Two owners of agricultural property went to court to fight City Hall over the way the city figured assessments in 2003 against their property as part of the city’s improvement of 76th Avenue SW from Sixth Street SW west to the CRANDIC Railroad tracks.
In total, 11 properties abutted 76th Avenue SW to the north and south in the area of the street improvement and became subject to a special assessment to help pay for the road improvement, which included traffic signals and storm sewers and turn lanes.
Two of the 11, Horak Prairie Farm LP and Leonard Dolezal, sued the city over the assessments.
The city of Cedar Rapids received state funding for the project and used that money to fund the public’s portion of the improvement. The two property owners filing the suit argued that some of the state grant should have been used to offset the assessments against the private property owners.
It’s not unheard of to hear objections from agricultural property owners who are farming land and have no immediate interest in a road improvement, which is being made to help new development that they are not a part of. However, the improvements typically raise the attractiveness of their own agricultural land for future development, which raises the land’s value should it be sold in the future.
In other words, the city’s position is that it does not want to use just public money for such road improvements, knowing that those with undeveloped land easily could market it for development and obtain higher prices for it because of the development.
In his opinion for the Iowa Supreme Court, Justice Jerry Larson provided a basic primer for how cities assess for road projects. Projects, he said, typically have public benefit for all and a special benefit for particular property owners.
In this instance, the issues were two: Can some of the state grant money be used to offset the private assessments? And did the city figure the private assessments correctly?
To the first question, Larson concluded that applying a special state RISE (Revitalize Iowa’s Sound Economy) grant to the public portion of the road project is consistent with the purpose of the RISE program. He said it would be inconsistent with the program to apply some of the money to the assessments of the private landowners.
To the second question, Larson noted that the burden to show the assessment is excessive rests with the property owner, not the city. “Unfortunately,” he added, “mathematical and analytical certainly is usually impossible in these cases, and thus, we must rely on approximations to determine the correct amount of the assessment.”
The ultimate question, he continued, is whether the assessment “represents a fair proportional part of the total cost.”
The justice said that both properties in the lawsuit now are zoned agricultural, but he noted that “the highest and best use of both properties is for future development for commercial or industrial use.” He said the properties “clearly” received a special benefit from the road improvement. And he added that the city provided a “detailed description” of its assessment procedures.
In arriving at its assessment decision, the city decided that the benefit to the public of the new traffic signal at 76th Avenue SW at Sixth Street SW came with a 50 percent public benefit, 50 percent private. It divided the private share of the cost among each of four property owners at the intersection. Further, the city also assessed each of the four property owners a quarter of the cost for turn lanes.
“These assessments, as well as the assessments for assessment fees and consulting fees, are reasonable,” the justice concluded.
The one thing that Larson did not agree with was the city’s decision to assess the property owners for a 100 percent of the cost of grading and drainage work when the work was incidental to the intersection work for which the city concluded that some of the benefit was the general public’s.
So the justice ordered the case returned to district court on “this narrow issue” and instructed that those costs be reduced by 50 percent.
As a result, Dave Elgin, the city’s public works director and city engineer, said the city would receive $3,800 less via special assessments for the project.