Sharon K. Nelson G. Jean Connelly John P. Rusinack and Beverly A. Rusinack, Husband and Wife and Lois Johnson v. City of Hampton, Iowa , 802 N.W.2d 224 ( 2011 )

IN THE SUPREME COURT OF IOWA
No. 08–0563
Filed August 26, 2011
SHARON K. NELSON; G. JEAN CONNELLY; JOHN P. RUSINACK and
BEVERLY A. RUSINACK, Husband and Wife; and LOIS JOHNSON,
Appellants,
vs.
CITY OF HAMPTON, IOWA,
Appellee.
Appeal from the Iowa District Court for Franklin County, Bryan H.
McKinley, Judge.
Landowners appeal from district court decision denying their
challenge to special assessments against their property for public
improvements made by a city to a residential subdivision. AFFIRMED.
Raymond P. Drew, Hampton, for appellants.
James R. Wainwright of Ahlers & Cooney, P.C., Des Moines, for
appellee.
2
CADY, Chief Justice.
In this appeal, we must primarily decide whether a city council’s
decision to make public improvements within a subdivision renders the
city unable to assess the costs of the improvements to landowners when
a city ordinance provides for the improvements to be made by the
subdivider.1 The district court determined the city failed to enforce a
subdivision ordinance requiring the subdivider to pay for street
improvements, but concluded the plaintiffs failed to state a claim upon
which relief could be granted because a city cannot be sued for its failure
to enforce ordinances. The district court further found the assessments
were not excessive. On our review of the issues presented on appeal, we
affirm the decision of the district court.
I. Background Facts and Proceedings.
Nearly twenty years ago, Arthur Raisch and landowners in the
northwest edge of the City of Hampton, Iowa, began to develop plans for
a high-end residential housing project. The basic plan eventually
developed into three separate subdivisions, each connected by streets
dedicated within each subdivision. These streets were accessed from the
northern end of Third Street Northwest. Although this litigation
primarily centers on the third subdivision, the other two phases are
relevant to understanding the legal issues presented in this case.2
The first subdivision was located directly north of Third Street
Northwest. It is known as Oak Hill First Addition. The preliminary plat
1Although the terms “subdivider” and “developer” are often used synonymously,
in this case, the words refer to distinct roles. The term “subdivider” is defined in the
Hampton ordinance as “any person, firm, corporation, or legal entity undertaking the
subdivision or resubdivision of a tract or parcel of land.” Hampton, Iowa, Code
§ 170.04(18) (2002). The term “developer” is defined as “the owner of land proposed to
be subdivided or the owner’s agent.” Id. § 170.04(8).
2A map of the plat at issue in this case appears at the end of this opinion.
3
provided for the dedication of a street and cul-de-sac identified as Oak
Court, which extended north off Third Street Northwest. Twelve lots
abutted the cul-de-sac and street. The plat also called for the dedication
of an east/west street called Oak Hill Drive that would intersect Oak
Court. Oak Hill Drive would run east from Oak Court approximately
300′ into a cul-de-sac to provide access to the second subdivision
immediately east of Oak Hill First Addition. This subdivision would
consist of six lots and would be known as the Gallogly Subdivision.
The plans also called for Oak Hill Drive to run west of Oak Court to
a cul-de-sac and would provide access to the third subdivision. This
subdivision would be known as Oak Hill Second Addition. Ultimately,
this third housing development would be separated from the Oak Hill
First Addition by approximately 300′ of land owned by Raisch and other
persons. Raisch, the primary developer, had preliminarily platted this
area to be part of this subdivision, but eventually decided to limit the
Oak Hill Second Addition to the west half of the land. Raisch had
acquired ownership of the land over which Oak Hill Drive would extend
from Oak Hill First Addition to Oak Hill Second Addition. Oak Hill Drive
would then extend approximately 400′ within the subdivision containing
ten abutting lots.
