WRB-88-002-AK
6-3300-2015-2
STATE OF MINNESOTA
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE BOARD OF WATER AND SOIL RESOURCES
In the Matter of the Appeal FINDINGS OF FACT,
of Mr. Winslow Holasek from CONCLUSIONS,
an Assessment Order of the RECOMMENDATION
Coon Creek Watershed AND MEMORANDUM
District Pertaining to
Anoka County Ditch No. 58
The above-entitled matter came on for hearing before Allan W. Klein,
Administrative Law Judge, on January 26, 1988 in St. Paul. Also attending and
participating in the hearing were Donald H. Ogaard, Natalie Haas Steffen,
William L. Cofell and Loni Kemp, all members of the Dispute Resolution
Committee of the Board of Water and Soil Resources.
Winslow Holasek, 1159 Andover Boulevard N.W., Anoka, Minnesota 55304,
appeared on his own behalf. Harold H. Sheff and Michelle J. Ulrich, of the
firm of Olson, Gunn & Seran, Attorneys at Law, 315 Peavey Building, 730 Second
Avenue South, Minneapolis, Minnesota 55402-2473, appeared on behalf of the
Coon Creek Watershed District. Special Assistant Attorney General Paul
Strandberg, Suite 200, 525 Park Street, St. Paul, Minnesota 55103, appeared on
behalf of the Board of Water and Soil Resources.1
The record in this matter closed on March 18, 1988, upon receipt of
late-filed exhibits.
This Report is a recommendation, not a final decision. The Board's
Dispute Resolution Committee will make the final decision after a review of
the record. The Committee may adopt, reject or modify the Findings of Fact,
Conclusions, and Recommendations contained herein. Pursuant to Minn. Stat.
14.61, the final decision of the Committee shall not be made until this
Report has been made available to the parties to the proceeding for at least
ten days. In opportunity must be afforded to each party adversely affected by
this Report to file exceptions and present argument to the Committee. Parties
should contact Mel Sinn, Executive Director, Board of Water and Soil Resources,
90 West Plato Boulevard, St. Paul, Minnesota 55107 to ascertain the procedure
for filing exceptions or presenting argument.
1The appeal that initiated this proceeding WaS filed on September 8,
1987 with the Minnesota Water Resources Board. Effective October 1, 1987,
that Board was renamed the Board of Water and Soil Resources, and its members,
committees, and operating procedures were changed, all pursuant to Laws of
Minnesota 1987, Chapter 358. The new Board and its newly created Committee
for Dispute Resolution then issued the Notice of and Order for Hearing on
November 30, 1987.
STATEMENT OF ISSUES
Was the Coon Creek Watershed District's 1987 levy of $50,000 for the
Ditch 58 maintenance and repair fund valid? Does the Board of Water and Soil
Resources have jurisdiction to hear appeals from such a levy? May an
individual landowner challenge the entire levy?
Based upon all of the proceedings herein, the Administrative Law Judge
makes the following:
FINDINGS OF FACT
Historical Backqround
1. Anoka County Ditch No. 58 was dug in 1917. This included the main
channel of Ditch 58, and Branches 58-1 through 58-9 and Laterals 58-3-1 and
58-7-1 through 58-7-3. These branches and laterals were always part of the
main system, rather than independent entities that were later consolidated
with the main system. The main stem of Ditch 58 is 8.2 miles long, and there
are 10.3 miles of branches.
2. Ditch 58 and its branches were originally dug to facilitate
agriculture. However, as the area served by the ditch has developed into more
residential use, the ditch system has also become the primary municipal storm
sewer drainage facility.
3. On July 13, 1959, the Anoka County Board passed a resolution
transferring jurisdiction over all county ditches (including Ditch 58 and its
branches and laterals) to the Coon Creek Watershed District. The resolution
provided that the ditches should thereafter be under the management of the
Watershed District.
4. There were no major repairs to Ditch 58 from the time of its
inception until 1984. There were minor repairs over the years, but no major
ones.
5. In response to a petition from adjoining landowners, the Watershed
District hired an engineer to assess the need for ditch repairs. On May 14,
1979, the managers of the District ordered the repair of Ditch No. 58. In
this order, they made findings confirming the benefits, as well as the damages
and the costs of the repair. The total benefits were found to be $182,585.94
and the cost of repair was found to be $180,591.40.
