Montgomery County v. Schultze

LOWE, Judge. In Montgomery County, no County road shall be constructed except pursuant to a written order of the county executive authorizing such construction. Mont.Co., Md., Code § 49-52. Before authorizing construction, the county executive must hold a public hearing, § 49-53(a), and may authorize the construction only if he finds “that the public interest requires that any road construction project under consideration ... be carried out ....”(§ 49-54(a)).

Upon authorizing construction, he shall forward a report to the county council describing the work to be done stating “with ⁷⁸⁵ particularity, what portion of the cost of such construction is recommended to be borne by the adjacent properties and what portion, if any, of such cost is recommended to be borne by the county . . . . ” § 49-54(b). That portion of the cost to be borne by the adjacent properties is to be computed on the basis of linear frontage of the properties. § 49-54(b). The proportionate cost of such construction is thus assessed by the county council “as a benefit to all property adjacent to the right-of-way of such road and specially benefited by the construction thereof ...” (§ 49-52) to the extent that the Road Construction Code provides for the assessment of such cost. No costs may be assessed against property of the State or Federal Government, § 49-52(c), nor could allowable assessments exceed the amount by which the property is specially benefited by such construction. § 49-52(a) and (b). 1 In this appeal the appellees question the validity of the special assessments which the appellant, the County Council of Montgomery County, imposed upon their property.

Questions concerning these special assessments have been addressed in Maryland courts since their inception. Before the enactment of the Act of 1874, ch. 218, Baltimore City property owners were required to apply to the City Council for particular improvements (such as grading, curbing or reconstruction) of streets adjacent to their property, and the City Council could enact a special ordinance for each individual application if and when the construction was approved. Burns v. Mayor etc. of Baltimore, 48 Md. 198, 200 (1878). The consideration of these applications and the passage of these special ordinances apparently became so cumbersome that the procedure was changed by the Legislature.

City owners who wanted their property benefited by such improvements could still apply to the City Council but the Legislature authorized the Mayor and Council of Baltimore to provide a standard for the application and incident pro ⁷⁸⁶ ceedings (including the assessment of the costs, in whole or in part, upon the adjacent property) to be established in a single ordinance applicable to all future cases. The legislative authority also gave “the Mayor and City Council power to pass ordinances in special cases . .. without any application by property owners.” Id. at 201-202 . The question arose whether “... this law grant[ed] to the City authorities power to make improvements of this character for the public convenience generally, or for the benefit of the whole City without any motive or purpose of special benefit to property in the immediate locality, and to assess the cost of the work upon the owners of such property? If it does, then the grave question is presented, whether such an enactment would be within the scope of legislative power....

For assuming the power to exist, it would be ... oppressive and unjust to exert it . . .. ” Id. at 202 . Justifying special assessments when the property owners received a special benefit from such “public” improvements, the Court of Appeals found that these “special benefit” assessments were proper since “the improvement is for their benefit, and that they derive such advantage from it, in the enhanced value of their property over and above what is conferred upon the public at large, that it is just they should be specially assessed therefor, and on this ground the validity of such laws has been sustained by the Courts.” Burns, supra at 203 . Ordinances authorizing a particular improvement are presumed to be for the benefit of those particular properties directly affected unless the ordinance declares the project expressly to be for the general benefit of the public at large. Mayor etc. of Balt. and Webb v. Johns Hopkins Hospital, et al., 56 Md. 1, 27 (1881).

See also V.F.W. v. Montgomery County, 207 Md. 442, 452 , 115 A.2d 249 (1955). If the presence of a purpose to benefit the public in general is manifest in an ordinance imposing a special benefit tax, the usual presumption would not arise and special assessments on particular properties would be invalid. Burns, supra at 204-205 ; Mayor etc. of Balt. v. ⁷⁸⁷ Moore, et al., 6 H. & J. 375, 380-383 (1825); Mayor etc. of Balt. v. Hughes, 1 G. & J. 480, 492-493 (1829); see V.F.W., supra. Since there must be both a public purpose to justify construction and a special benefit to the assessed property— above that accruing to the public — to warrant the special assessment, V.F.W., supra 207 Md. at 448 , 115 A.2d 249 , a more difficult problem arises as to when the abutting benefited properties may be compelled to carry the entire construction cost.