The Oak Hill First Addition was developed first, followed by the
Gallogly Subdivision. Final plats were filed for both subdivisions, and
the streets and municipal service lines were installed during the same
time that the lots were sold and homes were built on the lots. The plans
to develop Oak Hill Second Addition did not proceed forward, and the
land to the west of Oak Hill First Addition remained largely undeveloped.
The first three lots on the west side of Oak Court in the Oak Hill
First Addition, beginning at the southern portion of the point where
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Northwest Third Street enters the subdivision, are identified as “lots one,
two, and twelve.” A sixty-six-foot strip of land between lots two and
twelve was dedicated as the beginning of the street that would extend
westerly from Oak Court into Oak Hill Second Addition to complete Oak
Hill Drive. Plaintiffs John P. Rusinack and Beverly A. Rusinack
purchased lot one in 1992. A house was erected on the lot at the time.
Plaintiff Lois Johnson purchased lot twelve in 1993 with her late
husband. The Johnsons built a home on the lot. Plaintiff G. Jean
Connelly purchased lot two in 1998, together with her husband, who is
now deceased. A house was erected on the lot at the time of the
purchase. The land dedicated as the street between the Johnson and
Connelly lots consisted of dirt and gravel.
The Rusinacks also purchased a tract of land immediately to the
west of lot one. A portion of the northern boundary of the tract fronts
the planned future development of Oak Hill Drive running into the Oak
Hill Second Addition. The Johnsons also purchased a tract of land
immediately to the west of lot twelve. The southern border of the tract
fronts the planned development of Oak Hill Drive.
Plaintiff Sharon Nelson owns approximately three acres of land to
the west of the second Rusinack lot. The land is rectangular in shape.
The border to the north is 100′ and runs along the planned future
development of Oak Hill Drive. The lot extends 650′ to the south. A
house is located on the southern end of the lot, which fronts another
street south of the development that runs east and west. Nelson and her
husband had lived on the acreage for some time and used the northern
border of their land as pasture for horses for many years.
The land between Oak Hill First Addition and Oak Hill Second
Addition had been preliminarily platted by Raisch for development.
5
However, Raisch decided he did not want to include the land in the
development of Oak Hill Second Addition. In April 2000, Raisch entered
into a written development agreement with the City of Hampton in
conjunction with his decision to proceed with the development of Oak
Hill Second Addition. Under the agreement, Raisch agreed to employ an
engineer to survey the property and proceed with the residential housing
development. In return, the city agreed to make certain improvements to
the property. In particular, Raisch agreed to dedicate the land to extend
Oak Hill Drive 300′ from the west edge of Oak Hill First Addition to the
Oak Hill Second Addition, and the city agreed to install the water main
within the three-hundred-foot section. Raisch, however, agreed to
compensate the city for the construction cost. Raisch agreed to engineer
and install the sewer and water mains within Oak Hill Second Addition
and connect them to the water and sewer mains extended by the city to
the subdivision. The city agreed to furnish the pipes and materials to
Raisch for the installation of the sewer and water mains within the
subdivision. Additionally, Raisch agreed to install the storm sewers
along the entire street extending west from the Oak Hill First Addition.
He also agreed to be responsible for grading the entire street. Finally, the
city agreed to surface the entire street and assess the cost to the
adjoining property owners. This agreement was approved by the city
council.
In 2001, Raisch hired a civil engineering firm to survey and
subdivide the land as well as prepare the preliminary and final plats for
the Oak Hill Second Addition. The engineering company understood the
subdivision would be separated from Oak Hill First Addition by 300′, and
that Oak Hill Drive would be extended from Oak Hill First Addition
across the undeveloped land into the new subdivision.
6
The plans and plats for Oak Hill Second Addition were completed
in 2002, and the project began in 2003 with the installation of sewer and
water mains along Oak Hill Drive running west to the cul-de-sac. The
street was also graded, leaving a dirt surface from Oak Hill First
Addition. The city chose not to pave the street and not to install curbs,
gutters, and the remaining storm sewer until the lots began to sell and
homes were built.