6. Opponents of the repair petitioned the Environmental Quality Board,
asking for the preparation of an Environmental Impact Statement. The EQB
ordered the preparation of an EIS. The District Court affirmed the Order of
the EQB. The Supreme Court affirmed the Order of the District Court. Coon
.Creek Watershed District v. State Environmental Quality Board-, 315 N.W.2d 604
(Minn. 1982).
7. On May 27, 1980, while the repair order was pending in the legal
system, the managers of the Watershed District established a "maintenance and
repair fund" for County Ditch 58. They levied an assessment of $40,000,
payable in installments of two years. The assessment was based on Minn. Stat.
106.471, subd. 6, as amended by Laws of Minnesota 1980, Chapter 552.
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8. On October 3, 1983, the District levied an assessment of $20,000 for
the Ditch 58 maintenance and repair fund. The assessment was payable in one
year.
9. on January 30, 1984, the lawsuit requesting an EIS was dismissed
because the District had prepared and submitted a satisfactory EIS. This
dismissal paved the way for resuming activity on the 1979 repair Order.
10. On March 26, 1984, the District reordered the repair of Ditch No. 58,
and levied assessments in the amount of $180,591.40, payable over 15 years.
The District also directed the County Board to issue and sell bonds if
necessary to fund the repair. This was the same repair job and assessment as
was originally ordered in May of 1979.
11. The "$180,000 repair job" covered only a part of the main channel.
It did not cover any of the branches or laterals, nor did it cover the entire
main channel. It did not cover, for example, the distance between Station 43
and Station 71 of the main channel.
12. On March 26, 1984, the District ordered a bid to Minnesota Utility
Contracting, Inc. The bid was $77,575 for the construction work on the
"$180,000 repair job".
13. As of May 26, 1984, $6l,757.81 had been paid on the repair job. This
included engineering in the amount of $20,716.80, EIS preparation in the
amount of $42,296.39, and various other administrative expenses. Remaining to
be paid was the actual cost of construction ($77,575) and the cost of staking,
inspection, contingencies, and bond interest. The total of these remaining
costs was $118,833.59. The total cost of the project ($180,591.40) consisted
of the $61,757.81 which had already been paid and the $118,833.59 remaining to
be paid. There is no mention of the cost of viewers on the expense list. In
fact, the viewers were paid $10,255.00. They were paid out of the repair/
maintenance fund account. In addition, legal expenses for the Ditch 58 repair
job were $10,155.73. They are not listed on the list of expenses either.
They were, in fact, paid out of the repair/maintenance fund.
14. On October 14, 1985, the Board levied an assessment of $40,000 for
the maintenance and repair fund for Ditch No. 58. The levy was payable in
installments of two years.
15. Work on the "$180,000 repair job" got underway in late 1984, and
proceeded through 1985, 1986 and into 1987. Much of the actual digging work
was done during the summer of 1986. Although the original contract with
Minnesota Utility Contracting was for $77,575.00, two change orders raised the
total contract to $81,223.60. As of August 10, 1987, the contractor had been
paid all but $7,710.66 of the total due.
16. On February 24, 1986, the District authorized payment to Sauter &
Sons, Inc. out of the maintenance fund for work that they had performed on
Ditch 58 from Station 43 to Station 71. The actual amount of this payment is
not in the record, but it was between $2,000 and $5,000.
17. On August 10, 1987, the District's managers met. They conducted a
contract completion hearing to determine if there were any objections or
complaints to the work done on Ditch 58 pursuant to the "$180,000 repair
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job". The Board decided to delay final payment to Minnesota Utility
Contracting until a complaint was investigated.
18. As of January 28, 1986, the District expected the "$180,000 project"
to be completed by June 30, 1986. That forecast proved overly optimistic.
However, when asked why the October 14, 1985 levy of $40,000 was needed when
the completion of Ditch 58 was not even scheduled until June of 1986, the
District replied that the levy monies were needed for ditch repair on the
branch ditches.
19. On August 10, 1987, the managers also levied an assessment of $50,000
for the maintenance repair fund for Ditch 58. This is the assessment under
appeal in the this proceeding. This assessment was payable in installments of
one year. The resolution was very similar to all the other repair fund levy
resolutions except that a statutory reference has been changed. The earlier
resolutions referenced Minn. Stat. 106.471, subd. 6, as amended by Minn.