That question appears to have been answered sub silentio if without equivocation in cases where the improvement is an obvious and direct peculiar benefit to the property it abuts, such as water and sewer mains which due to proximity may be tapped for private use so the owner does not need to provide lines or be denied access altogether. The public is benefited by the abutting property’s access to water and sewer lines only by its interest in the general health and safety which serves as the justification for the public effort and expenditure in those local improvements. A similar disproportionate special benefit is readily apparent in sidewalk improvements for local or commercial pedestrians where the costs appear to have been assessed totally against abutting properties. See, e.g., Bassett v. M. & C. of Ocean City, 118 Md. 114 , 84 A. 262 (1912); see also Hyattsville v. Smith, 105 Md. 318, 325 , 66 A. 44 (1907).

In most of the cases wherein the improvement anticipated is a road or way, the rigid rule that “. . . the settled law in this State that the cost of the improvement of a street may be assessed, in whole or in part, upon the property binding on the street” (emphasis added), points to the justification for such special assessments, on the basis that the improvements must have been made with the primary intent to benefit specially the properties in a particular district or on the abutting avenue. Bassett, supra 118 Md. at 119 , 84 A. 262 . That is made abundantly clear by Burns, supra at 204 , where the Court explained that ⁷⁸⁸ “. .. an ordinance providing for a special case of paving or repaving a street or any part of a street, without the application of the property owners, and assessing the cost, in whole or in part, on the adjacent property, must be passed with the motive and for the purpose of conferring a special benefit upon such property, or else it is nugatory and void.” (Emphasis added). In none of the older cases was the issue of apportioning the benefits between the public and the private adjacent owners for the purpose of paying for the improvement directly before the Court.

In fact the formula for justifying any special assessment was frequently reiterated from Burns, supra, in that the adjacent properties derived such advantage from the improvement in the enhanced value of their property “over and above what is conferred upon the public at large, that it is just that they should be especially assessed therefor, and on this ground the validity of such laws has been sustained.” Hyattsville, supra 105 Md. at 323 , 66 A. 44 (emphasis partially added). It does seem clear, however, that where the costs have been apportioned between general tax funds and assessments of abutting properties, even if by all appearances disproportionately so, the Court of Appeals considers any such apportionment an exercise of legislative discretion which will not warrant the holding of the assessment illegal. V.F.W., supra 207 Md. at 453 , 115 A.2d 249 . In that case, however, the Court of Appeals was quite concerned that the primary purpose of the roadway improvement was expressly for the primary benefit of a school yet the abutting property was assessed 80% of the cost.

The holding in V.F.W., supra, does not foreclose some form of judicial review; to the contrary, it suggests significant concern with the problem of allocating costs between the general tax funds and the abutting properties. In seeking guidance on the basic question before us of whether abutting property owners may be compelled to pay the entire costs of a public highway, not only do we find vacillation among the cases but within them as well. In ⁷⁸⁹ Alexander v. M. etc. City of Balt., 5 Gill 383, 396 (1847), as the Court of Appeals rationalized its observation that a special benefit assessment imposed no burden upon the persons upon whom it operates, by its reference to a “ratio”, the Court presupposed sub silentio what V.F.W. later suggested in its dictum, that there should be public-private benefit considerations. “It is a mere requisition, that the owners of property, the value of which is enhanced by the opening of the street, shall pay for the improvement in a ratio to the benefit derived from it.” The Court then suggested that if the balance is extravagantly disproportionate, justice may be sought in the courts. “It cannot be denied that injustice is sometimes inflicted in the application of this principle, by an extravagant estimate of the benefits conferred by the improvements: but when this occurs, the aggrieved party may appeal to the City Court, and contest the correctness of the assessment made by the commissioners before a jury of the country [sic].” Reflecting upon one of the equitable safeguards which also appears in the County statute here, that “[t]he law does not . . . require any man to pay more than his benefits shall be valued at” (id. at 390, quoting Chief Judge Archer from an earlier opinion of March, 1847), the Court went on to say: “And, assuming that the amount of the assessment is only equivalent to the benefit derived by the owner from the enhanced value of his property, nothing can be more equitable and just than that he should pay it.” Id. at 396 . This is a far cry from holding, as the County interprets here, that any public improvement regardless of its primary purpose and anticipated use may be assessed in its entirety to adjacent private property owners simply by declaring that the adjacent property is enhanced in an amount equal to the cost of the project without reference to some apportionment of the costs to the general public.

