§19.5 PARTICULAR ISSUES IN SPECIAL BENEFIT
This section addresses principles applied to determining the special benefit and assessments against benefited property.
(1) Determinations of highest and best use
Even though there are significant differences between eminent domain and special assessment proceedings, it may be appropriate to cite principles established in eminent domain cases, particularly on LID valuation issues. In re Jackson St., 62 Wash. 432, 113 P. 1112 (1911). However, eminent domain law should not be superimposed on special assessment law. Doolittle v. City of Everett, 114 Wn.2d 88, 96, 786 P.2d 253 (1990). As a result, condemnation concepts of value must be applied cautiously to assessment proceedings.
For example, potential highest and best use in an assessment proceeding is premised upon a different foundation than in a condemnation proceeding. In condemnation, an owner may be compensated for the loss of a reasonable, foreseeable future use to which the property can be adapted. See State v. Rowley, 74 Wn.2d 328, 334, 444 P.2d 695 (1968); WPI 150.08, .09. In contrast, an LID charge based on a theoretical future use would force the owner to pay on the basis of what an expert says the owner should do with the property. Doolittle v. City of Everett, 114 Wn.2d at 105. For this reason, the concept of highest and best use must be applied more judiciously in the context of special assessments.
In particular, LID assessments are unlike eminent domain proceedings where highest and best use for contiguous lots in unitary ownership will generally be considered as one parcel for determination of damages regardless of separate or different uses of the individual lots. LID assessments, in contrast, may require analysis based on present uses:
If separate parcels are combined in disregard of present use, "the increase in fair market value will not be attributable solely to the local improvements. Instead, the increase in value will be derived from the local improvements and the combination of the lots, with the owner's actual use disregarded. This has not been the measure of special benefits approved by this court, and it is inconsistent with the principle that the assessment be based on the special benefits resulting from the local improvements.
Bellevue Plaza, Inc. v. City of Bellevue, 121 Wn.2d 397, 412, 851 P.2d 662 (1993) (citing Doolittle v. City of Everett, 114 Wn.2d at 103-04).
(2) Parsing the special benefits test
The law requires a public improvement to confer a special benefit on the property to be assessed. To be considered "special," these benefits must be substantially more intense to the specific property subject to assessment than to the rest of the municipality. Heavens v. King County Rural Library Dist., 66 Wn.2d 558, 563, 404 P.2d 453 (1965).
It is fundamental to assessment proceedings that property not benefited by local improvements may not be assessed, and special assessments for special benefits cannot exceed the amount of the special benefit. In re Schmitz, 44 Wn.2d 429, 268 P.2d 436 (1954). The reason for this requirement is that the assessment is regarded as compensation paid by the property owner for the improved value of the land. Heavens v. King County Rural Library Dist., 66 Wn.2d at 564. To allow otherwise may result in a taking of property without just compensation in violation of the Ninth Amendment to the Washington Constitution and the Fifth Amendment to the U.S. Constitution. In re Jones, 52 Wn.2d 143, 146, 324 P.2d 259 (1958). The courts have recognized that exact equality of assessment is not always attainable and that some excess of cost over special benefits may be allowed if the overage is not material. Hargreaves v. Mukilteo Water Dist., 43 Wn.2d 326, 332, 261 P.2d 122 (1953).
(a) Method of calculation
In theory, the amount of special benefit is easily defined. As stated in the definitive commentary regarding Washington law on special assessment practices and procedures:
In terms of a formula, the amount of special benefit accruing to property by reason of a local improvement is the difference between the fair market value of the property immediately after the special benefits have accrued, and the fair market value of the property before the benefits have accrued. "Fair market value" is the amount of money which a purchaser willing, but not obligated, to buy would pay an owner willing, but not obligated, to sell, taking into consideration all uses to which the property is adapted or might reasonably be applied.
Philip A. Trautman, Assessments in Washington, 40 WASH. L. REV. 100, 118 (1965).
Although the theory underlying the measurement of special benefits is easy to state, accurately performing these calculations can be difficult. This is so because the process of deriving individual assessments actually combines the municipality's need to...
