1) sanitary-sewer systems are more preferable to septic
systems because lenders now require septic-system compliance before approving home
financing; (2) compliance systems for septic systems are constantly changing;
(3) property values are negatively affected by the presence of septic systems because of
their need for drain fields and mounds; (4) septic systems require ongoing maintenance;
(5) septic systems tend to freeze in the winter; and (6) homes that use sewer systems sell
more quickly than those that use septic systems. Ultimately, Draheim compared the
market value of appellants’ property before the improvement to the market value of the
property after the improvement to arrive at the figure representing the property’s
increased value from the improvement, which is the traditional approach used by
appraisers. See id. (“Characteristically, an appraiser in a special-assessment case is to
give two values to the property: the first is the value of the property before the public
improvement is in place and the second is the value of the property after the improvement
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is in place.”). Finally, Draheim challenged the validity of the comparables used by
McPartland to support his appraisal. In its findings, the district court specifically
“credit[ed] Mr. Draheim’s experience and testimony.”
Given our deferential standard of review, we conclude that Draheim’s testimony
was sufficient to support the $26,459.55 increase in market value of appellants’ property
due to the improvement. The law does not require application of a specific method to
prove market value; it requires only the use of “any method resulting in a fair
approximation of the increase in market value for each benefited parcel[;] . . . as long as a
valuation method fairly approximates the increase in a parcel’s market value, it may be
used in an assessment proceeding.” DeSutter, 489 N.W.2d at 238 (citation omitted). In
Eagle Creek Townhomes, LLP, this court affirmed a special assessment that used a
valuation method that had not been previously recognized, but “yield[ed] fair
approximations of both the before and after values of the [subject] property.” 614
N.W.2d at 251-52. Likewise, Draheim’s testimony is sufficient to prove the market value
of appellants’ property.
In Special Assessment for Maplewood Public Project No. 78-10 by Oxford v. City
of Maplewood, this court reversed a special assessment of over $24,000 to a property for
a storm sewer improvement when “[t]here was no credible evidence to support the
[district] court’s finding” that the value of the subject property increased by at least that
amount from the improvement. 358 N.W.2d 106, 108 (Minn. App. 1984). Appellants
argue that this case is controlling here. We disagree. Respondent offered credible
evidence to support an increase in the value of appellants’ property due to the
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improvement, and the evidence is sufficient to support the district court’s decision to
uphold the special assessment. See DeSutter, 489 N.W.2d at 239 (“The scope of
[appellate] review is 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. The evidence must be against the
findings to justify a reversal.” (quotations omitted)); Twin City Hide v. Transamerica Ins.
Co., 358 N.W.2d 90, 92 (Minn. App. 1984) (stating that in evaluating a district court
determination of market value, it is not this court’s role “to weigh the evidence as if
trying the matter de novo, but rather to determine if the evidence as a whole sustains the
[district] court’s findings”).
III. Evidence considered at trial
Appellants argue that the district court improperly considered evidence that was
irrelevant to the special-assessment proceeding. They cite to several factual findings
made by the district court that set forth historical facts from earlier proceedings, as well
as four exhibits and testimony related to them. It is unclear how appellants conclude that
this information is not relevant to the issues presented, nor do appellants cite to any legal
authority or ask for specific relief due to this assertion. Under these circumstances,
appellants have not established proper grounds for relief. See Louden v. Louden, 221
Minn. 338, 339, 22 N.W.2d 164, 166 (1946) (“An assignment of error based on mere
assertion and not supported by any argument or authorities in appellant’s brief is waived
and will not be considered on appeal unless prejudicial error is obvious on mere
13
inspection.”); In re Estate of Grote, 766 N.W.2d 82, 88 (Minn. App. 2009) (“This court
declines to address allegations unsupported by legal analysis or citation.”).
Affirmed.
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