The final plat of Oak Hill Second Addition was approved by the city
council and recorded in June 2004. This plat consisted of nine lots
abutting the street and cul-de-sac designated as Oak Hill Drive. The
street then extended east from the lots to the land dedicated as the street
between lot two and lot twelve of Oak Hill First Addition.
By 2005, over half the lots in the subdivision had sold, and the
owners were experiencing some problems with the dirt surface street, as
well as experiencing problems with surface drainage. The city decided to
proceed with plans to surface the street. Raisch had passed away by this
time, and the subdivision project had slowed. The city, however,
continued to move ahead with the project. It hired the same engineering
company that had surveyed the land and prepared the plat for Raisch to
prepare the preliminary and final assessments for the street resurfacing
project.
In November 2006, the city council adopted a resolution of
necessity for the Oak Hill Drive improvements. The street improvements
essentially consisted of the installation of 325′ of storm sewer and 905′ of
six-inch concrete paving with integral curb and gutter. The surfacing
would begin at Oak Court in the Oak Hill First Addition and run west
into the cul-de-sac in the Oak Hill Second Addition.
7
The costs of the project in 2006 were estimated to be $183,100.
An assessment plat and schedule were prepared. The city intended to
assess 89.6% of the costs of the project to the owners of the lots and
tracts abutting the improved street, pursuant to the special benefits
derived from the improvements. The assessments were described in a
preliminary assessment plat and schedule. A total of eighteen parcels of
land abutting Oak Hill Drive were subject to the assessment. The
property included the nine lots within the Oak Hill Second Addition, the
two lots within Oak Hill First Addition, and seven tracts of land abutting
the street between the two subdivisions. Thus, the property owners
affected by the assessment included Connelly, Johnson, Nelson, and the
Rusinacks. The two lots owned by Johnson on the north side of the
street were included in the assessment. The lot owned by Connelly on
the south side of the street was also included in the assessment. The
back lot owned by the Rusinacks on the south side of the street was
included in the assessment, and the lot owned by Nelson was included in
the assessed area because the north boundary of the lot abutted the
street.
The assessment schedule was prepared by the same engineering
company that had originally surveyed the land and prepared the
preliminary and final plats for the Oak Hill Second Addition. The
company essentially assigned a portion of the construction costs to the
owners of the property abutting the proposed street according to the
number of feet of property fronting the street. Under this method, the
engineer proposed the following assessments:
Nelson $9417.55
Rusinacks $5481.16
Connelly $6030.18
Johnson $7663.96
8
In December 2006, Nelson, Connelly, Johnson, and the Rusinacks
filed a petition with the district court to contest the assessments. The
petition claimed the assessments were void because they were contrary
to a city ordinance that required the subdivider to “make and install” the
grading and improvement of streets within the final plat of a subdivision
by “surfac[ing] or caus[ing] to be surfaced the roadways” in a manner
prescribed by regulations. Hampton, Iowa, Code § 170.09(18)(A) (2002).
In the alternative, the petition claimed the assessments of the properties
exceeded the statutory limitations for assessments, and no special
benefit was derived from the proposed improvement of the street.
The street construction project and assessments went forward, as
did the lawsuit brought by the property owners on the east end of the
street project. Additionally, the city hired a second engineering firm to
review the final assessment schedule. The engineer recalculated the
assessments of the street construction costs under a formula known as
the “Flint Formula.” Generally, this formula distributes the costs
according to the special benefit conferred on the property as result of the
paved street, based not only on the frontage foot of the property but also
the depth of the property within the assessment district. The special
benefits are considered in the formula by assigning a point value to each
benefit. Based on the Flint Formula, the engineer determined the
following assessments:
Nelson $8210.80
Rusinacks $8199.54
Connelly $9698.36
Johnson Tract $6717.41
Johnson Lot $9894.41
The city council considered the assessments reached by both
engineers in making its final determination. It directed the final
9
assessments to be corrected by decreasing the amounts of the
assessments against the lots owned by Connelly and Johnson by fifty
percent because they were corner lots that had existing access through
Oak Court and Northwest Third Street. The city council adopted the
Flint Formula calculations for the tract of land owned by the Johnsons
and the tract of land owned by Nelson. It increased the assessment to
the tract owned by the Rusinacks in an amount between the final
assessment and the Flint Formula assessment.
