Senske Rentals v. City of Grand Forks ( 2023 )


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  •                                                                             FILED
    IN THE OFFICE OF THE
    CLERK OF SUPREME COURT
    MARCH 31, 2023
    STATE OF NORTH DAKOTA
    IN THE SUPREME COURT
    STATE OF NORTH DAKOTA
    
    2023 ND 55
    Senske Rentals, LLC, a North Dakota
    Limited Liability Company, and
    Sierra Investments, LLC, a North Dakota
    Limited Liability Company,                        Petitioners and Appellants
    v.
    City of Grand Forks, a political
    subdivision of the State of North Dakota,          Respondent and Appellee
    No. 20220222
    Appeal from the District Court of Grand Forks County, Northeast Central
    Judicial District, the Honorable John A. Thelen, Judge.
    AFFIRMED.
    Opinion of the Court by McEvers, Justice.
    DeWayne A. Johnston, Grand Forks, ND, for petitioners and appellants.
    Jenna R. Bergman (argued), Minneapolis, MN, and Corey J. Quinton (on brief),
    Fargo, ND, for respondent and appellee.
    Senske Rentals, et al. v. City of Grand Forks
    No. 20220222
    McEvers, Justice.
    [¶1] Senske Rentals, LLC, appeals a district court’s order affirming the City
    of Grand Forks Special Assessment Commission’s decision to specially assess
    property for street improvements. We affirm.
    I
    [¶2] Senske owns property in a subdivision affected by a City of Grand Forks
    project designed to pave gravel roads, which required installation of a storm
    sewer and other infrastructure. In February 2019, the City Council approved
    plans for the project and created a special assessment district and a special
    assessment commission. In May 2019, City engineers prepared a report and an
    estimate of the cost of the project and provided notice to benefited property
    owners. The estimated cost of the project was $3.5 million. In June 2019, the
    City Council approved increasing the amount of the City’s share of the project,
    from the usual policy of 15% for the City’s share of the pond cost to 50% of the
    pond cost. Notice of the original assessment estimate was $0.98 to $1.36 per
    square foot and was sent to property owners.
    [¶3] A public meeting was held and property owners were asked for their
    input on the project. Jim Senske, owner of Senske Rentals, wrote, “I am in
    favor of this project in it’s [sic] entirety – been a long time coming – will be good
    for this part of town.” Thereafter, construction bids were received but were 27%
    higher than originally estimated by the City engineers. Property owners were
    notified of the updated assessment range of $1.57 to $1.80 per square foot. The
    Commission did not receive any comments or objections.
    [¶4] The Commission held a public hearing on September 30, 2021, where
    Jim Senske, on behalf of Senske, requested reconsideration of the assessment
    amount. The City Council ultimately reduced costs and removed the
    administrative markup, reducing the assessment to $1.41 per square foot,
    which was 3.7% higher than the original estimate.
    1
    [¶5] On October 18, 2021, another hearing was held. A City engineer provided
    an in-depth explanation of the assessment determinations for the project. The
    City Council and City Attorney heard arguments made by Senske’s attorney
    that the policy did not fairly allocate costs and that the City should be
    responsible for more of the costs. The City Council concluded the Commission
    followed policy and its actions were not arbitrary, capricious, or unreasonable.
    Senske appealed to the district court, which upheld the Commission’s
    assessments. Senske appeals.
    II
    [¶6] Senske requests this Court take judicial notice of multiple City of Grand
    Forks’ published documents relating to the special assessment amount of the
    project.
    [¶7] A court may judicially notice an adjudicative fact “that is not subject to
    reasonable dispute because it . . . can be accurately and readily determined
    from sources whose accuracy cannot reasonably be questioned.” N.D.R.Ev.
    201(b)(2). Facts that were not available to the district court below and are the
    subject of reasonable dispute will not be judicially noticed by this Court. State
    v. Vetter, 
    2019 ND 262
    , ¶ 6, 
    934 N.W.2d 543
    . Except for jurisdictional matters
    and the taking of judicial notice, we generally consider only issues raised below.
    Workforce Safety & Ins. v. Oden, 
    2020 ND 243
    , ¶ 54, 
    951 N.W.2d 187
    . This
    Court has discretion whether to take judicial notice when no request was made
    in the trial court. Id. at ¶ 56.