If a general public benefit is the only result of the improvement ⁷⁹⁰ the entire betterment assessment can be invalidated. Hyattsville, supra 105 Md. at 325 , 66 A. 44 . It would logically follow that where the primary purpose of the improvement is not to confer a special benefit upon the adjacent property, as a requisite suggested in Burns and Bassett, supra, the predominate general benefit and public purpose for the improvement must be a predicate consideration in determining whether and what the special benefit assessable to each abutting property is to be. In the case before us, the Montgomery County Executive publicized and held a public hearing on October 2, 1975, as required by the Code, to consider the construction of “Randolph Road between Rockville Pike and Parklawn Drive . .. . ” The purpose of the construction was to enhance Randolph Road’s function as a major cross-county connector replacing the need for the proposed Rockville Freeway.

In fact, the project was introduced initially due to the delay and uncertainty of the proposed Rockville Freeway. Notices were properly given, including estimated costs and assessments but neither of the appellees (cross-appellants) Schultze or Berk appeared or participated in the hearing. Passing over (for the moment) details extraneous to the direct appeal, the record shows that the County Executive, still following the Code requirements, by an executive order dated February 3,1976, expressly found “that public interest require[d] improvement” of the Randolph Road project. The cost of the construction, according to § 49-52 of the Code, as noted, was to be assessed by resolution of the county council, “as a benefit to all property adjacent to the right-of-way of such road and specially benefited by the construction thereof . . . . ” This resolution was necessary to subject the abutting property owners to a special assessment. “How much” was a legislative question based upon the Executive’s recommendation subject to certain statutory protections against excessive or prohibitory assessments.

Two of these statutes provided benchmarks beyond which an abutting property owner could not be assessed. ⁷⁹¹ Sec. 49-52(a) provided that the “cost of construction should be assessed only to the extent that any Road Construction Code of the county in force at the time construction is authorized provides for the assessment of such cost or any portion thereof”. At the time of the hearing the Road Construction Code differentiated the percentage of special benefit assessment cost depending upon the type of road. It provided the extent of assessment for the type of road in question as two-thirds of the costs of paving and not to include land acquisition costs. 2 Mont.Co., Md., Code (1971, as ⁷⁹² amended) § 49-27(b) and (c). Since road construction is justified only if there is some public benefit, the assessable public benefit exceeding that special benefit was presumably treated as at least one-third of the total construction cost by virtue of the statutory limit.

It appears that the Court of Appeals in V.F.W., supra, viewed this section as an attempt to deal with the problems of apportioning the costs between the public and private interests.* * 3 There is a further protection in § 49-52(b). “No such property shall be assessed in excess of the amount by which such property is specially benefited by such construction; .... ” ⁷⁹³ This protection which limited the assessment to tne enhancement had an added statutory significance as a consequence of the two-third cost limitation. Not only would there be a statutory guarantee of at least one-third public participation but a property owner whose use was not enhanced or only slightly benefited had the protection accorded by subsection (b), i.e., limiting his special assessment to the special value the road had for his property. The executive order authorizing the Randolph Road construction project was not issued, however, until February 3, 1976. In the interim between the hearing and the authorization, the County Council on January 14, 1976, amended § 49-37(b) by eliminating the road type distinctions of construction, rebuilding, etc., and abolished the two-thirds limitation in the Code provision.

Its substituted version was simplicity itself, providing that: “Whenever a road is constructed as a ‘front foot assessment’ project, pursuant to sections 49-51 to 49-61, the portion of the cost chargeable and assessed to the benefited abutting properties shall be all costs of construction, including costs of acquisition of land or interest therein for right-of-way.” § 49-37(b). After the reconstruction (or construction) of Randolph Road from a residential type road to a substitute freeway was completed, the County Executive’s assessments of the abutting owners were presented to the County Council which substantially adopted the recommendations. Appellees (cross appellants) Schultze and Berk filed an administrative appeal to the Circuit Court for Montgomery County. Judge Rosalyn B. Bell held, among other things, that despite the record reflecting a public need for the project as declared by the County Executive and a concomitant public benefit from it, the nearly sixty percent costs absorbed by the county “supposedly to reflect a public benefit were primarily a by-product of other factors.