Laws of 1980, Chapter 552. The 1987 resolution changes that reference to
Minn. Stat. 106A.735, subd. 1, as amended by Minnesota Laws of 1985, Chapter
172. The earlier resolution recited that the fund could not exceed 20 percent
of the assessed benefits on the ditch system or $40,000, whichever is larger.
The 1987 resolution changes that recitation to 20 percent of the benefits of
the drainage system, $1,000 per mile of open ditch in the ditch system, or
$50,000, whichever is greater.
20. The $50,000 assessed in August of 1987 was not based upon any
detailed cost estimates by engineers for specified projects. Instead, there
were pending a number of petitions from landowners requesting the repair of
branch ditches. As of January 28, 1986, petitions for repair had been
received for 58-2, 58-3-1, 58-4, 58-5, 58-6, 58-7, 58-7-1, 58-7-2, and
58-7-3. Ex. 10. As of August 10, 1987, there were petitions for the repair
of 58-7-1, a small portion of 58-7-2, the north half of 58-7, and all of
58-7-3. In addition, there were petitions pending for a portion of 58-5, all
of 58-3-1, a small portion of 58-4, and a portion of 58-2. Ex. Y. The
managers had "guidelines" of estimated costs of the repairs, and they felt
there was enough work to justify levying the full $50,000 that they believed
was allowed. There is no documentation of which projects were considered when
the managers levied the $50,000.
21. The $50,000 assessed in August of 1987 would be used in part to redip
the main channel and in part to continue with the ongoing project of repairing
branches and laterals. The repair of branches and laterals does create
sloughing and siltation in the main channel. Therefore, even though the main
channel was cleaned in 1986, it does need redipping again. Nonetheless, part
of the money would be used to repair branches and laterals that were not
included in the "$180,000 repair job".
22. On September 9, 1987, Holasek filed an appeal with the Water Resources
Board. It was an appeal from the August 10, 1987 maintenance levy of $50,000.
Holasek stated three grounds for the appeal:
1. Ditch 58 repair was just completed this year and it certainly
does not need $50,000 worth of maintenance on it.
2. This levy results in assessments that exceed the redetermination
of benefits that the managers had set for the Ditch 58 system.
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3. The use of a maintenance fund in this manner also results in
assessing many owners on Ditch 58 for a repair that benefits only the
landowners of the particular branch ditch cleaned. All landowners
for the Ditch 58 system have already been assessed for the repair of
Ditch 58 that was just completed. To now assess all of them again
for a branch ditch that only benefits those people who own land on
that ditch is improper.
23. On September 10, 1987, the Water Resources Board filed notice of the
appeal with the Watershed District, the Anoka County Auditor, and the
District's attorney.
24. On November 30, 1987, the newly created Board of Water and Soil
Resources issued the Notice of and Order for Hearing in this matter, setting
the hearing for January 26, 1988 in St. Paul. Copies of the notice were sent
to the five members of the Dispute Resolution Committee, Mr. Holasek, the
District's attorney and officers.
25. At the current time, the District maintains two funds relating to
Ditch 58. The first is the "Ditch 58 bonded project fund", which relates
specifically to the "$180,000 repair job". The second is the "Ditch 58
maintenance fund". This is the fund that has been the subject of the various
levy assessments described above and that has been used to pay both for repair
work on the branches and some of the expenses (such as viewers and legal)
incurred in connection with the "$180,000 repair job".
26. It is not possible to determine from the record what the account
balance for the Ditch 58 repair fund was on August 10, 1987. The only
evidence on that point is a statement in Respondent's Brief (at page 17), that
on August 19 [sic?] there was a "cash balance of $874.39 in the District's
repair and maintenance fund." However, Ex. 8 indicates that the "Ditch 58
maintenance fund" had $22,204.03 "cash in bank--savings" as of October 31,
1981. There was not enough attention paid to this question of fund balances
at the time of the hearing in order to permit an accurate resolution of it.
27. The managers intend to redetermine the benefits for the Ditch 58
system relatively soon, after the District's legal problems concerning Ditch 57
are cleared up.
Based upon the foregoing Findings, the Administrative Law Judge makes the
following:
CONCLUSIONS
1. The Board of Water and Soil Resources does have subject matter
jurisdiction over this appeal .
2. Holasek's failure to notify all property owners in the drainage
system does not invalidate this proceeding.
