Special Assessments Turn a City Into a Vicious Predator
In the past, I have called special assessments corrupting and immoral. I think I was pulling punches. Conducting special assessments for routine maintenance is a predatory practice, the breaking of a social covenant that deeply undermines the credibility of a local government. Places that do it are callous, self-serving, and irresponsible. They demonstrate disdain for the citizens they are supposed to serve.
If that wasn’t bad enough, we can now add “hypocrites” to the list of adjectives describing the worst local governments.
At Strong Towns, we continually seek to elevate the role of local government. We believe that local government is the highest level of collaboration for strong citizens working to build a prosperous place. It is the most important level of government. We want cities to have more tools, more discretion, more capacity to do good. Our bottom-up revolution seeks to have local governments step up and address the many struggles of our day. We call on local governments to do more.
And we call on local governments to be better.
A special assessment is a charge assessed by a local government that requires a specific property to pay for some or all of the costs of a project. Special assessments are a powerful tool, but they are selectively used. Want your dirt road paved? You will almost certainly get a special assessment. Want to build an interchange or bridge? The random landowners made instant millionaires by such a massive public investment are rarely given a special assessment.
In other words, governments pick and choose when they use the special assessment tool. They tend to use it less often with wealthy and well-connected property owners and they are often prolific in using it with the less affluent and influential. There is a simple reason for that.
For the government to charge a special assessment, the property needs to receive a special benefit, something that all other property owners in the city are not receiving. There must be an increase in market value because of the improvements. It is the government’s responsibility to demonstrate that increase in value.
If the city goes out and paves the dirt road in front of your house and then asks you to pay a $10,000 charge as a special assessment, they have to be able to demonstrate that your property increased in value by $10,000 as a result of the paving project. If the state goes out and builds an interchange on the edge of town and adds $1 million to the adjacent landowner’s property value, it can require that landowner to pay $1 million for that interchange through a special assessment.
In the United States, we take the power to tax very seriously. The Equal Protection Clause of the United States Constitution, Amendment XIV, requires that no state shall “deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” This is echoed in my home state in the Uniformity Clause of the Minnesota Constitution (Article X, Section 1), which states that “Taxes shall be uniform upon the same class of subjects and shall be levied and collected for public purposes.” We can come up with different rates of taxation, but we can’t tax two otherwise equal people at different amounts.
This is why special assessments are a process. A due process, so to speak. If a city follows that process, it can treat someone differently. Again, from the Minnesota Constitution, the legislature can authorize “municipal corporations to levy and collect assessments for local improvements upon property benefited thereby without regard to cash valuation.”
The city can charge you as much as they want for a special assessment, but not more than the property increases in value. Charging an assessment greater than the property increases in value constitutes an unconstitutional taking of property under the Minnesota and United States Constitutions. And the city has to actually go out and measure the value — they need to be able to prove that there was an increase — or the method used to determine the assessments will be found to be arbitrary and capricious and based upon an erroneous theory of law.
I’m going to stop here and let you in on what is going on with all the bold fonts. Everything in bold above is taken from a district court filing made by my hometown, the city of Brainerd (MN), in its appeal of a special assessment made by the neighboring city of Baxter. In this case, the city of Baxter was trying to charge the city of Brainerd nearly $60,000 for a project that Brainerd claimed didn’t increase their property value. Brainerd appealed.
The key to understanding my hatred for special assessments is understanding why this was appealed to district court. In a special assessment process, you can ask the city “pretty please” to lower your assessment, but if they refuse — and they often feel compelled to refuse to avoid opening the floodgates — then the only place to appeal is district court.
Do you understand now why the wealthy and well-connected property owners are rarely assessed for massive projects while the less affluent and influential are nickel-and-dimed for everything that can be run through a special assessment hearing?
In my early years as a municipal engineer, I was taught (received common wisdom) that the way you do a special assessment is to come up with a number high enough to matter but low enough to make an appeal to district court unlikely. Forget the written assessment policy. If appealing to district court was going to cost $6,000 for an attorney and fees, then an assessment amount that was $6,000 or less was very unlikely to be appealed. Something higher became a roll of the dice based on a gut feeling of the likelihood of success.
This feels kind of gross, but it’s really just project proponents being sloppy and self-serving when it comes to new construction. With new construction, the obsession everyone has is getting the project done. Identifying different funding streams, with special assessments being one, was just good business. (Note: I say “sloppy and self-serving” because, of course, nobody was ever worried about the public’s return on investment or whether the community could afford to maintain things in the future. They just want to do a project.)
Where the special assessment mindset moves beyond gross, where it becomes disgustingly predatory, is when it extends to routine maintenance.
With routine maintenance, you rarely have an increase in property value. In constitutional terms, there is no benefit to justify the special assessment — they are merely maintaining what is already there. Yet, way too often they do a special assessment anyway. Why?
It’s simple: because they can.
And because your cost to appeal it is more than you can justify spending for a roll of the dice in district court, especially if you lack the knowledge, connections or resources to go the district-court route anyway.
I watch my city recklessly extend roads, streets and public utilities all over the countryside in the pursuit of what they call growth. All of these are horrible investments; all of them cost me and my neighbors more in the long run than they return in increased taxes and fees. This is money, time and energy that should be spent doing other things, not only projects that don’t make us poorer but perhaps ones that improve the overall quality of life in one of Minnesota’s poorest cities.
Instead, when we do take the time to go in and do a routine maintenance project in one of our core neighborhoods, you can count on it coming with a special assessment. Yes, we’ll finally fix this overengineered, dangerous stroad you live on, the one we let fall apart because we don’t have money to fix it and are too spread out and distracted to do so anyway. Here’s the extra bill that will be added to your taxes for the next dozen years. Be grateful, peasant, because we could have let it completely fail.
I hate this. I hate when big cities do this and I hate when small towns do this. I hate what it says about us, how we prefer to tell a hundred small lies to our friends and neighbors than to have the mature conversation we need to have. I hate how it perverts the discussion within city hall, twisting professionals from servants to predators and our elected officials from leaders to exploiters. I hate how we wrap our ineptitude in the language of public service and doing what is right when we know it's not the truth.
Stop assessing the poor for maintenance. Start assessing the land speculator for the new interchange. To do otherwise is not just corrupt, it is deeply immoral.
At least I know that my city understands this. The next time they act like hypocrites and assess maintenance without providing an increase in benefit, my neighbors can just copy and paste the district court filing they prepared when they fought their unjust assessment.
It’s time to demand better from our local governments. Join the movement by becoming a member of Strong Towns today.
Charles Marohn—known as “Chuck” to friends and colleagues—is the founder and president of Strong Towns. He is a land use planner and civil engineer with decades of experience. He holds a bachelor’s degree in civil engineering and a Master of Urban and Regional Planning, both from the University of Minnesota.
Marohn is the author of Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity (Wiley, 2019) and Confessions of a Recovering Engineer: Transportation for a Strong Town (Wiley 2021). He hosts the Strong Towns Podcast and is a primary writer for Strong Towns’ web content. He has presented Strong Towns concepts in hundreds of cities and towns across North America.