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Weber v. Kenai Peninsula Borough (10/15/99) sp-5191
Weber v. Kenai Peninsula Borough (10/15/99) sp-5191
Notice: This opinion is subject to correction before publication in the
Pacific Reporter. Readers are requested to bring errors to the attention
of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska
99501, phone (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
ROBERT M. WEBER, )
) Supreme Court No. S-8404
Appellant, )
) Superior Court No.
v. ) 3KN-94-00242 CI
)
KENAI PENINSULA BOROUGH, ) O P I N I O N
)
Appellee. ) [No. 5191 - October 15, 1999]
)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kenai,
Jonathan H. Link, Judge.
Appearances: Robert M. Weber, pro se,
Wasilla. Holly B. Montague, Assistant Borough
Attorney, Kenai Peninsula Borough, Soldotna,
for Appellee.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
BRYNER, Justice.
I. INTRODUCTION
Robert Weber appeals from a superior court order
upholding the Kenai Peninsula Borough's decision to finance a
privately owned gas-line extension by creating a utility special
assessment district. Weber raises constitutional challenges to the
assessment district's creation and to his property's mandatory
inclusion in it. Because the borough created the assessment
district for the purpose of financing a gas line that provides
public benefits and because the construction specially benefitted
Weber's property, we hold that the borough acted constitutionally.
Accordingly, we affirm.
II. FACTS AND PROCEEDINGS
In May 1993 property owners in the East Scout Lake Loop
area of the Kenai Peninsula Borough (the borough) petitioned to
form a utility special assessment district to finance a gas line
extension. After a public hearing on the petition the borough
assembly established the East Scout Lake Loop Utility Special
Assessment District (assessment district) to finance the gas line.
At another public hearing, the borough appropriated $220,000 to
fund the project. The borough hired Enstar, a public utility that
is a privately-owned, for-profit corporation, to construct the gas
line. The borough's agreement with Enstar provided that Enstar
would assume ownership of the gas line. The borough then
authorized Enstar to proceed with construction. Upon completion of
the gas line in 1993, the borough confirmed the assessment roll,
established the funding mechanism for the assessment district, and
set $1,330 as the amount to be paid by each property owner within
the district.
The approved assessment roll included Weber's property,
which was then owned by Weber's predecessor in interest, Karen
Mills. Mills appealed the borough's decision to the superior
court, which affirmed the assessment. In the interim, Weber had
replaced Mills as the property's owner.
Weber appeals the superior court's decision.
III. DISCUSSION
A. Standard of Review
Because the superior court acted as an intermediate court
of appeal, we independently review the borough's decision.1 We
apply our independent judgment to constitutional issues.2 But when
a question of law involves the borough's expertise, we review the
decision under the rational basis standard.3 Likewise, we apply
the rational basis standard when the borough's application of the
law to the facts implicates administrative expertise or involves
fundamental policy determinations.4 Under this standard, we defer
to the borough's determination as long as it is supported by the
facts and has a reasonable basis in law.5
B. The Borough's Creation of a Special Assessment District
to Finance the Construction of a Gas Line Was for a
"Public Purpose" as Required by Article IX, Section 6 of
the Alaska Constitution.
Article IX, section 6 of the Alaska Constitution
provides, "No tax shall be levied, or appropriation of public money
made, or public property transferred, nor shall the public credit
be used, except for a public purpose." In the superior court,
Weber argued that the borough's creation of the special assessment
district violated this provision because it benefitted only Enstar
and served no public purpose. Relying primarily on our decision in
Suber v. Alaska State Bond Committee,6 the superior court ruled
that the creation of the assessment district was valid because the
gas line served a legitimate public purpose. Weber contends that
the superior court misinterpreted Suber.
In Suber we considered the constitutionality of a
mortgage adjustment plan intended to aid mortgagors and mortgagees
of one- to four-family dwellings that had been damaged by the
March 27, 1964, earthquake.7 There we upheld the state's program
on the basis that the "paramount purpose of the Program is the
relief of those saddled with economic hardship. Any private
advantage, such as to those holding mortgages on the damaged or
destroyed homes, is incidental and subordinate."8
Weber argues that Suber is inapplicable to this case
because the private benefit to Enstar was "the sole benefit" -- and
not merely an incident -- of the utility assessment.9 He relies
exclusively on the fact that Enstar not only received all
assessment proceeds, but owns and operates the gas line. Weber
emphasizes that the borough created the assessment district
specifically to pay Enstar for its costs in building the gas line.
But these assertions do not compel the conclusion that the gas line
was constructed for a purely private purpose or that Enstar alone
benefitted from the special assessment.
We presume that a municipal legislative assessment
decision is valid.10 We thus assume that the creation of the
assessment district is constitutional unless Weber proves
otherwise. As we held in City of Wasilla v. Wilsonoff,11 we will
reverse a special assessment decision only upon proof of "fraud or
conduct so arbitrary as to be the equivalent of fraud, or [where a
decision is] so manifestly arbitrary and unreasonable as to be
palpably unjust and oppressive."12
Weber has presented no evidence that the borough's
decision to construct the gas line was motivated by considerations
other than the public interest. In fact, the borough did not
initiate the formation of the assessment district; rather, the
landowners -- by over a seventy-percent vote -- petitioned the
borough to create the assessment district. Weber has not shown
that the borough created the assessment district to assist Enstar.