3. The costs of a repair, whether by petition, Board motion, or through
a repair fund, must be borne by all benefited properties in the drainage
system, even if the repair is only to one lateral or to one part of the system.
4. There is no limitation upon the total cost of all repairs made over a
ditch system throughout its life. Instead, limitations exist either based
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upon the calendar year involved, or the size of an individual repair job.
There is no prohibition against the total Costs Of all repairs over a number
of years exceeding the benefits.
5. The $50,000 assessment in 1987 was based upon improper procedure
because it is part of a bit-by-bit approach to petitioned repairs which evades
the cost limits in the statutes. See, Memorandum.
Based upon the foregoing, the Administrative Law Judge makes the following:
RECOMMENDATION
That the Committee declare the Coon Creek Watershed District's Resolution
87-4, assessing $50,000 for the repair of Ditch No. 58, to be invalidly adopted
and, therefore, void.
Dated this 13th day of April, 1988.
ALLAN W. KLEIN
Administrative Law Judge
Reported: Tape Recorded, Two Tapes.
NOTICE
Pursuant to Minn. Stat. 14.62, subd. 1, the agency is required to serve
its final decision upon each party and the Administrative Law Judge by first
class mail.
MEMORANDUM
This appeal raises numerous legal issues for resolution. Each of them
will be discussed below.
Subject matter jurisdiction of this appeal is properly before the Board of
Water and Soil Resources, rather than the District Court.
County authority over ditches preceded, by many years, the creation and
establishment of watershed districts. The history of this ditch is typical.
It was first dug in 1917. The Coon Creek Watershed District was not created
until 1959. When the District was established, the County Board had the
option of either transferring jurisdiction of existing ditches to the newly
created District, or retaining jurisdiction in the County Board. The Anoka
County Board elected to transfer jurisdiction of all county ditches (including
Ditch 58) to the new District.
The statute authorizing such transfers gave to the managers of the
Watershed District the right (and obligation) to repair and maintain the
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transferred drainage system. However, the statute also provided that when a
transfer is directed, all proceedings for repair and maintenance "shall
conform to the provisions of Chapter 106." Minn. Stat. 112.65, subd. 1.
The managers of the Coon Creek Watershed District argue that this last
provision requires that Holasek bring any appeals to the District Court (as
required by Minn. Stat. 106A.091) rather than to the Board of Water and Soil
Resources (as required by Minn. Stat. 112.801).
It is concluded that the Board is an appropriate forum for a number of
reasons. First of all, the explicit language of the Board's statute
authorizes such appeals. Minn. Stat. 112.801, subd. I provides:
An appeal may be had to the district court or to the board
by any party . . . aggrieved by an order of the managers
made in any proceeding and entered upon its record
determining any of the following matters:
(1) the amount of benefits determined;
(2) the amount of damages allowed; [or]
(4) a matter that affects a substantial right.
The statutory section which the District relies upon for its argument that
appeals ought to go to the District Court provides, in pertinent part:
A party may appeal to the district court from a recorded
order of a drainage authority made in a drainage proceeding
that determines:
(1) the amount of benefits;
(2) the amount of damages;
However, the term "drainage authority" is defined in Chapter 106A as "the
board or joint county drainage authority having jurisdiction over a drainage
system or project." Minn. Stat. 106A.005, subd. 9. "Board" is defined to
mean the County Board of Commissioners. Therefore, the appeal provision
relied upon by the managers applies only to county boards of commissioners or
joint county drainage authorities. It does not apply to watershed boards.
Secondly, the District Court is the usual forum for reviewing county board
decisions, at least those relating to a ditch. While there are situations in
which county board decisions are subject to review by state agencies (such as
the Department of Naturdl Resources or the Pollution Control Agency), those
are the exception rather than the rule. For the most part, county board
decisions are appealable to the District Court because it is the traditional
forum.
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Decisions of a watershed's board of managers, however, are in most cases
appealable to the State Board of Water and Soil Resources. That is the
traditional route for appeal from a local board decision.
The Legislature has noted that if a person aggrieved by an order of the
local board elects to appeal to the District Court, but the Court concludes
that there are facts, circumstances, or matters peculiarly or especially
within the knowledge, functions, or duties of the State board, then the Court
may refer to the board as referee questions of fact within the scope of the
board's knowledge, functions, and duties. This evidences a legislative
recognition of the expertise resident in the board.