The street improvements were completed by the city during 2007,
and a final assessment schedule and levy was adopted by the city council
in January 2008.
The final costs of the project were less than the expected costs, and
the five lots and tracts subject to litigation were collectively assessed
$30,807.90 of the total assessed costs of $148,439.33. Ultimately, the
assessments were made as follows:
Nelson $8210.80
Rusinacks $6083.30
Connelly $4849.18
Johnson Tract $6717.41
Johnson Lot $4947.21
The case proceeded to trial. The plaintiffs testified they would not
use the new street and would derive no benefit from its presence. A
property appraiser also testified on behalf of the plaintiffs. He did not
value their property, but indicated that any benefit derived from the
paved street was offset by the loss of privacy resulting from the street
and the increased traffic. The city introduced expert testimony showing
the street increased the value of plaintiffs’ properties. The testimony
applied the Flint Formula, as well as other factors.
10
Following the trial, the district court rejected the claims by the
plaintiffs that the city had no authority to assess street construction
costs to them when a city ordinance made the subdivider responsible for
the costs. In doing so, the district court also rejected the claim by the
plaintiffs that the subdivider would have been required to pay for the
street construction if the ordinance had been enforced and that they
were entitled to the benefit they would have received if the ordinance had
been enforced. It concluded the plaintiffs failed to state a cause of
action. Finally, the district court found the plaintiffs failed to prove the
assessment by the city was excessive and that their properties were not
benefited by the construction of the street.
The plaintiffs filed an appeal. They first claim the city had no
authority to assess the costs of making improvements because the
ordinance required the subdivider to make the improvements. They
assert this claim is properly raised by a petition to test the legality of the
assessment and assert no assessment would have been necessary if the
ordinance had been followed. Alternatively, the plaintiffs argue the
assessments were excessive.
The city argues the claim by the plaintiffs based on the city
ordinance is factually deficient because a portion of the street surfaced
by the city was outside the subdivision, and the ordinance only makes
the subdivider responsible to improve streets within the subdivision.
Thus, the city asserts it was responsible to surface this portion of the
street, even if the ordinance had been enforced. They also argue the city
is not required to follow the ordinance, and it may utilize any available
authority to make public improvements. Finally, the city argues the
assessments were not excessive.
11
II. Scope of Review.
Our review of decisions on property assessments is de novo. Gray
v. City of Indianola, 797 N.W.2d 112, 117 (Iowa 2011). We give weight to
the findings by the district court but are not bound by them. Id. On
appeal, the plaintiffs have the burden to show that the special
assessments were excessive. Id.
III. Plaintiffs’ Claim Concerning the Ordinance.
The plaintiffs argue their claim is authorized under Iowa Code
section 384.66(1) (2007). This section permits a person to test the
“legality of the assessment procedures by a petition in equity filed in
district court.” Iowa Code § 384.66(1). The plaintiffs’ claim, however,
does not challenge the legality of the procedures to assess property under
chapter 384. Instead, the plaintiffs have brought an equity claim
predicated on the perceived unfairness of allowing the city to assess lot
owners for improvements it made when a city ordinance directs the
improvements to be made by a private subdivider. They argue the city
may not exercise its assessment authority under chapter 384 under such
circumstances.
