Special Benefits: One Phrase, Two Meanings

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Special benefits under the law are addressed in two contexts – actions involving just compensation under the eminent domain statutes (Wis. Stat. Ch. 32) and actions involving special assessments under Wis. Stat. Ch. 66.

Under eminent domain law, if the landowner’s property has received a “special benefit” as a result of the public improvement, the amount of the special benefit offsets the amount of just compensation the condemnor must pay. Separately, municipalities may levy a special assessment on property benefitted by municipal improvements pursuant to Wis. Stat. § 66.0701 et seq., but the value of the special benefit cannot be recovered twice.

While both statutes refer to “special benefits,” that term is not defined. Furthermore, the statutes are mutually exclusive, as each statute has its own exclusive remedies for contesting a special benefit. This exclusivity was explained in CED Props., LLC v. City of Oshkosh, 2017 Wisc. App. LEXIS 31 (Wis. Ct. App. Jan. 18, 2017) (not recommended for publication).

CED is the owner of property which was affected by the reconstruction of an intersection by the city of Oshkosh. The reconstruction included “the construction of a roundabout to replace traffic signals; concrete paving; asphalt paving; sanitary sewer laterals (new and relaid); storm sewer main and laterals; sidewalk replacement and repair; concrete driveway approaches; and streetscaping/landscaping improvements.”

The City sought to assess a portion of the $4,060,000 cost of the project to adjoining landowners, which included CED. The City also used its power of eminent domain to acquire a portion of CED’s property for the project. The parties agreed on the amount of just compensation due to CED for the taking, but CED challenged the special assessment.

Initially CED’s challenge of the special assessment was dismissed as ineffective and untimely, which dismissal was upheld on appeal by the Court of Appeals. However, the Wisconsin Supreme Court reversed the Court of Appeals’ decision, remanding the matter to the circuit court with direction to the circuit court to dismiss the assessment, due to the City’s failure to comply with statutory assessment requirements.

Subsequently the City reopened the matter and once again specially assessed CED. For a second time CED contested the special assessment, and the circuit court again dismissed CED’s challenge. CED then appealed the circuit court’s decision to the Court of Appeals, which upheld the circuit court’s decision.

One of the two issues on appeal was whether the City was precluded from seeking a special assessment because it failed to allege special benefits in the condemnation matter. CED argued that “special benefits” under the eminent domain procedure (Wis. Stat. § 32.09(3)) and “special benefits” under the assessment procedure (Wis. Stat. § 66.0703) are indistinguishable. The City argued that special benefits under eminent domain law and special benefits under special assessment law are two different things, and the Court agreed with the City. The Court stated that eminent domain and special assessments are distinct proceedings with different legal analyses, and while special benefits under both may be similar in definition, they are in fact separate and different considerations under distinct and different governmental actions.

The Court held that the City’s failure to claim special benefits in the eminent domain action did not foreclose the City from levying special assessments against CED under its police power, and, in fact, that special benefits do not even need to be present in an eminent domain action in order for a city to allege special benefits under the assessment statutes. The converse is also true – a failure to specially assess a property for special benefits does not foreclose a claim of special benefits in an eminent domain action.

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