A county board of commissioners is an elected body. Their decisions are
entitled to a certain amount of deference because of that. The watershed
district board is not an elected body. It does not seem inappropriate to
subject the watershed district board's decisions to review by a State board or
even a committee of a State board. It does, however, seem out of keeping with
the deference due elected officials to subject their decisions to scrutiny by
the same kind of body.
A county board is never forced to turn over jurisdiction of an existing
ditch to a watershed district. All new ditches, however, are automatically
subject to the jurisdicti on of a watershed board ( if there is one), whether
the county board likes it or not. Minn. Stat. 112.65, subd. 2. Even in
situations where a county board has retained jurisdiction over a ditch,
jurisdiction over a petition for a new lateral to the ditch lies with the
watershed district (if the existing ditch is entirely within a watershed
district) rather than the county board that still has jurisdiction over the
ditch itself. Op. Atty. Gen., No. 206a, August 4, 1983.
Finally, Minn. Stat. 112.431 is part of an enactment giving special
powers to watershed districts within the metropolitan area. It recognizes
that urban growth and development have spawned problems for the improvement
and repair of drainage systems which were originally established for
agricultural purposes, and therefore the procedure for improvement and repair
of drainage systems should be simplified to more adequately and economically
improve and repair them. That act provides that a person aggrieved by an
order for improvement or repair by the managers, or by an assessment, may
appeal "as provided in Sections 112.801 and 112.81."
For all the above reasons, it is concluded that subject matter
jurisdiction of the Holasek appeal is properly within the Board of Water and
Soil Resources.
II.
One of the grounds for Holasek's appeal was that the money raised by the
$50,000 assessment was going to be used to benefit lands located far from his
property, and that only those who are directly benefiting ought to bear the
cost .
The long and short of the matter is that as the drainage system is
currently organized, all benefited properties in the entire Ditch 58 system
must bear their proportionate cost of any repair to any part of the system.
Even though Holasek's land is close to the southwest corner of the system, and
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even if (a fact not actually established) the $50,000 were to be used only at
the northeast end of the system, Holasek must still bear his proportionate
share. The theory is that the persons on the far end of the system help to
pay for the work that benefits Holasek, and thus Holasek must pay for the work
that benefits people at the far end of the system. Petitions of Dudek (also
known as Braun v Countv. of Renville), 244 Minn. 532, 70 N.W.2d 329 (1955).
While it is possible to subdivide the Ditch 58 system to accomplish what
Holasek would like to have happen, that action must be taken by the board of
managers.
The managers assert that even if the Board of Water and Soil Resources
does have jurisdiction to hear this matter, the appeal can only go to the
assessment levied on Holasek's property, not the other properties assessed,
because the other owners did not appeal, nor were they given notice of
Holasek's appeal.
Minn. Stat. 112.801, subd. 4 (1987 Supp.) provides aS follows:
Any person . . . appealing the amount of benefits or damages
may include and have considered and determined benefits or
damages affecting property other than that person's own.
Notice of the appeal must be served on the owner or occupant
of the other property or upon the attorney who represented
the owner in the proceedings.
Minn. Stat. 106A.091, subd. 2 (1986) includes a similar provision:
A person who appeals the amount of benefits or damages may
include benefits and damages affecting property not owned
by the appellant. Notice of the appeal must be served to
the auditor and to the owner or occupant of the property
included in the appeal or to the attorney representing the
property owner in the proceedings.
Holasek admits that he did not serve notice on any other landowners. While
some other property owners inquired about the appeal, none perfected their own
appeal or intervened or otherwise joined in this one.
It is clear that in situations where an appeal will result in a lowering
of one person's benefits and the raising of another's, notice to the other is
appropriate, both as a matter of statutory construction and as a matter of due
process. See, for example, Matter of Rice_County_Ditch No. 25, 389 N.W.2d 737
(Minn. App. 1986). It is not so clear, however, that notice would be required
in a situation where all properties are going to be relieved of assessments at
exactly the same ratio that they were assessed. The Rice_County case was
clearly a case where one group of landowners was trying to shift the cost of a
project to another group of landowners. In Holasek's case, however, he is not
asking that benefits be redetermined so as to exclude his property (he did ask
that, but that C laim Was rejected in pa ragra ph II above). Instead, he is
saying that no one should have to pay because the board of managers has acted
illegally in an attempt to circumvent the cost-benefit limitations of the
statute.