    [¶8] The documents Senske requests we take judicial notice of relate to
    information gathered nearly two years after the determination of the special
    assessment amount. The documents were not presented to the district court,
    the City Council, or the Special Assessment Commission. The documents are
    now offered in support of Senske’s position that the special assessment was
    excessive. “[W]e do not try special assessment cases anew or reweigh the
    evidence.” Holter v. City of Mandan, 
    2020 ND 202
    , ¶ 9, 
    948 N.W.2d 858
    .
    Therefore, we decline to take judicial notice of the City of Grand Forks’
    2
    published documents, and will not consider them, because they are not in the
    record.
    III
    [¶9] Senske argues the Special Assessment Commission acted in an
    arbitrary, capricious, and legally unreasonable manner by failing to comply
    with the requirements of N.D.C.C. § 40-23-07 to determine the assessment to
    its properties.
    [¶10] In an appeal from a decision of a local governing body under N.D.C.C. §
    28-34-01, our scope of review is the same as the district court, which is very
    limited. Tibert v. City of Minto, 
    2006 ND 189
    , ¶ 8, 
    720 N.W.2d 921
    . We exercise
    a limited review of challenges to special assessments in part because of the
    separation of powers doctrine:
    The special assessment commission is in essence a legislative
    tribunal created by legislative authority to “(1) determin[e] the
    benefits accruing to the several tracts of land in an improvement
    district by reason of the construction of an improvement and (2)
    assess[ ] the costs and expenses thereof against each tract in
    proportion to the benefit received.” Accordingly, judicial review is
    limited to assuring that local taxing authorities do not act
    arbitrarily, capriciously, or unreasonably. Courts are not to act as
    a super grievance board, and we do not try special assessment
    cases anew or reweigh the evidence. Rather, we begin with the
    presumption that assessments for local improvements are valid,
    and the burden is on the party challenging the validity of the
    assessments to demonstrate they are invalid.
    Holter, 
    2020 ND 202
    , ¶ 9 (quoting Bateman v. City of Grand Forks, 
    2008 ND 72
    , ¶ 10, 
    747 N.W.2d 117
    ).
    [¶11] Section 40-23-07, N.D.C.C., governs a special assessment commission’s
    decision relating to benefits and assessments:
    The commission shall determine the amount in which each of the
    lots and parcels of land will be especially benefited by the
    construction of the work for which such special assessment is to be
    3
    made, and shall assess against each of such lots and parcels of land
    such sum, not exceeding the benefits, as is necessary to pay its just
    proportion of the total cost of such work, or of the part thereof
    which is to be paid by special assessment, including all expenses
    incurred in making such assessment and publishing necessary
    notices with reference thereto and the per diem of the commission.
    [¶12] This Court has stated three requirements must be satisfied for a special
    assessment to comply with N.D.C.C. § 40-23-07:
    The special benefit accruing to each lot or parcel of land from the
    improvement must be determined. The special assessment levied
    against each lot must be limited to its just proportion of the total
    cost of the improvement. The assessment against any lot or parcel
    of land must not exceed the benefit which has been determined to
    have accrued thereto.
    Bateman, 
    2008 ND 72
    , ¶ 11.
    [¶13] This Court looks at whether, on its face, the legislative act was arbitrary,
    capricious, or legally unreasonable. Holter, 
    2020 ND 202
    , ¶ 12. In Ulvedal v.
    Board of County Commissioners of Grand Forks County, 
    434 N.W.2d 707
    , 708-
    09 (N.D. 1989), this Court stated:
    Several decades ago, this court addressed the proper role of courts
    in reviewing a tax assessment by a local governing body. Appeal of
    Johnson, 
    173 N.W.2d 475
     (N.D. 1970). In that earlier appeal, also
    from an assessment of real estate in Grand Forks, this court
    surveyed how courts in other states approached review of
    assessments of property for tax purposes. We concluded that “it is
    not for the court to substitute its judgment for that of the lawfully
    designated taxing authorities, . . . ” Id. at 484. When “there is
    substantial evidence to support the appraisal made by the
    assessing     authorities     and      no    evidence      of    any
    discrimination,” Id. at 484, a decision of county commissioners
    should be upheld.
    [¶14] In summary, a reviewing court may not reverse a local governing body’s
    action simply because it finds some of the material considered more convincing.
