Senske Rentals, LLC v. City of Grand Forks

1

2024 ND 172

Senske Rentals, LLC, Petitioner and Appellant v. City of Grand Forks, Respondent and Appellee

No. 20230397

Supreme Court of North Dakota

September 12, 2024

Appeal from the District Court of Grand Forks County, Northeast Central Judicial District, the Honorable Lonnie Olson, Judge.

Daniel M. Baczynski (argued), West Fargo, ND, and DeWayne A Johnston (on brief), Grand Forks, ND, for petitioner and appellant.

Jenna R. Bergman (argued), Minneapolis, MN, and Corey J. Quinton (on brief), Fargo, ND, for respondent and appellee.

Opinion of the Court by Tufte, Justice, in which Chief Justice Jensen and Justice Bahr joined. Justice McEvers filed an opinion concurring in part and dissenting in part, in which Justice Crothers joined.

OPINION

Tufte Justice

[¶1] Senske Rentals appeals a district court order affirming a City of Grand Forks decision to specially assess property for street improvements. The central issue in this appeal is whether the City's special assessment commission properly determined the benefits accruing to Senske's property as required by N.D.C.C. § 40-23-07. We conclude N.D.C.C § 40-23-07 requires a determination of special benefits independent of, and without regard to, the cost of the improvement project, and Senske has shown the City did not make such a determination. We reverse the district court order and remand to the City.

I

[¶2] Senske owns property in a subdivision affected by a City of Grand Forks improvement project to pave gravel roads and install street lighting. In January 2021, the city council approved a resolution of necessity creating a special assessment district for the project and referred the project to the City's special assessment commission. The City engineers prepared an estimate for the cost of the project, and notice was provided to affected property owners. The commission discussed the matter and found "[t]he benefits received from the project are for access, both for property and fire protection, dust suppression, pedestrian accommodations and provides some drainage control and to provide lighting for pedestrian safety." The commission then voted to "assign benefits" to the affected property on the basis of frontage, sideage, and square footage.

[¶3] Property owners were notified of the potential assessments. Public input meetings were held in February and March of 2021 during which property owners expressed concerns regarding the assessments. The city council reviewed and approved amendments to the project and increased the City's share of the project. The City opened construction bids and approved the low bid of $3.8 million. Notice of the special assessments was provided to the affected property owners via letter in August 2022. At a public meeting on September 6, 2022, the city council passed a resolution directing the commission to levy special assessments in the amount of approximately $2.5 million on the property in the special assessment district.

[¶4] The commission held a public hearing on September 29, 2022. Jim Senske, on behalf of Senske Rentals, protested the proposed assessments, contesting the assessments as excessive. The commission ultimately approved the special assessments. Through counsel, Senske filed a letter of protest and appealed the special assessments to the city council.

[¶5] On October 24, 2022, the city council held a hearing on Senske's appeal. Senke argued that the policy did not fairly allocate costs and that the commission did not determine the special benefit as required by law. Senske agreed the City provided "a very good cost analysis" but argued "when I look at legislative dictate that says the special assessment commission needs to look at a project and determine a benefit, I don't see that as a cost analysis." He asked the council to send the matter "back to the special assessment commission and say okay put a number on the benefit." Senske explained he appeared at the commission meeting to discuss it and they said "you'll have to go talk to the city engineering-we don't make any of those determinations." Mr. Senske emphasized his argument was the determination of benefit: "I don't see that it is something that should first be dependent on cost." He requested the city council "not accept special assessment commission's failure to do the analysis required by law separate from the money."

[¶6] At the city council hearing, Senske was asked if he agreed the special assessment commission had followed the policy, to which he said, "We don't know that because they simply said . . . city council sent us the number. We're taking that number and moving forward. There wasn't any analysis done; there wasn't a benefit found." Referring to our decision in Bateman v. City of Grand Forks, 2008 ND 72, 747 N.W.2d 117, Senske explained that a city may consider a variety of possibilities for determining benefit and what it would be. After Senske concluded, a council member asked: "Don't we always special assess based upon . . . the financial cost of the project per square foot? That's the way we do it; that's the way we've always done it? Correct?" The City Attorney responded, "I believe that's correct."