We agree with the city that the plaintiffs have not stated a claim
under section 384.66(1). The claim by the plaintiffs does not challenge
the assessment procedures. We also agree that those plaintiffs who own
property within the Oak Hill First Addition do not fall within the
parameters of the claim. The ordinance at issue does not require a
subdivider to make improvements outside the platted area of the
subdivision. Additionally, these plaintiffs make no special claim of
prejudice to support any other claim other than the city was required to
enforce the ordinance. Nevertheless, those plaintiffs who own property
12
abutting the subdivision plat have stated a claim in equity, and it is this
claim that we proceed to resolve.
IV. Impact of City Ordinance on Assessment by the City.
Municipalities are “creature[s] of the state legislature.” 1 Eugene
McQuillin, The Law of Municipal Corporations § 3.02, at 234 (3d ed. rev.
vol. 1999) [hereinafter McQuillin]. In Iowa, cities are given the power of
self-government or the authority to “exercise any power and perform any
function it deems appropriate to . . . preserve and improve the peace,
safety, health, welfare, comfort, and convenience of its residents.” Iowa
Code § 364.1. One exception to the broad powers conferred to cities is
the power to tax residents. A city has no power to tax unless specifically
authorized by the legislature. Id. § 364.3(4). The assessment of the
costs of street improvements is generally considered to be a form of
taxation.
Our legislature has specifically authorized cities to assess the costs
of building or repairing streets and other associated public improvements
within its borders to property owners based on the benefit derived from
the improvements. Id. § 384.38; see also Des Moines City Ry. v. City of
Des Moines, 183 Iowa 1261, 1273, 159 N.W. 450, 454–55 (1916).
Although the legislature has provided cities with a specific procedural
mechanism for financing public improvements, it expressly recognized
and reserved cities’ right and power to “establish and enforce ordinances
regulating the division and use of land.” Iowa Code § 354.1(3). As a
result, we generally employ a “liberal approach to [a city’s] subdivision
decisions.” Blumenthal Inv. Trusts v. City of W. Des Moines, 636 N.W.2d
255, 268 (Iowa 2001).
Iowa’s statutory property assessment authorization is found in
Iowa Code chapter 384. The chapter recognizes that the construction
13
and improvement of city infrastructure is a necessary component to
community development by establishing a procedure for the assessment
of the costs to the benefited property. See Iowa Code § 384.61. Yet, the
statutory scheme does not limit the power of a city to pursue public
improvement projects through its independent authority to contract with
subdividers to share in the costs of installing public improvements. See
id. § 384.41(3). Generally, a city is authorized to enter into contracts,
including contracts governing the construction of streets and the
installation of public improvements. 10 McQuillin § 29:6, at 337 (3d ed.
rev. vol. 2009); see also 13 McQuillin § 37:98, at 362 (3d ed. rev. vol.
2008).
Streets and other public services are a normal part of most real
estate development, especially development projects involving the
subdivision of land. A subdivision divides a tract of land into multiple
lots and generally requires the development and integration of streets
and other public services. See Iowa Code § 354.6(1)–(2) (defining
standards for subdivision of private property and including requirement
that recorded subdivision plats clearly designate area reserved for streets
and other future public areas). A subdivider works with the owner of the
tract to ultimately develop the land into lots for sale with the goal of
making a profit from the sale of the lots.
The city subdivision ordinance at issue in this case regulates the
construction standards that must be met before a final plat is approved
by the city council for recording and includes a requirement that all
subdivisions include streets and storm sewers, as well as water and
sanitary sewer lines. See Hampton, Iowa, Code § 170.09(18). The
ordinance conditions the city council’s approval of a final plat of a
subdivision upon the subdivider “mak[ing] and install[ing]” the
14
improvements pursuant to detailed specifications, procedures, and
oversight by the city. Id. The ordinance does not address the authority
of the subdivider to contract with other entities to install the
improvements. Generally, the obligations of one can be performed by
another. See Restatement (Second) of Contracts § 318, at 19 (1981)
(noting the general rule that the duty to perform may be delegated).