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In such a situation, it is concluded that notice is not required to be
given to the other property owners affected. While the question is not free
from doubt, the effect of Holasek's appeal is not to shift the cost of the
repair work from himself to other landowners. Instead, it is to relieve all
of them of the cost.
IV.
Holasek points out that with this assessment, he will have been assessed a
total of $538.83 despite the fact that his redetermined benefits were only
$297.60. Put another way, there has been a total of $330,591.40 assessed
since 1980 against lands which were determined to be benefited only in the
amount of $182,585.84. Holasek believes this is wrong. He believes that the
managers should only be able to assess up to the benefits, and no more.
Resolving this issue requires an examination of how repairs are funded.
There are a number of different ways that managers may fund a repair. But
each of the different methods has its own set of limitations and conditions
for its use.
The managers now base their $50,000 assessment upon Minn. Stat.
106A.705, subd. 5 (1987 Supp.), which provides that:
in one calendar_year the drainage authority may not levy an
assessment for repairs or maintenance on one drainage
system for more than 20 percent of the benefits of the
drainage system, $1,000 per mile of open ditch in the ditch
system, or $50,000, whichever is greater, except for repair
made after a disaster . . . or under the petition procedure.
(Emphasis added.)
The "petition procedure" referred to in Section 106A.705 is the procedure
set forth in Section 106A.715. The funds for petitioned repairs can come out
of the drainage system repair fund (Section 106A.735) or they may be raised
by separate assessment, either with or without bonding (Section 106A.731).
In the event of a petition for repair, the drainage authority must make
findings and order the repair so long as "the cost of the repair will not
exceed the total benefits determined in the original draining system
proceeding." Minn. Stat. 106A.715, subd. 4(a)(2). See_also, Gerval and
Larson, Drainaqe Law in Minnesota (Minnesota Continuing Legal Education,
1985), at p. 80. Pursuant to Minn. Stat. 106A.351, subd. 3 (1986),
redetermined benefits and damages may be used in place of the original
benefits and damages. Therefore, the limitation is the $182,585.84, and it
is to be compared to "the cost of the repair". This is similar to the "cost
of the job" language which appeared in earlier law, and which was interpreted
in Op. Atty. Gen., No. 602-H, March 26, 1951. In that opinion, the Attorney
General noted that this limitation applies ". . . to the job. There may be
many jobs of repair over the period when the ditch will be useful."
Therefore, in the event of a petition for repairs, the cost of the job is
compared to the reassessed benefits.
The Section 106A.735 drainage system repair fund also has limits on it.
The statute (Minn. Stat. 106A.735) provides that:
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To create a repair fund for a drainage system to he used
only for repairs, the drainage authority may apportion and
assess an amount against all property and entities assessed
for benefits . . . . The fund may not exceed 20 percent of
the assessed benefits of the drainage system or $40,000,
whichever is greater. If the account in a fund for a
drainage system exceeds the larger of 20 percent of the
assessed benefits of the drainage system or $40,000,
assessments for the fund may not be made until the account
is less than the larger of 20 percent of the assessed
benefits or $40,000. Assessments must be made pro rata
according to the determined benefits.
Holasek had argued that the total assessments, over the years, ought not
to be allowed to exceed the benefits. None of these methods of paying for
repairs puts a cap or upper limit on the amount of money that may be paid for
repairs over a period of years. In other words, nowhere is it provided that
the cost of various repairs, occurring over a period of years, may not exceed
the benefits.
It is not permissible, however, to split up a needed repair job, and do a
bit of repair in one year, another bit of repair in another year, a third bit
of repair the third year, etc. so as to avoid the limitations set forth above,
if the repairs are all part of the same proceeding, or if they ought to have
been. In the Dudek case, one branch of a county ditch had been lineally
divided into four consecutive sections, labeled Section A, Section B,
Section C and Section D. Since 1948, parts of Sections A, B and C had been in
a state of disrepair. The benefits for the entire ditch system were originally
assessed at $65,278. On April 19, 1950, a petition was filed for repair of
Section A. On April 10, 1951, the county board granted the petition for
repair of Section A, and on August 16, 1951, a contract was let for the
repairs at a cost of $37,534.47. The repairs were completed in 1952.
On December 16, 1951, a petition was filed for the repair of Section B.
