While special assessments are purposed for funding improvements that benefit property owners, disputes may arise over whether the costs are justified and equitably distributed. Special assessments are imposed by the municipalities for a specific purpose or local improvement and are distributed according to the benefit received by residents. Ashley Ann Arbor, LLC v. Pittsfield Charter Tp., 299 Mich.App. 138 (2012). While likened to a tax, a special assessment differs as it “is imposed to defray the costs of specific local improvements, rather than to raise revenue for general governmental purposes.” Kadzban v. City of Grandville, 442 Mich. 495, 500 (1993)
Recently, Michigan’s Court of Appeals struck down a challenge brought by Heron Cove Association and members against Midland County Board of Commissioners, Gladwin County Board of Commissioners and Four Lakes Task Force. The property owners challenged a special assessment imposed by the counties to conduct maintenance and improvements to four inland lakes. The costs in completing this project on the lakes totaled approximately $399,700,00. The Task Force reportedly obtained over $200,000,000 in federal and state grants. They assessed that approximately $217,000,000 or 55% in costs would therefore be covered by special assessments levied on property owners in Four Lakes Special Assessment District.[1]
Similar to land use and zoning appeals, challenging a special assessment begins at local hearings where objections can be made in writing to the relevant municipal board. Should a special assessment be confirmed by the board, those objecting can dispute it in court. MCL § 123.754.
Michigan law generally presumes that municipal decisions regarding special assessments are valid. To be determined valid, special assessments must meet two legal requirements: (1) the improvement subject to the special assessment must confer a benefit on the assessed property and not just the community as a whole and (2) the amount of the special assessment must be reasonably proportionate to the benefit derived from the improvement.” Michigan’s Adventure, Inc. v. Dalton Twp., 290 Mich.App. 328, 335 (2010). The very idea special assessments are justified is premised on values of properties in specified assessment districts will be enhanced from the improvements made. It follows that the validity of these assessments hinges on the benefits conferred.
Accordingly, finding an increased market value as a result of the improvements would constitute as a benefit conferred from the special assessments. The Michigan Supreme Court articulated when analyzing the validity of a special assessment, courts are not “to determine whether there is a ‘rigid dollar-for-dollar balance between the amount of the special assessment and the amount of the benefit…” Kadzban, 442 Mich. at 502, (quoting, Dixon Rd. Group v. Novi, 426 Mich. 390, 395 (1986)). “Rather, a special assessment will be declared invalid only when the party challenging the assessment demonstrates that ‘there is a substantial or unreasonable disproportionality between the amount assessed and the value which accrues to the land as a result of the improvements.” Id. at 502.
For instance, in an earlier case, N H Motel Enterprises, Inc. v. City of Troy, 205 Mich.App. 459 (1994), the Court of Appeals found the City’s special assessment on a hotel for widening, extending, and connecting roads in order to change traffic patterns, to be invalid. The hotel presented credible evidence that its property decreased in value following such assessment, and its earnings significantly diminished due to a new hotel opening nearby on previously inaccessible property along one of the newly built streets. Id. at 463-464. By contrast, in the recent decision mentioned above, involving special assessments for improvements to inland lakes, the court there found the property owners failed to demonstrate there was a substantial or unreasonable disproportionality between the amount assessed and value which accrued to the land as a result of the improvements to the four lakes.
Everything considered, special assessments can be a useful tool in Michigan communities for funding local improvements. However, they must adhere to legal standards or be prepared for legal challenges. Therefore, property owners and developers should review calculated assessments carefully and understand what rights they have to be prepared to dispute such assessments when appropriate.
Should you have any questions about the impact of special assessments to property or any other land use matters in Michigan, contact the law office of Dalton & Tomich, PLC for experienced assistance navigating these complex issues.
[1] See, Heron Cove Association v. Midland County Board of Commissioners, No. 371659 (Mich. Ct. App., Jan. 6, 2025).
