Kadzban v. City of Grandville

Riley, J.

I concur in the judgment of the majority. I would, however, remand the case for factual supplementation of the issue of proportionality.

According to Dixon Rd Group v Novi, 426 Mich 390, 401; 395 NW2d 211 (1986), "there must be some proportionality between the amount of the special assessment and the benefits derived therefrom.”1 If we are to recognize a presumption of validity in favor of municipalities in matters of special assessments, then the proportionality issue as outlined in Dixon must be subsumed into such a presumption. To hold otherwise would be to make a nullity of the proportionality question by subjugating it to the presumption of validity. Accordingly, I believe that a municipality seeking to rest upon its presumption must indicate, when challenged in court, that it engaged in a consideration of the benefits to those assessed in contrast to the costs imposed on them. As noted in the dissent to Dixon, "[an] assessment cannot exceed the benefit to be derived from the improvement, for the reason that the only principle upon which the special assessment can be made at all is that the value of the property is enhanced by the expenditure.” 426 Mich 407, n 4, quoting White v Saginaw, 67 Mich 33, 40; 34 NW 255 (1887)._

*510In my opinion, there is no indication on the record that defendant gave any reasonable degree of consideration to the proportionality issue either before the assessment process or following the filing of the instant action. Defendant’s proofs before the Tax Tribunal consisted of an attack on plaintiffs’ empirical evidence, which took the form of a real estate survey,2 and intangible concepts such as safety and "curb appeal.” The hearing officer, therefore, relied on the presumption of validity to affirm the assessments as supported by "competent, material and substantial evidence on the whole record.”3

I also believe that plaintiffs make several good arguments worthy of empirical rebuttal. For example, there are approximately seventy homeowners whose property fronts Canal Avenue, yet the two-lane street accommodates between 8,000 and 10,000 vehicles each day. Moreover, it is undisputed that Canal Avenue is a major collector of traffic from relatively recently developed subdivisions whose only access to the rest of Grandville is through use of Canal Avenue.4 As noted by plaintiffs, this high degree of traffic contributed to the deterioration of the spray-sealed road that they assert was adequate for their purposes. It also belies what I consider to be the primary purpose for the improvements.

*511In cases where there is no demonstrable public benefit of the nature at issue here* it is easier to conceive of a vague reliance on the presumption of validity in order to affirm the decisions of an assessing municipality. Where the private benefits of an improvement to adjoining properties are not so clear, I would prefer to see more record evidence of any asserted benefit before feeling confident in relying upon the presumption of validity. Where courts are going to do away with consideration of the proportionality requirement mandated by the Dixon line of cases, they should at the least ascertain whether an assessing municipality considered the costs and benefits to the assessed landowners before concluding that there is sufficient evidence on record to sustain the presumption of validity.5

I continue to believe that municipalities should enjoy a presumption of validity and that dollar-for-dollar benefits to assessed landowners is not required. If courts are to avoid the proportionality issue by reliance on the presumption of validity, however, I would require more by way of record proof that an assessing municipality considered the benefits to those who must pay the assessments.

On the basis of the foregoing, I would reverse the decision of the Court of Appeals and remand the case for the purpose of allowing defendant to supplement the record so as to justify its reliance on the presumption of validity.

Mallett, J., concurred with Riley, J._ *512Levin, J.

(separate opinion). I agree with the majority that Dixon Rd Group v Novi, 426 Mich 390; 395 NW2d 211 (1986), "did not modify the well-settled principle that municipal decisions regarding special assessments are presumed to be valid”1 and its conclusion that the record contains substantial evidence to support the Tax Tribunal’s finding and decision "that the value of plaintiffs’ properties increased as a result of the improvements to Canal Avenue.”2

I write separately because I do not agree with the majority’s disposition of plaintiffs’ alternative argument, based on Johnson v Inkster, 401 Mich 263; 258 NW2d 24 (1977), that the Canal Avenue improvements did not particularly and specially advantage and benefit plaintiffs’ properties. The Court of Appeals did not address this issue, stating that because it found "that the proofs in the present case are insufficient to support an increase in market value as required” by Dixon Rd,3 it "need not address plaintiffs’ argument that the Tax Tribunal erroneously failed to apply Johnson v City of Inkster . . . .”4 As in Brill v Grand Rapids, 383 Mich 216, 223; 174 NW2d 832 (1970),5 this issue "has received but casual treatment in *513the briefs . . . The primary focus of the briefs in the instant case was on the Dixon Rd issue. I would not bypass the Court of Appeals on this issue, and would rather remand to the Court of Appeals for reargument and plenary disposition of this issue.

i

In Dixon Rd, supra, p 403, this Court said that while decisions respecting "special assessments generally should be upheld, this Court will intervene where there is a substantial or unreasonable disproportionality between the amount assessed and the value which accrues to the land as a result of the improvements. In this case, the cost of the improvements is approximately 2.6 times the increase in value of the properties and for that reason we hold the special assessment invalid.”