On December 19, 1951, a petition was filed for repair of Section C. The
engineer estimated the cost of repair to Section B at $22,667.50, and the cost
of repair to Section C to be $53,690.
On October 30, 1953, the benefits of the entire system were reassessed at
$95,054.
On March 23, 1954, the Board granted the petitions for Sections B and C,
and ordered their repair.
A landowner on a completely separate branch of the same ditch system
appealed the assessments for repairing Sections B and C on a number of
grounds. One of the grounds was that the total cost (A + B + C) exceeded the
benefits. The court determined that the assessments for repairs to Sections B
and C were valid because they were separate from the repairs to Section A.
The estimated total cost of those assessments (B + C) was $76,357.50. That
cost had to be compared to the reassessed benefits of $95,054. But if, in
addition, the cost of repairs to Section A ($37,534.37) were added to the cost
of the other two sections, the total cost ($113,891.87) would exceed the
redetermined benefits of $95,054.
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The court determined it was not appropriate to add the cost for Section A
to the costs for Sections B and C because the proceedings for repairs to
Section A were "independent" of those to Sections B and C and the landowner
had failed to show that the engineers appointed by the Board in either the
Section A or Section B & C proceedings failed to examine and report upon the
condition of the entire ditch system.
What the court was getting at was that upon receipt of a petition, an
engineer is to be appointed to examine the ditch and make a repair report,
showing the necessary repairs, the estimated cost, and "all details, plans,
and specifications necessary" to prepare and award a contract. Upon receipt
of the repair report, the Board is to set a time for a hearing on the repair
report. At least ten days before the hearing, the auditor is required to give
mailed notice of the hearing to the petitioners, owners of property, and
political subdivisions likely to be affected by the repair proposed in the
report.
One of the safeguards against sequential repair is to require that the
engineer's report apply to the entire ditch system, and not just to a single
lateral, even if the petition is only for the repair of a single lateral. The
Attorney General has opined (Op. Atty. Gen. 602-J, May 22, 1950) as follows:
A repair proceeding is instituted upon a petition . . .
Several petitions for repair of the same ditch should not
be pending at one time. If several proceedings for the
repair of the same ditch were pending at one time, they
should all be regarded as one proceeding. But after a
repair proceeding has been completed, I do not consider
that another proceeding may not be commenced . . . . The
section cited provides for a determination by the board or
court as to the state of repair of the ditch. This does
not mean a part of the ditch. It means all of the ditch.
The engineer's report should refer to the entire ditch and
not to a single lateral . . . .
When it is apparent to the board or court that a large part
of the ditch system is in need of repair, the limitation in
the law as to cost cannot be evaded by repairing only a
part of the ditch and then subsequently in another
proceeding repairing another part which required repair at
the same time that the first repair was made.
This opinion was cited with approval by the Dudek court.
Although the evidence in the Holasek case is sparse, it appears that the
Coon Creek Watershed District has had pending, for some time, a number of
petitions for repair of various parts of Ditch 58 and its laterals and
branches. Pursuant to the Attorney General's opinion cited above, and the
Dudek case, depending on when these petitions were filed, they ought to have
been the subject of one engineering report and one Board determination. If
the engineering report concluded that all of the repairs needed would result
in costs greater than the redetermined benefits, then the repairs could not be
made. It is not permissible to attempt to avoid the limitation by ignoring
needed repairs, when petitioned for, until they can be accomplished on a
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bit-by-bit basis within the limitations of the statute. As the Supreme Court
noted in Dudek, that may be an "impracticable" result, but the problem must be
remedied by legislative change rather than by distortion of the statutes.
Dudek, 70 N.W.2d 329, at 333, n. 7.
The Coon Creek Board claims, however, to have avoided this problem by
ordering repairs and assessments in 1980, 1983, 1985 and 1987, of $40,000,
$20,000, $40,000, and $50,000, respectively, pursuant to the "705" (a
reference to Section 106A.705, subd. 5) procedure, which allows a board to
make its own determination of need, without a petition. it is permissible for
a board to proceed with repairs using the "705" procedure even after a
petition has been filed under Section "715", so long as the tests of "705" are
met. Taylor v. County of Sherburne, 243 Minn. 303, 67 N.W.2d 827 (1954),
overruled on other grounds, Petition of-Zimmer, 359 N.W.2d 266 (Minn. 1984).