To the contrary, the record shows that the borough based its
decision on the public's stated need for a new gas line.
The fact that Enstar is a private company is irrelevant
to whether the gas line serves a public purpose. In Milheim v.
Moffat Tunnel Improvement District,13 the United States Supreme
Court held that "the test of the public character of an improvement
is the use to which it is to be put, not the person by whom it is
to be operated."14 And we similarly held in Lien v. City of
Ketchikan 15 that "[t]he test of whether a public purpose is being
served does not depend on the . . . nature of the [entity] that
will operate the . . . property, but upon the character of the use
to which the property will be put."16
In Lien we held that the City of Ketchikan's funding of
the construction of a community hospital served a public purpose.17
We concluded that the city did not alter that purpose simply by
turning the hospital's operation over to a religious order.18
Specifically, we recognized that "[t]he moneys used to construct
the Ketchikan hospital were spent for a public purpose, since a
community hospital serves the general welfare. That purpose does
not become non-public when the hospital is turned over to a
[private organization] for operation, rather than being operated by
the city itself."19 Though Lien involved a non-profit religious
order rather than a for-profit corporation, its reasoning applies
here.
Lien thus establishes that Enstar's status as a private
corporation and its ownership of the gas line do not foreclose a
finding that the gas line will provide a public service. The issue
turns not on who is being paid but on what will be provided.20 And
there are no rigid categories establishing public versus private
purposes; in each case, the analysis of public purpose must be made
within the context of specific facts.21
Because the existence of a public purpose turns on a
case-specific factual determination involving agency expertise, we
must defer to the borough's view of the public good.22 We will
overturn the borough's decision only if it is "arbitrary or without
any reasonable basis in fact or is so unreasonable as to transgress
the limitations of our constitution such that it is plainly
foolhardy or without any discernible benefit."23
Under this deferential standard, we have accepted a broad
range of purposes as legitimate public purposes.24 Here, it was not
"plainly foolhardy"25 for the borough to conclude that Enstar's
natural gas line will provide a "discernible benefit."26 To the
contrary, the record reveals that the borough reasonably could have
concluded that the gas line would provide public benefits. The
construction of the gas line enables any property owner within the
assessment district to access natural gas through Enstar. As the
superior court observed, gas line proponents cited several benefits
of having a natural gas line, including comfort and safety, the
economy of natural gas, as well as increased property values.
Granted, the borough never made an express determination that it
was establishing the assessment district for the public good. But
neither the public purpose clause nor our case law requires that it
do so. Weber's contention that only Enstar benefitted from the
improvement is no more than "mere conjecture,"27 and we reject it
accordingly.
We thus conclude that the borough's creation of the
assessment district does not violate the public purpose clause of
the Alaska Constitution.
C. The Gas-Line Construction Specially Benefitted Weber's
Property.
Weber next argues that because his property received no
special benefits, the assessment was a taking without just
compensation in violation of the due process clauses of the United
States and Alaska constitutions. He relies on the 1898 case of
Village of Norwood v. Baker,28 in which the United States Supreme
Court held that property in a special assessment district must be
specially benefitted by the subject of the assessment.29 Alaska has
adopted this special benefit requirement.30 But Weber fails to show
that his land was not benefitted by the gas line.
Proponents of the gas line wrote to the borough about the
benefits of having access to the gas line. These benefits included
having a safe,31 convenient,32 reliable,33 environmentally clean, and
economical source of fuel. Weber, in contrast, submitted only a
tax valuation of his property indicating a net decrease in the
property's value since the gas line's construction. He offered as
evidence a "Public Information" printout indicating that the
borough appraised his property at a value that decreased gradually
from $37,800 to $32,900 for the years 1993 through 1996 but then
increased in 1996 to an amount that was still less than its pre-
gas-line value.
This evidence fails to overcome Weber's heavy burden of
proof. In Kissane v. City of Anchorage 34 the court held that an
assessment amounts to an unconstitutional taking only when it
"clearly results in . . . flagrant and palpable inequality between
the burden imposed and benefits received . . . ."35 Evidence that
Weber's property suffered a decrease in value is irrelevant to his
takings argument absent a showing that the decrease is causally
related to the existence of the gas line. Weber provides no
evidence of any causal connection.
In addition to the tax valuation, Weber also argues that
he personally does not want to access the natural gas and thus will
reap no benefit from the project. But the question of benefit
applies only to the property itself.36 Weber's personal gain or
loss is irrelevant to the takings issue; it is enough that he is
able to access the gas line and enjoy its benefits if he so
wishes.37 Accordingly, we hold that Weber has failed to establish
an unconstitutional taking.38
IV. CONCLUSION
We AFFIRM the superior court's judgment.
Footnotes:
1 See CH Kelly Trust v. Municipality of Anchorage, Bd. of
Equalization, 909 P.2d 1381, 1382 (Alaska 1996).