In the instant case, the special assessments averaged $3,550 for each of the seventy-five properties involved. There is evidence that one home, specially assessed $1,385, sold for. $59,500 after the improvements, and that another home, specially assessed $4,487 for a double lot, sold for $62,500 after the improvements. Plaintiffs’ expert witness testified that any increase in value was attributable to general improvement in the real estate market and not to the improvements for which the special assessments were levied. There was, however, substantial evidence tending to show that the sewer, road, and other improvements enhanced the utility, appearance, and value of plaintiffs’ homes.

The plaintiffs contend that because the city did not "compile some documentary evidence and conduct some sort of study or analysis as to the special benefits which are to be specially assessed,” the city is not entitled to the presumption of *514validity for the special assessments in this case. The plaintiffs cite no authority supporting their contention that such a foundation is a prerequisite to reliance by the city on the presumption of validity.

The Tax Tribunal hearing officer found that the study prepared by plaintiffs’ expert witness "was suspect as to sample sizes and silent as to permissible margin of error; deficient as to a proper foundation for its believability; questionable as to the assumptions upon which its credibility rested; challengeable as to the reliability, and arbitrary in the selection, of sales used; disproportional and dissimilar in the comparison data available on and off Canal Avenue; and short of the import necessary to overrule the assessments.” The Tax Tribunal adopted the hearing officer’s findings of fact and conclusions of law. Although the foregoing characterization of plaintiffs’ expert witness’ study is arguably incorrect, there is a substantial basis in the record for that characterization and for the conclusion of the Tax Tribunal "that the subject properties did experience increases in value as a result of the special assessment improvements and that the increases in value were . . . reasonably proportional to the amounts specially assessed . . . .”

ii

The total cost of the Canal Avenue road improvements was $187,529. The city did not assess the entire cost to the plaintiffs, all of whose homes abutted Canal, because Canal was improved beyond the city’s standards for residential streets. *515Canal was improved to a width of thirty-six feet, almost as wide as a four-lane road.6

The plaintiffs were assessed on the basis of the cost of a thirty-two-foot-wide standard residential street with two-inch asphalt and six-inch gravel base, rather than the cost of the three-inch "bituminous concrete” and eight-inch gravel base actually installed because of the heavy traffic on Canal Avenue. Also deducted from the amount specially assessed against the plaintiffs’ property was the cost of improvements at intersections and along the side yards of homes fronting on both Canal and a side street. But the entire remaining cost was assessed against the plaintiffs’ property, and no amount was assessed against property on side streets feeding into Canal.

Before the installation of the sewer and road improvements that were the subject of the special assessments, Canal Avenue was twenty to twenty-two feet wide, and had a simple, thin-seal coat of bituminous spray surface. Canal was flanked by gravel shoulders and, in most instances, by gravel driveway approaches into abutting properties. Until the late 1960’s or early 1970’s, the surrounding area was farmland. As stated by the hearing officer, it was "sparsely developed, with cornfield and open spaces predominating,” and the houses on Canal consisted of "older farmhouse-type structures and some newer homes, many situated on relatively large parcels . . . .”

There was evidence that until 1971, the Canal Avenue roadway was adequate for local traffic needs. The hearing officer did not find otherwise.

Approximately seventy-five homes on the portion of Canal Avenue subjected to the special assessments ranged in age from over one hundred *516to less than ten years. Since the early 1950’s, approximately five hundred homes were built on side streets in areas to the east and west of Canal. Canal was the only means of ingress and egress for the homes west of it. It was one means of ingress and egress for homes to the east.

The city had grown considerably since the initial sealcoating of Canal Avenue. In addition to the new residential neighborhoods that depend on Canal for ingress and egress, there are, in the surrounding area, ten commercial enterprises, nine restaurants, five churches, four apartment or condominium complexes, three schools and three shopping centers. A public park and a factory are also located near this part of Canal.

Over eight thousand vehicles use Canal Avenue daily. The seventy-five homes in the special assessment district do not account for that level of traffic. In Johnson, supra, pp 270-271, this Court said:

The principle that persons who "are made to bear the cost of a public work, are at the same time to suffer no pecuniary loss thereby” does not accommodate an assessment to defray the cost of rectifying conditions mainly brought about by the public at large and not "specially and peculiarly” related to the use or needs of persons residing in the assessment district. The plaintiffs’ homes were not specially and peculiarly advantaged by restoring safe and ready access to and from a road adequate to serve their needs and which would have remained adequate but for pre-emptive use emanating from outside the assessment district. "There has been no enhancement.” Fluckey v Plymouth [358 Mich 447, 454; 100 NW2d 486 (I960)]. [Emphasis added.]

The heavy use of Canal Avenue resulting from residential and other developments to the east and *517west and elsewhere in the city, did indeed result in significant deterioration in the roadway. The plaintiffs assert that rectifying conditions resulting from use or needs of persons not residing on Canal should not be specially assessed against their properties. Clearly, there was no need, from plaintiffs’ point of view, to increase the size of the roadway to thirty-six feet from twenty to twénty-two feet. The plaintiffs might have been content with another sealcoating of Canal, which might have been "amply adequate”7 for their needs without resurfacing with "bituminous concrete.”