The logical premise behind the imposition of an obligation on the
subdivider to make public improvements within a subdivision is that the
subdivider can pass the expense of the work to lot owners by adjusting
the price of the lots. See Preston v. Oliphant, 256 Iowa 128, 130, 126
N.W.2d 329, 329–30 (1964) (buyers of residential property sued seller for
failing to install roads and other improvements promised to be included
in purchase price of lot); Village Square No. 1, Inc. v. Crow-Frederick
Retail Ltd. P’Ship, 551 A.2d 471, 474 (Md. Ct. Spec. App. 1989) (noting,
in argument, that cost of roads and sewers provided at the expense of the
developers is passed on by the developer to the ultimate owners of the
property). See generally Jerry S. Williford & C. Todd Sinnett, Tax
Planning for the Developer: Allocating Costs Among Land and
Improvements, 103 J. Tax’n 335, 342 (2005) (recognizing developers must
account for all expenses involved in making improvements to property
and that improvements made to land should be allocated to the different
lots or parcels for tax purposes). Thus, the costs of the improvements
are ultimately borne by the property owners who are the primary
beneficiaries of the improvements, just as is ultimately done under the
assessment procedures of chapter 384 when the city incurs costs in
making street improvements. See Divan Builders, Inc. v. Planning Bd. of
Twp. of Wayne, 334 A.2d 30, 39 (N.J. 1975) (noting the end result of a
city requiring the developer to fund improvements in a subdivision is the
15
same as though the city directly assessed the costs against the owners of
the property within the subdivision).
The fighting question presented in this case is whether the city
may exercise its statutory assessment authority to defray the costs of
making street improvements as a part of the development of a
subdivision when an ordinance conditions the city’s approval of the
subdivision plat on the private subdivider making the improvements. At
its core, the resolution of this issue hinges on a more narrow question of
whether the ordinance imposed a mandatory enforcement obligation on
the city.
Generally, the question whether a municipality is required to
enforce its ordinances has been obliquely addressed within the
parameters of such legal concepts as standing and the discretionary
function immunity. See Schmitz v. City of Dubuque, 682 N.W.2d 70, 74
(Iowa 2004) (applying a two-part test for discretionary immunity to
actions of city in constructing trail); White v. Robinson, 260 S.W.3d 463,
472 (Tex. Ct. App. 2008) (holding referendum sponsors lacked standing
to challenge city’s construction of, and refusal to enforce, an adopted
proposition). Additionally, other legal theories have surfaced in the
context of tort liability involving the failure to enforce an ordinance. See
Ball v. Town of Woodbine, 61 Iowa 83, 85, 15 N.W. 846, 847 (Iowa 1883)
(holding city not liable when council members, who shot off fireworks in
violation of city ordinance, injured citizens); accord Harris v. City of
Des Moines, 202 Iowa 53, 58, 209 N.W. 454, 455 (1926) (holding failure
to enforce municipal ordinance regulating streets did not impose liability
on municipality). Yet, the action in this case is framed solely in equity
and only seeks a declaration that the city may not exercise its
assessment authority. Thus, we must decide if the city’s failure to
16
enforce an ordinance conditioning approval of a subdivision plat upon
the subdivider financing street improvements prevents the city from
waiving the condition and instead exercising its statutory authority to
assess the costs it incurs in making the improvements.
One approach we have taken to decide whether the governmental
failure to fulfill the terms of an ordinance affects the validity of
subsequent government action is to consider whether the specific terms
of the ordinance are mandatory or directory. Cf. Taylor v. Dep’t of
Transp., 260 N.W.2d 521, 522 (Iowa 1977) (considering whether a statute
is mandatory or directory). Under this approach, when the enactment at
issue does not expressly resolve the question, we look to the main
objective of the enactment to determine if the requirement is essential to
furthering the objective. Id. at 522–23. If it is, the requirement is
ordinarily mandatory, and the failure to perform the requirement
invalidates the subsequent governmental action. Id. While other related
approaches could be considered, we find this approach particularly
helpful in the resolution of this case.