The principal factor was an inability by law [§ 49-52(c) j to collect the assessments on abutting property owned by the State of Maryland. ⁷⁹⁴ Appellants argue that the total cost of the Project was assessed against all abutting property owners. The State of Maryland was included as an abutting property owner. The County paid the cost of the special front-foot benefit assessed against the State property in addition to the costs associated with the B & 0 Railroad Property. This amount was apparently included in the County figures to arrive at a determination that the County paid 60% of the cost of the project.

While this may be accurate, it does hot reflect, and in examining the record, the Court cannot find any determination of an amount attributable to a public benefit.” Judge Bell then remanded the case “to the Montgomery County Council to determine the cost attributable to the public benefit and adjust the front-foot benefit assessment accordingly.” The County seems most concerned that: “By ordering the Montgomery County Council to determine what construction costs were attributable to public benefit and to reduce the special benefit assessments accordingly, the lower court, in effect, judicially repealed the County Council’s amendments to Sections 49-37 and 49-52. The lower court concluded, in effect, that because there was a public need for a road construction project, the total cost of construction could never be fully assessed as special benefit assessments against the abutting property owners, even when those special benefit assessments did not exceed the amount of special benefits accruing to the abutting properties.” The County misreads the effect of Judge Bell’s decision. Commendably, she did not declare these statutes to be invalid. The statute, if properly administered is not invalid, but there must be some apportionment of the total costs to the public whose interest is in this case the primary consideration for the construction.

None of the evidence in this case permitted so much as an inference that the costs were allocated or that apportioning the costs was ever considered. ⁷⁹⁵ From our reading of the cases we conclude that underlying all of the Court of Appeals’ opinions from which the parties have extracted quotations, as well as those we have unearthed, is the presupposition that the enhanced benefit of a project by reason of proximity alone is not sufficient to require the more proximate taxpayers to shoulder the entire cost of a project purposed generally to be beneficial to, and primarily used by, the public at large. That may be permissible when the purpose of the improvement is to confer a special benefit on the adjacent properties, Burns, supra. If the statute does not allow for some division of costs to reflect general public participation where the improvement is more clearly for the public (rather than a particular district or the adjacent property owners), the record must reflect that public cost participation was contemplated and to some degree apportioned by the council when a want of any apportionment is judicially raised. In Mayor, etc. of Balt. v. Moore, supra at 380-381 , Chief Judge Buchanan in 1825 noted that: “Where a street is directed to be paved for the benefit of a particular part or district of the city, it is perhaps proper that such part or district be taxed for the purpose; but where the paving is for the general benefit [as was declared in the preamble of the ordinance in question], and not of the immediate district in which the street lies, it ought to be paid for out of the general fund; and there would be much injustice in imposing a special tax on the particular district for that object, which could not have been the intention of the Legislature.” Judge Miller, who also wrote the Burns opinion, made it eminently clear that the power to determine: 1) when a special assessment shall be made, 2) on what basis it shall be apportioned, 3) over what area it shall extend, and 4) whether the particular improvement will confer a benefit upon property in the immediate locality beyond that which will accrue therefrom to property more remote, or to the public generally, is a power confined to the legislative department, ⁷⁹⁶ to be exercised, subject to such provisions, and under such restrictions only as the lawmakers may see fit, in each case to prescribe.

Mayor, etc. of Balt. and Webb v. Johns Hopkins Hospital, et al., supra. Therefore, explained Judge Miller, unless there is something on the face of the ordinance authorizing the improvement, indicating that those who passed it judged that the improvement was for the public convenience “exclusively” and not for the benefit of the particular district, the validity of the ordinance cannot be assailed in court upon the ground that the improvement was in fact for the benefit of the public at large, and conferred no special benefit upon the owner of adjacent property. Id. at 28. See also Hyattsville v. Smith, supra.

But Judge Miller refused to close the door completely, suggesting that although the statute’s validity in such a case was unassailable, judicial