To be sure, the plaintiffs’ properties were benefited by the improvements installed. The utility and appearance was enhanced, and there was evidence that the value of the properties also was enhanced. It would surely be appropriate to assess against plaintiffs’ properties some portion of the cost incurred in conferring those benefits. But the failure to assess any of the cost of the road improvements against the owners of properties on side streets that depend solely on Canal for ingress and egress and on the owners of properties that depend heavily on Canal for ingress and egress, suggests that it was arbitrary to allocate to the plaintiffs the entire cost assessed against them.8

The majority distinguishes Johnson on the basis that it involved nonabutting property owners, the transformation of a two-lane street into a five-lane major thoroughfare, and also because the evidence supports the conclusion that, without regard to the growth in the surrounding area, Canal Avenue would have deteriorated and required resurfacing *518periodically. The majority adds that the entire cost of the road improvements was not assessed against plaintiffs’ properties, but only the costs of a "typically improved residential street.” Ante, p 507, n 6.

The principle set forth in Johnson, precluding the levy of a special assessment for an amount greater than the special benefit conferred, applies, as set forth in Brill, without regard to whether the property being assessed is nonabutting or abuts the road being improved. Further, in the instant case, the plaintiff property owners were assessed for a thirty-six foot road, although the road previously had been twenty to twenty-two feet in width, "amply adequate” for those abutting Canal. It appears that the need for the additional fourteen to sixteen feet in width was primarily attributable to the use of Canal Avenue by the owners of property east and west of Canal, and by others in the general area.

The plaintiff property owners were thus assessed for the entire cost of adding ten to twelve feet to the twenty to twenty-two feet preexisting width; the city absorbed the cost of the additional four feet, from thirty-two to thirty-six. The cost of periodic resurfacing of Canal Avenue does not appear, but that evidentiary gap does not tend to support the effort to distinguish the principle set forth in Johnson.

The record is sparse concerning the sewer assessment, but it appears that this was somewhat ancillary to the decision to resurface Canal Avenue. If Canal had not been resurfaced at this time, the sewer assessment might have been deferred, perhaps indefinitely. The extent of benefits resulting from the sewer improvements to plaintiff property owners abutting Canal and of any benefits to *519property owners on side streets and in the general area, and the city at large, is unclear.

I would remand the case to the Court of Appeals for further consideration of whether the cost of the road and sewer improvements was excessively allocated and assessed against plaintiffs’ property.

See also Crampton v Royal Oak, 362 Mich 503; 108 NW2d 16 (1961); Fluckey v Plymouth, 358 Mich 447; 100 NW2d 486 (1960); St Joseph Twp v Municipal Finance Comm, 351 Mich 524; 88 NW2d 543 (1958); German Lutheran Church Society v Mt Clemens, 179 Mich 35; 146 NW 287 (1914).

In support of their claim, plaintiffs offered the testimony of a realtor who had undertaken a sales ratio study that compared the ratios of assessed values to the sales prices paid from November, 1984, for properties on Canal Avenue and for properties in adjacent subdivisions.

This phraseology constitutes- the standard by which appellate courts assess the validity of administrative agencies’ decisions. See 1963 Const, art 6, § 28.

The issue what constituted the appropriate assessment district was not preserved for purposes of this appeal. I would think, however, that the benefits noted by defendant arising from the road improvements, such as police and fire services, would also inure to the benefit of all subdivision homeowners whose only access to those very same services is Canal Avenue.

Defendant wisely paid the costs of constructing a larger and more durable road than would ordinarily be necessary for the handful of landowners whose property fronts Canal Avenue. This does not, however, remove the municipality’s duty to consider any special benefits of an ordinary roadway to the landowners paying the assessment.

Ante, p 502.

Ante, p 507.

Unpublished opinion per curiam of the Court of Appeals, decided August 7, 1991 (Docket No. 114503), p 3.

Id.

In Brill v Grand Rapids, 12 Mich App 297; 162 NW2d 840 (1968), the Court of Appeals affirmed the circuit court’s decision rejecting the abutting property owners’ complaint alleging that no special benefits were conferred by the improvement of a street. This Court reversed stating, on the authority of Fluckey v Plymouth, 358 Mich 447; 100 NW2d 486 (1960), that no special benefit was conferred on the homeowners. The Court said that the second question was whether Calvin College should be considered residential property for this purpose. Because of the casual treatment in the briefs of this issue, the Court remanded the cause to the extent it affected Calvin College for the taking of additional testimony and for a new determination of the rights, if any, of Calvin College.

A four-lane road would have required at least forty to forty-four feet.

Fluckey v Plymouth, supra, p 452.

The entire cost of the road improvements was assessed against the owners of property abutting Canal, less only the cost attributable to (i) enlarging the road from thirty-two to thirty-six feet, (ii) the intersections with side streets, and (iii) side yards of homes fronting on side streets.