[¶7] The City's attorney then provided an explanation of the statutory requirements for special assessments, the City's adopted policy for assessments and benefits, how the policy was followed for this project, and case law relating to special assessments. The city council, concluding the commission followed the City's policy and its actions were not arbitrary, capricious, or unreasonable, then approved the commission's findings for the project. The city council denied Senske's appeal and voted to approve the recommendations of the commission, certified the special assessments for the project, and approved the findings for the project.

[¶8] On November 23, 2022, Senske appealed to the district court, arguing the commission erred in its decision and the special assessment amounted to an unconstitutional taking. Senske also moved that additional evidence be submitted for the appeal and later moved to strike from the record a "Benefit and Assessment" chart. The court granted Senske's motion to allow the record to be supplemented with an electronic recording of the October 24, 2022 appeal hearing, and denied his other motions. On October 13, 2023, the court affirmed the city council's decision to approve the commission's determination on the special assessments for the project. Senske appeals.

II

[¶9] Senske argues the district court erred in denying his motion to strike the "Benefit and Assessment" chart from the record on appeal. Senske also appeals the court's denial of his untimely motion to supplement the record. The Benefit and Assessment chart is a critical document in this appeal because it contains the commission's determination of the amount of benefits to each lot. Because it is unnecessary to our decision, we need not consider and do not address the district court's denial of Senske's motion to supplement the record.

[¶10] Senske argues the Benefit and Assessment chart should be excluded from the record on appeal because it violates N.D.C.C. § 28-32-44, which limits the record on appeal from an administrative order. Senske's argument is misplaced because the record on appeal is not governed by N.D.C.C. § 28-32-44, which controls the certified record for administrative appeals, but by N.D.C.C. § 28-34-01 which governs the record for appeals from decisions of a local governing body. Subsection 28-34-01(2), N.D.C.C., provides:

2. The appellee shall prepare and file a single copy of the record on appeal with the court. Within thirty days, or such longer time as the court by order may direct, after the notice of appeal has been filed in the court, and after the deposit by the appellant of the estimated cost of a transcript of the evidence, the local governing body shall prepare and file in the office of the clerk of the court in which the appeal is pending the original or a certified copy of the entire proceedings before the local governing body, or such abstract of the record as may be agreed upon and stipulated by the parties, including the pleadings, notices, transcripts of all testimony taken, exhibits, reports or memoranda, exceptions or objections, briefs, findings of fact, proposed findings of fact submitted to the local governing body, and the decision of the local governing body in the proceedings. If the notice of appeal specifies that no exception or objection is made to the local governing body's findings of fact, and that the appeal is concerned only with the local governing body's conclusions based on the facts found by it, the evidence submitted at the hearing before the local governing body must be omitted from the record filed in the court. The court may permit amendments or additions to the record to complete the record.

[¶11] Although the district court analyzed the issue under N.D.C.C. § 28-32-44, under N.D.C.C. § 28-34-01(2), the court also has discretion whether to allow amendments or additions to the record. Compare N.D.C.C. § 28-32-44(8) ("The court may permit amendments or additions to the record filed by the administrative agency in order to complete the record.") with N.D.C.C. § 28-3401(2) ("The court may permit amendments or additions to the record to complete the record."). The question under both provisions is whether the court abused its discretion in declining to strike the Benefit and Assessment chart from the record.

[¶12] As required under N.D.C.C. § 28-34-01(2), the city council filed the record on appeal in December 2022. Section 28-34-01(2), N.D.C.C., permits amendments to the record. The district court found Senske's motion to strike the Benefit and Assessment document...