In making this determination under subdivision regulations, we
also apply the statutory requirements for cities considering subdivision
plats under chapter 354. If the ordinance at issue is required to be
enforced, the city is directed by the legislature to “apply reasonable
standards and conditions in accordance with applicable . . . ordinances.”
Iowa Code § 354.8. Otherwise, the city is granted the authority to
approve plats for recordation by considering “the possible burden on
public improvements and . . . a balance of interests between the
proprietor, future purchasers, and the public interest in the subdivision.”
Id.
17
In this case, the City of Hampton ordinance does not expressly
resolve the issue, but the purpose of the condition is expressly described
in the opening paragraph of the subdivision regulation chapter. The
declared purpose or objective is “to establish minimum standards for the
design, development and improvement” of subdivisions so as to protect
“existing developments” and to make adequate provisions “for public
services,” and to promote “health, safety, and general welfare.”
Hampton, Iowa, Code § 170.01. Additionally, the ordinance seeks to
ensure improvements are uniformly made in accordance with certain
specifications to the city’s satisfaction. Id. § 170.03. The ordinance
describes specific requirements for the submission of subdivision plats
for approval by the city, and it specifies a host of rules required for the
development of a subdivision. Thus, we must decide if the city’s failure
to enforce the plat approval condition requiring the subdivider to
personally finance the improvements would undermine these objectives.
We recognize a certain symmetry in using subdividers to help build
streets and install other public services within the development of a city.
The city, of course, has the authority to make such improvements and to
pass the costs onto abutting property owners who most benefit from the
improvements through assessment procedures. See Iowa Code
§ 384.38(1)–(2). Yet, the same end result occurs when the requirement to
make improvements within a subdivision is given to a subdivider. When
improvements are made by a subdivider, the costs of the improvements
are still passed to those property owners who most benefit from the
improvements, but through the use of free-market forces instead of a
forced assessment. In many instances, the two approaches work to
develop city streets without overlap. However, unique circumstances can
18
arise that may justify a shared development effort between subdividers
and the city. The background of this case presents a good illustration.
Here, the particular area of the subdivision where the property was
divided into lots was separated from the nearest existing street by over
300′. This portion of the subdivision could not be connected to the
existing street without extending the street to reach the area containing
the subdivided lots. The presence of the extended street and the
underground improvements arguably benefited property owners outside
the subdivision. If the subdivider was required to make all of the
improvements, the subdivider would have no means to pass the costs to
those outside property owners. Instead, the subdivider could only pass
on the costs through the sale of the lots. The result is the property along
the street but outside the plat would receive the benefit of the street
without the owner paying for the benefit. Moreover, the sale price of the
subdivided lots within the subdivision may need to be increased beyond
what the market forces would bear, forcing the subdivider to ultimately
shoulder the costs. In any event, such unique circumstances can
disrupt the normal symmetry of the city-subdivider approach to make
public improvements. Importantly, the objectives of the ordinance to
protect existing developments, make adequate provisions for public
services, and promote the general welfare could be undermined if the city
and subdivider could not work together to make street improvements
under some circumstances. The city’s development through subdivision
could be adversely affected, and street development near existing
developments could suffer as well.
Thus, we conclude that the portion of the ordinance requiring the
subdivider to make improvements as a condition to the city’s approval of
a plat does not describe a mandatory enforcement duty on the city.
19
Instead, the city may waive its subdivision plat approval standards when
the objectives of its standards would not be met by strict adherence to
them and when waiver would not otherwise conflict with the mandatory
platting standards contained in Iowa Code chapter 354. See York v.