The applicable "705" statute read (for the 1980 and 1982 assessments):
In one calendar year the drainage authority shall not levy
an assessment for repairs or maintenance on one ditch
system in a sum greater than 20 percent of the benefits
thereof in that county, or jurisdiction, or the sum of
$20,000 if the said 20 percent is less than $20,000, except
as provided in subdivision 4 [the petition process].
Minn. Stat. 106.471 (2) (b) (1980 and 1982).
Since Holasek did not appeal any of the earlier assessments, it is not
appropriate to determine their validity. All that Holasek appealed is the
$50,000 assessment in 1987.
In 1987, the Legislature amended Section lObA.705, subd. 5 to replace the
$20,000 cost limitation with a $50,000 cost limitation. Therefore, so long as
the other requirements of that statute are satisfied, and so long as the
assessment is not part of an improper "bit-by-bit" evasion of the limitations
as discussed above, a $50,000 assessment is allowable.
The resolution for 1987's $50,000 assessment, Resolution 87-4 adopted on
August 10, 1987, refers to the repair fund authorization in Section 106A.735,
subd. 1, as amended by Laws 1985, ch. 172. The resolution recites the
limitations contained therein, but with an error. The law actually provided:
The fund may not exceed 20 percent of the assessed benefits
of the drainage system or 140,0OO, whichever is greater.
If the account in a fund for a drainage system exceeds the
larger of 20 percent of the assessed benefits of the drain-
age system or $40,000, assessments for the fund may not be
made until the account is less than the larger of 20 percent
of the assessed benefits or $40,000.
The resolution, however, recites the following limits:
Whereas, in one calendar year the drainage authority may
not levy an assessment for repairs or maintenance on one
drainage system for more than 20 percent of the benefits of
the drainage system, $1,000 per mile of open ditch in the
ditch system, or $50,000, whichever is greater . . .
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Those limitations contained in the resolutions are, in fact, the limitations
in effect at the time of the resolution for Minn. Stat. 106A.705, subd. 5,
the Board's own motion section, not the repair and maintenance fund section.
Apparently, the managers believed that the recent change authorizing
assessments of $50,000 (for projects on the Board's own motion) applied to the
repair and maintenance fund section as well.
In their post-hearing memorandum, the managers proposed that since the
repair levy limitation Was raised to $50,000, that implicitly amended the
repair fund limit to $50,000 because the two were irreconcilable without the
implicit amendment. The Administrative Law Judge disagrees.
Minn. Stat. 645.26, subd. 4 does, indeed, provide that when provisions
of two or more laws passed at different sessions of the Legislature are
irreconcilable, the law latest in date of final enactment shall prevail.
However, if it is at all possible to construe the laws so that both may be
given effect, such a construction is required. Wichelman v. Messner, 250
Minn. 80, 83 N.W.2d 800 (1957).
In this case, the two limitations are not irreconcilable. While it would
be clearer if the limitations were the same, the express language of a statute
may not be ignored in order to foster administrative convenience. There is no
reason why a board could not levy $40,000 for the repair fund and $10,000 (or
some lesser amount) for a separate and individual repair project on the same
system.
The fundamental question that must be answered is whether the $50,000
assessment in 1987 was beyond the authority of the Board to levy. The $40,000
limitation in the repair fund statute prevents the Board from relying on that
statute. The Board could, however, rely upon the "Board's own motion"
provisions of the repair procedure statute. In addition, it could rely upon
the petition procedure in Section 106A.715. However, there was no Notice of
Hearing or other formalities required by Subdivision 3 of the petition
statute, thereby removing it from consideration. That leaves the "on its own
motion" procedure in 106A.705. The assessment meets all of the criteria in
that statute. The only bar would be if the proposed repairs were part of a
"bit-by-bit" scheme that improperly circumvents the limitation.
Based upon all the facts in the record concerning the pending petitions,
and the past actions of the managers, it is concluded that the 1987 assessment
was part of an on-going practice of dealing with repairs and petitions on a
bit-by-bit basis. Such a practice is prohibited by Dudek and the 1950 Attorney
General's opinion cited above. The assessment, therefore, is invalid.
V.
The Administrative Law Judge is unaware of the appropriate manner of
proceeding in the face of an invalid assessment. If it is still possible to
withdraw it, that would seem the simplest resolution. It is up to the
Committee, with its peculiar experience and expertise in this area, to
determine the best way to proceed.
A.W.K.
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