Legal Alerts

In Town of Tiburon v. Bonander , an appellate court determined that although properties in an assessment district formed to finance the undergrounding of overhead utilities (the "Project") would receive special benefits from the Project, the proposed assessments were nevertheless invalid because: (1) they were allocated based on cost considerations rather than on proportional special benefits; and (2) the properties in the district were required to pay for special benefits conferred upon parcels excluded from the district.  This case is important to public agencies for its analysis of what public improvements and services constitute special benefit, how enhancement of property value arising from public improvements that provide a direct benefit to property does not convert a special benefit into a general benefit, and how to proportionately allocate those special benefits among properties.

After forming an assessment district to pay for the Project, the Town of Tiburon determined that the Project would cost more than originally projected and supplemental assessments were necessary to cover the shortfall.  The engineer's report identified three special benefits that properties would receive from the Project - improved aesthetics, increased safety and improved service reliability.  The appellants claimed that: (1) the Project improvements did not provide special benefits to the properties assessed; (2) the assessments did not tie special benefit to specific properties; (3) enhanced property values are not special benefit; and (4) the assessments were not proportionately allocated.  The court rejected the first three claims, but agreed with the fourth claim.

The engineer's report created three benefit zones for which the construction costs were determined and separately apportioned.  The court found that the benefit zones were not based on differential benefits enjoyed within each zone, but were largely based on variances in the costs of placing the utilities underground in the zones.  This apportionment methodology resulted in properties that receive identical special benefits paying vastly different assessments.  The assessments, therefore, were not proportionately allocated according to relative special benefit.

Finally, the town excluded certain properties from the supplemental district even though they were determined to receive special benefits.  By excluding these properties from the district, the assessments on properties included in the district necessarily exceeded the proportional special benefit conferred on them. 

For more information regarding this decision and the impact it may have on your agency, please contact your BB&K Public Finance, Municipal Law, Special District, School Law or Environmental Law attorney, Kelly J. Salt or Warren B. Diven.

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