Town of Ogunquit, 769 A.2d 172, 177 (Me. 2001) (recognizing the
authority of city planning board to waive subdivision standards but not
to waive zoning provisions subject to analysis mandated by state
statute); see also City of Mequon v. Lake Estates Co., 190 N.W.2d 912,
917 (Wis. 1971) (finding city acted within delegated authority conferred
by legislature in varying subdivision standards in ordinance in special
agreement with subdivider). But see Allen v. St. Tammany Parish Police
Jury, 690 So. 2d 150, 153 (La. Ct. App. 1997) (noting language
conditioning final subdivision approval upon design details and
specifications approved by department of public works imposed
mandatory obligation on city). Such an approach is consistent with the
legislature’s grant of authority to cities in development planning as well
as our court’s flexible approach to city subdivision decisions. See Iowa
Code § 354.1(3); see also Blumenthal Inv. Trusts, 636 N.W.2d at 268.
Consequently, the city’s failure to require the subdivider to personally
make all improvements does not invalidate the authority of the city to
assess property owners under chapter 384.
V. Special Benefit to Property Assessed.
The statutory scheme for the assessment of costs incurred by a
city in making public improvements provides that lots in the assessment
district may be assessed according to the special benefit conferred on the
property. Iowa Code § 384.61. One qualification, however, is the
assessment cannot exceed twenty-five percent of the property value. Id.
§ 384.62(1). The statutory assessment scheme seeks to protect
20
individual property owners from subsidizing the benefit from
improvements enjoyed by the public in general. Horak Prairie Farm, L.P.
v. City of Cedar Rapids, 748 N.W.2d 504, 507 (Iowa 2008).
When a municipality has properly made public improvements, a
presumption of necessity arises, as well as a presumption that some
benefit has resulted to assessed property owners. Goodell v. City of
Clinton, 193 N.W.2d 91, 93 (Iowa 1971). The law not only presumes the
assessments are correct, but it also presumes that they do not exceed
the special benefit derived. Id. Many factors are considered in the
assessment, including the future use and expectations of the property,
as well as its present use. Id. Mathematical exactness is not required.
Gray, 797 N.W.2d at 119.
The plaintiffs argue the new street does not provide any special
benefit to them. They point out that the street does not provide access
that did not previously exist. Moreover, they point out that any benefit
from the street is offset by the loss of privacy. Primarily, the plaintiffs
argue the street is not something they desired and was only installed to
allow access to the new lots within the subdivision.
The arguments made by the plaintiffs are familiar. In Gray, we
reiterated our understanding of the displeasure felt by property owners
who are asked to share in the expense of street improvements they did
not want or believe will provide any benefit to them. Id. at 118–19. Yet,
these arguments are insufficient to rebut the presumption that the
assessments were correct. Id. at 119.
The property in dispute in this case was ultimately assessed by
considering a wide variety of factors in conjunction with the Flint
Formula. See Milton O. & Phyllis A. Thorson Revocable Estate Trust v.
City of W. Des Moines, 531 N.W.2d 647, 650 (Iowa Ct. App. 1995)
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(identifying factors the court will consider when distinguishing between a
general benefit and a special benefit). Even though the plaintiffs testified
they would not use the street, the improvements did increase the value of
their property, especially the three parcels of land west of Oak Hill First
Addition. The presence of the street abutting these tracts increased their
value as future residential development. Moreover, the mere
transformation of the street from gravel and dirt to pavement conferred a
number of benefits on the Connelly and Johnson lots located within
Oak Hill First Addition, even though the lot owners were personally
satisfied with a dirt street. See Gray, 797 N.W.2d at 119 (recognizing
that the pavement of a gravel road confers substantial benefits on
abutting landowners). Nevertheless, the city council understood the
benefits to these two lots were not as great as the benefit provided to the
other three tracts and substantially reduced the assessments. Overall,
the plaintiffs did not establish the assessments to their property
exceeded the special benefit provided by the improvement. The
assessments did not exceed twenty-five percent of the value of the
property owned by the plaintiffs.
VI. Conclusion.
We have carefully considered all issues raised in this appeal. We
affirm the decision of the district court.
AFFIRMED.
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