2 See Walker v. Walker, 960 P.2d 620, 622 (Alaska 1998).
3 See Rose v. Commercial Fisheries Entry Comm'n, 647 P.2d
154, 161 (Alaska 1982).
4 See Hammer v. City of Fairbanks, 953 P.2d 500, 504
(Alaska 1998).
5 See Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co.,
746 P.2d 896, 903 (Alaska 1987).
6 414 P.2d 546 (Alaska 1966).
7 See id. at 548-51.
8 Id. at 552.
9 Weber also disputes the lower court's characterization of
the assessment as a lien on the property rather than a charge to
the landowner by noting that if the landowner does not pay the
special assessment the borough can foreclose on the property. This
fact is irrelevant to whether a public purpose is served by the
borough's financing of a gas line. Nor is the fact that Weber owns
a coal business, which may vie with the natural gas utility for
business, relevant to the public purpose query.
10 See Property Owners Ass'n of the Highland Subdivision a
Portion of USMS 769, Ketchikan, Alaska v. City of Ketchikan, 781
P.2d 567, 572 (Alaska 1989); City of Wasilla v. Wilsonoff, 698 P.2d
656, 657 (Alaska 1985).
11 698 P.2d 656 (Alaska 1985).
12 Id. at 658 (quoting Kissane v. City of Anchorage, 159 F.
Supp. 733, 737 (D. Alaska 1958)); accord Property Owners, 781 P.2d
at 573.
13 262 U.S. 710 (1923).
14 Id. at 719.
15 383 P.2d 721 (Alaska 1963).
16 Id. at 722.
17 Id.
18 Id.
19 Id.
20 See id. at 722.
21 DeArmond v. Alaska State Dev. Corp., 376 P.2d 717, 721
(Alaska 1962)("Whether a public purpose is being served must be
decided as each case arises and in the light of the particular
facts and circumstances of each case."); accord Wright v. City of
Palmer, 468 P.2d 326, 330 (Alaska 1970); Walker v. Alaska State
Mortgage Ass'n, 416 P.2d 245, 251 (Alaska 1966).
22 See Wright, 468 P.2d at 331; accord Comtec, Inc. v.
Municipality of Anchorage, 710 P.2d 1004, 1006 (Alaska 1985).
23 Comtec, 710 P.2d at 1006 (internal quotations omitted)
(quoting DeArmond, 379 P.2d at 721, and Wright, 468 P.2d at 331).
24 See, e.g., Lake Otis Clinic, Inc. v. State, 650 P.2d 388,
394 (Alaska 1982) (holding that the state's reimbursement to a
guarantor who paid off a private, non-profit hospital's
construction loan served a legitimate public interest); Wright, 468
P.2d at 330-31 (holding that the city's issuance of general
obligation bonds to finance a community development plan providing
for the purchase of a site and the construction of a manufacturing
and processing facility that would be leased to a private
corporation did not violate the constitution's public purpose
requirement because it would help boost the city's failing
economy); Walker, 416 P.2d at 252 (the Alaska State Mortgage
Association provides citizens with health, safety, welfare,
comfort, security and economic benefits and thus serves a
legitimate public purpose); Suber v. Alaska State Bond Comm., 414
P.2d 546, 552 (Alaska 1966) (recognizing that the relief and
support of the poor as well as the "aiding [of] those persons . . .
who have suffered a substantial financial burden as a result of
natural disaster" as public purposes); see also Wright, 468 P.2d at
328 n.2 (listing cases upholding municipal financing of improvement
projects).
25 Wright, 468 P.2d at 331.
26 Id.
27 City of Wasilla v. Wilsonoff, 698 P.2d 656, 658 (Alaska
1985).
28 172 U.S. 269 (1898).
29 Id. at 278-79.
30 See AS 29.46.010(a)("A municipality may assess against
. . . private real property to be benefited by an improvement all
or a portion of the cost of acquiring, installing, or constructing
[the improvement].") (emphasis added).
31 See Simmons v. City of Moscow, 720 P.2d 197, 204 (Idaho
1986) (considering safety a legitimate benefit of a special
assessment).
32 See Comtec v. Municipality of Anchorage, 710 P.2d 1004,
1006-07 (Alaska 1985).
33 See id.
34 159 F. Supp. 733 (D. Alaska 1958).
35 See id. at 737; see also Houck v. Little River Drainage
Dist., 239 U.S. 254 (1915) (holding that where state forms an
assessment district, "its action cannot be assailed under the 14th
Amendment unless it is palpably arbitrary and a plain abuse").
36 See Kissane, 159 F. Supp. at 737; see also AS 29.46.010
(permitting assessments against "private real property to be
benefitted by an improvement [for] all or a portion of the cost of
. . . constructing [the improvement]").
37 See City of Glendale v. Trondsen, 308 P.2d 1, 7 (Cal.
1957).
38 Weber also asserts that the assessment violates equal
protection. But, as the borough points out, Weber failed to raise
this argument at the administrative or superior court level and
thus has waived the issue. See Nenana City Sch. Dist. v. Coghill,
898 P.2d 929, 934 (Alaska 1995).
-15- 5191
