De Novo Review and the Presumption of Validity in Municipal Special Assessment Appeals

Introduction

KJD, LLC v. City of Tea, 2025 S.D. 22, is a Supreme Court of South Dakota decision addressing a property owner’s challenge to a municipal special assessment under SDCL 9-43-96. The City of Tea adopted a special assessment to finance road‐construction improvements and levied a $61,623.38 charge against KJD’s parcel. KJD objected in circuit court, arguing the project conferred no “special benefit” and that the assessment method—allocating total project cost by linear frontage—was unconstitutional. After briefing and a hearing, the circuit court upheld the assessment, finding KJD failed to rebut the statutory presumption that the city’s findings were correct. KJD appealed, and the Supreme Court affirmed.

Summary of the Judgment

• The Court held that appeals under SDCL 9-43-96 proceed by trial or de novo review in circuit court, with the municipality’s findings presumed valid.
• The Court distinguished special assessment challenges from condemnation proceedings and declined to treat an absence of benefits in eminent-domain appraisal as dispositive in a special assessment context.
• KJD bore the burden to produce “weighty, substantial, credible” evidence rebutting the presumption and clear-and-convincing proof that the assessment exceeded any special benefit, but offered only legal argument and inadmissible appraisal reports.
• Because KJD failed to introduce admissible evidence—and did not move for summary judgment—the circuit court correctly affirmed the assessment.
• The Supreme Court performed a de novo review and affirmed the lower court’s judgment denying KJD’s objection.

Analysis

Precedents Cited

The Court relied principally on three lines of authority:

• Hubbard v. City of Pierre (2010 S.D. 55): Established that municipal assessments must confer a “special benefit” above that enjoyed by the public at large, and that city findings carry a rebuttable presumption of validity. Landowners must introduce substantial, credible evidence and prove by clear and convincing evidence that the assessment exceeds the benefit.
• Village of Norwood v. Baker (172 U.S. 269): Confirmed that assessments which exceed the special benefit operate as a taking without just compensation, and emphasized landowners’ right to show the assessment amount exceeds benefit received.
• Winona & St. P.R. Co. v. City of Watertown (1890): Articulated the presumption that special assessments are levied only on the theory that a special benefit has accrued to the assessed property.

Legal Reasoning

The Court’s reasoning unfolded in several steps:

1. Procedure under SDCL 9-43-96. The statute creates a right to appeal a municipal assessment to circuit court. Although the Legislature did not specify the scope of review, Hubbard’s framework applies: city findings are presumed correct, and landowners may seek a trial on the merits or move for summary judgment (if properly noticed and supported by admissible evidence).
2. Presumption and Burden of Proof. Following Hubbard, the City’s resolution of necessity carries a presumption that its factual findings—e.g., improved traffic flow, enhanced safety, raised market value, aesthetic benefits—are correct. KJD bore two burdens:
   • Rebut the presumption with substantial, credible evidence (“weighty,” “clear and positive”), and
   • Ultimately persuade by clear and convincing proof that any special benefit did not equal or exceed the special assessment.
3. Distinction from Condemnation Proceedings. The Court clarified that condemnation statutes (SDCL 21-35-17) address compensation for land taken or damaged, with benefit offsets limited to value increases of the remaining property. Special‐assessment benefits are broader—encompassing improved use, safety, aesthetics, and potential market‐value uplift. Thus, an appraisal in an eminent‐domain case concluding no offset does not preclude a separate finding of special benefit under a special assessment.
4. Assessment Methodology. The Court upheld cost‐based allocation by linear frontage (SDCL 9-43-78), provided the city conducts an investigation of benefits and issues a resolution documenting them. Such a method is not per se unconstitutional so long as it is tied to findings as to benefit and subject to judicial review.
5. Evidence and Admissibility. KJD attempted to rely on appraisal reports and the city’s discovery admissions, but did not properly move for summary judgment or tender the appraisals as evidence at trial. The Court declined to consider inadmissible materials and noted that admissions in a separate condemnation action were not binding here. KJD offered no live testimony or admissible documents to challenge the City’s findings.

Impact

This decision clarifies several practical points for future challenges to municipal special assessments:

• Circuit courts may conduct de novo trials on special assessment appeals, and parties may move for summary judgment if the record is properly developed.
• Municipal resolutions listing the factual basis for special benefits will carry a strong presumption of validity.
• Landowners must present admissible, weighty evidence at the appellate‐level trial—appraisals or expert testimony—to overcome that presumption.
• Allocating project costs by frontage remains a constitutionally permissible method under state law, so long as benefit findings accompany the calculation.
• Condemnation proceedings do not collaterally estop or automatically resolve benefit disputes in special assessment appeals.

Complex Concepts Simplified

• Special Assessment: A levy by a municipality on property owners proximate to a local public improvement, allocating project costs to those who will benefit most.
• Special Benefit: A gain or advantage conferred on assessed property beyond that shared by the general public, including but not limited to increased market value, improved access, enhanced safety, or aesthetic improvements.
• Presumption of Validity: Legal effect that a municipal finding is correct until a property owner offers strong admissible proof to the contrary.
• Clear and Convincing Evidence: A high evidentiary standard requiring the challenger to show it is “highly probable” or “reasonably certain” that the assessment exceeds the benefit.
• De Novo Review: An appellate‐level remand or trial in which the circuit court re-examines the facts and law from scratch, without deferring to the municipal decision.

Conclusion

KJD, LLC v. City of Tea reaffirms that municipal special assessments enjoy a presumption of correctness when the governing body issues a resolution documenting the specific benefits conferred by a local improvement. Property owners challenging such assessments must timely invoke circuit‐court review, produce admissible and substantial evidence, and satisfy a clear‐and‐convincing standard to overturn the charge. The decision distinguishes assessment appeals from condemnation proceedings, upholds cost‐allocation methods when paired with benefit findings, and provides a clear procedural roadmap for future disputes over municipal special assessments in South Dakota.