Daily Development for Tuesday, December 5, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

PUBLIC/PRIVATE DEVELOPMENT; ASSESSMENTS; CONSTITUTIONAL LAW: An assessment amounts to an unconstitutional taking only when it "clearly results in . . . flagrant and palpable inequality between the burden imposed and the benefits received."

Weber v. Kenai Penninsula Borough, 990 P.2d 611 (Alaska 1999).

Property owners petitioned to form a utility special assessment district ("district") to finance a gas line extension. The district then appropriated $220,000 to fund the project. Upon completion of the project, the pipeline was turned over to a privately owned gas utility. the district then assessed each property owner within the district $1330. Plaintiff was also assessed this amount.

Plaintiff argued that because his property received no special benefits, the assessment was a taking without just compensation. Plaintiff further produced evidence that his property value actually decreased after the gas line was installed.

The Alaska Supreme Court held that the Plaintiff presented no evidence that the district's decision to construct the gas line was motivated by considerations other than public interest. There was evidence that over 70% of the land owners approved of the creation of the district, and that there was a showing of an actual need for the new gas line. The court further held that a private entity benefitted from installing the line was of no consequence stating: "the test of whether a public purpose is being served does not depend on the . . . nature of the [entity] that will operate the . . . property, but upon the character of the use to which the property will be put."

The fact that the plaintiff chose not to benefit from the available gas supply, and thus received no benefit, was of no consequence. The gas was there to be had; and, in the view of the elected officials, was a desirable benefit. As to the landowner's reduction in value, the court concluded that there was no reason to believe that the property would have not reduced in value more had the pipeline not been completed.

Note: The complainant was a coal distributor whose business likely was significantly eroded by the publicly supported gas line competitor.

Comment: Although the case is very straightforward in its tone, acting as if this is "business as usual," the case is a good illustration as to how far American jurisprudence has come since the original state constitutional provisions prohibiting public benefits to private interests were first enacted.

These provisions were a direct response to the municipal bankruptcies and huge windfalls associated with the expansion of railroads into the West in the Nineteenth Century. Huge landholdings, lending of public credit, and often cash payments or bonuses were paid to railroad builders in order to bring the tracks to various western towns. In many cases, the railroads failed, competing lines rendered the tracks superfluous, or for other reasons the public benefits were not realized, and without the increased tax base the local municipalities suffered financial ruin.

Is there really any difference between the city's decision here to subsidize the gas line and a Nineteenth Century city's decision to assist a railroad construction? Obviously the level of financial commitment is less, and we have probably more of a political process involved, particularly when we use assessment proceedings. But, in the end, it appears that the citizen's remedy for these kinds of policies in modern times, lies in politics and not in law, notwithstanding the origins of the "public purpose" doctrine.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.

ABOUT DIRT:

DIRT is an Internet discussion group for serious real estate professionals. Message volume varies, but commonly runs 5 ‑ 10 messages per workday.

Daily Developments are posted every workday.

To subscribe to Dirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Subscribe Dirt [your name]

To cancel your subscription to Dirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Signoff Dirt

For information on other commands, send the message Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only commercial and general real estate matters but also focuses specifically upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named “Brokerdirt.” But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to Brokerdirt, it is not necessary also to subscribe to DIRT, as Brokerdirt carries all DIRT traffic in addition to the residential discussions.

To subscribe to Brokerdirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Subscribe Brokerdirt [your name]

To cancel your subscription to Brokerdirt, send an e-mail to:

To:	ListServ@listserv.umkc.edu
Subject:	[Does not matter]
Text in body of message	Signoff Brokerdirt

DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors.

DIRT has a WebPage at: http://cctr.umkc.edu/dept/dirt/