South Dakota municipalities rely on their statutory authority to fund improvements like streets, curb and gutter, sewer and water infrastructure, and sidewalks though special assessments. These assessments charge the cost of part or all of some improvements to the property owners within the municipality who are benefitted by them. When the South Dakota Supreme Court affirmed a recent circuit court ruling that the City of Pierre's special assessment for replacement curb and gutter was an unconstitutional taking of private property, it upended municipalities' longstanding special assessment procedures. Hubbard left municipalities unsure how to levy special assessments within the parameters of the law. As a result, the South Dakota Municipal League successfully proposed, and the Legislature passed, a complete rewrite of special assessment laws during the 2012 legislative session. This new legislation alone, however, will not remedy municipalities 'frustrations. The solution instead lies in a close examination of the facts and procedure of Hubbard and of the constitutional principles governing special assessments. Hubbard leaves several important questions unaddressed, but it does not hold that municipalities are statutorily or constitutionally incapable of levying sound special assessments for improvements, including replacement curb and gutter.
Almost seventy percent (1) of South Dakota residents live within one of the state's 310 incorporated municipalities. (2) These municipalities serve their residents by administering the local affairs of the community (3) and by providing improvements and services. (4) "People want good schools, parks, bands, libraries, golf courses, swimming pools, water and sewer systems, electrical service, police protection, carefully tended streets and all of the other services that the city renders to its people." (5) But all of these services and improvements cost money,, and "they all cost much more money today than they did a few years ago." (6) Instead of requiring municipalities to fund all improvements through general taxation or user fees, the South Dakota Legislature authorizes municipalities to recover the costs of some improvements from nearby property owners through a process known as special assessment. (7) As political subdivisions of the state, municipalities possess only those powers, including the power to levy and collect special assessments, conferred on them by the legislature. (8) But, unlike many other areas of municipal law, constitutional principles and not merely statutory restrictions govern special assessments. (9) These constitutional principles and municipalities' statutory authority to levy special assessments are not consistently in sync; therefore, municipalities' practice of turning to South Dakota law for authority (as they must) (10) does not alone guarantee that their special assessments will pass constitutional muster. (11)
Hubbard v. City of Pierre (12) is South Dakota's most recent precedent in a sparse history of special assessment cases, in which the South Dakota Supreme Court affirmed a circuit court ruling that a special assessment by the City of Pierre was unconstitutional. (13) This note supports the results of the case as presented both at trial and on appeal but argues that minor deviations in procedure by the City of Pierre could have saved at least part of its special assessment. (14) Because a primer on municipal government and special assessments is essential to fully understanding the facts and procedure in Hubbard, this note will first briefly survey the structure of municipal government and finance. (15) Next, this note will explain the nature of special assessments, their statutory authority, constitutional principles, and historical setting. (16) Finally, this note will examine Hubbard and House Bill 1156, recently enacted in response to Hubbard, and analyze what they mean (and do not mean) for the future of municipal special assessments in South Dakota. …