    Holter, 
    2020 ND 202
    , ¶ 12. A reviewing court can only reverse when there is
    4
    such an absence of evidence or reason as to amount to arbitrary, capricious, or
    unreasonable action. 
    Id.
     As such, a municipality has broad discretion to
    determine benefits and apportion assessments and costs to properties within
    an improvement district. Id. at ¶ 13. There is no exact formula for quantifying
    benefits. Id. An “assessment may be apportioned according to frontage, area,
    value of, or estimated benefits to, the property assessed, or according to
    districts or zones, or on any other reasonable basis that is fair, just, and
    equitable.” Serenko v. City of Wilton, 
    1999 ND 88
    , ¶ 21, 
    593 N.W.2d 368
    (quoting Cloverdale Foods Co. v. City of Mandan, 
    364 N.W.2d 56
    , 61 (N.D.
    1985)).
    [¶15] Here, the Commission determined the benefit and the City made
    findings based on past practices, policies, and procedures. The findings include:
    The benefits received from the project are to allow drainage to
    public and private property to include streets, allows increased
    impervious surface areas caused by development, safely conveys
    storm water from the benefiting area and provides sanitary
    method of moving and holding storm water.
    [¶16] The Commission found Senske’s properties, along with other commercial
    properties, were benefited more than residential properties because
    commercial properties have more run off than residential properties. The
    Commission also reduced the benefit percentage regarding a pond in
    determining the amount assessed against each lot. The record includes a
    Benefit and Assessment chart that includes each affected property’s benefit
    and percent benefited. The record does not include an exact formula
    quantifying how the Special Commission determined the benefit to each lot or
    parcel, other than following past practices. Where the record is silent as to how
    benefit was determined, we presume the determination of benefit is consistent
    with applicable ordinance and policy and the resulting assessment is valid, and
    Senske has the burden to demonstrate the determination of benefit did not
    comply with N.D.C.C. § 40-23-07. See Bateman, 
    2008 ND 72
    , ¶ 10 (relying on
    Serenko, 
    1999 ND 88
    , ¶ 20). The record does not reflect Senske made a specific
    argument on the method the Commission determined the benefit. Without an
    adequate record, Senske has failed to meet the burden to demonstrate the City
    5
    or the Special Commission acted arbitrarily, capriciously, or unreasonably in
    determining the benefit. This Court will not substitute its judgment for that of
    the Commission. See Ulvedal, 434 N.W.2d at 708-09.
    [¶17] Senske also disagrees with the Commission’s method of assessment. The
    Commission calculated the assessment amount by taking the cost of
    construction and dividing it by the square footage of the property and assessed
    it according to the lot frontage. After considering arguments made by Senske,
    the City Council reduced costs and waived administrative markups. Senske
    argues the complex nature of this project is not comparable to other projects
    that lend themselves to a simple form of calculation. However, we have
    routinely approved the use of formulas such as front footage area or value to
    determine the benefits assessed to properties. See Holter, 
    2020 ND 202
    , ¶ 18.
    This Court has previously rejected the same argument:
    We have rejected similar arguments in the past and upheld
    assessments based upon square footage of the property. Although
    the landowners and Serenkos may disagree with the special
    assessment commission’s choice of method, and with its conclusion
    their properties were substantially benefitted by the street
    improvement project, it is not our function to reweigh the evidence.
    The landowners and Serenkos have failed to meet their burden of
    demonstrating the commission acted arbitrarily, capriciously, or
    unreasonably.
    Serenko, 
    1999 ND 88
    , ¶ 23 (citations omitted).
    [¶18] We conclude Senske has not met his burden to show the assessments are
    invalid or that the Commission failed to comply with the statutory
    requirements under N.D.C.C. § 40-23-07.
    IV
    [¶19] Senske also argues a constitutional taking occurred because the special
    assessments are as much as the improved value of the parcels. Senske did not
    raise this argument in the district court. Issues or contentions not raised in the
    district court cannot be raised for the first time on appeal. Spratt v. MDU Res.
    6
    Grp., Inc., 
    2011 ND 94
    , ¶ 14, 
    797 N.W.2d 328
    . We will not consider whether a
    constitutional taking occurred for the first time on appeal.
    V
    [¶20] The order of the district court is affirmed.
    [¶21] Jon J. Jensen, C.J.
    Daniel J. Crothers
    Lisa Fair McEvers
    Jerod E. Tufte
    Douglas A. Bahr
    7