February 22, 2010
Dear City Administrator:
You recited the following facts to me on the telephone: Recently the developer of a subdivision went bankrupt before he could complete the streets in accordance with the city' s subdivision standards, in a subdivision in the city. The city collected on the bond posted by the developer, but there is insufficient money from the proceeds of that bond to complete the streets in accordance with the city' s subdivision standards. The city has two questions arising from these facts:
1. Is there any possibility that the streets are city streets notwithstanding the fact that they have not formally been accepted by the planning commission? (Actually, I raised this question).
2. If the city agrees to accept the streets, can it, as a condition to such acceptance, impose a special assessment upon the property holders in the subdivision to pay for the completion of the streets therein to the city' s subdivision standards?
The answer to question 1 is that the city has not accepted the streets by implication arising from public use.
The answer to question 2 is that I see no reason why the city could not, with the agreement of the property owners, impose special assessment upon the property owners to complete the streets in the subdivision.
Analysis of Question 1
The city did not raise this question; it occurred to me during the conversation I had with you on the telephone because streets can be accepted by implication through public use.
Tennessee Code Annotated, '13-3-405 provides that, " The approval of a plat by a regional planning commission shall not be deemed to constitute or effect acceptance by any county or by the public of a dedication of any road or other ground shown upon the plat." Tennessee Code Annotated, '13-3-403 contains the restrictions and conditions that developers must meet to obtain formal acceptance of the subdivision' s streets. As I understand the facts, the developer did not meet those conditions with respect to the roads in the subdivision in question. While I was on the phone with you, I mentioned the possibility that the streets had been accepted by the public' s use of them. That was the outcome of Hackett v. Smith County, 807 S.W.2d 95 (Tenn. Ct. App. 1990). However, as the court itself noted in that case, even though the roads had not been formally accepted by Smith County, the Smith County Road Commissioner had approved the roads as having been properly constructed and had released the bond for them, following which the public' s use of them constituted implied acceptance of them.
The unreported case of Shanan v. Franklin County, 2003 WL 23093836 (Tenn. Ct. App.), declared that Hackett v. Smith County, above, did not apply to a case in which a developer argued that the county had impliedly accepted the roads he had built, reasoning that, among other things, the construction of the roads were substandard, not even having been paved.
The doctrine of implied acceptance has only limited application to property within subdivisions governed by local planning statutes. It may be invoked when a local government has declined or refused to explicitly accept property after a developer of an approved subdivision has complied with all applicable regulations... [At 6]
In another unreported case, Gibbs Brothers Construction Company v. Brook Hollow Green, LLC, 2005 WL 905775 (Tenn. Ct. App.), a question was whether the roads in a subdivision were public or private roads, the roads not having been completed to standards and accepted by the city. It was said by the court that:
Brook Hollow asserts that the roads in the subdivision were not private roadways because the City of Fairview gave plat approval to Brook Hollow before the roads were built, making them public roads. Tennessee statutes, however, are contrary to Brook Hollow's position. Tennessee Code Annotated '13-4-405 states expressly that plat approval does not constitute public acceptance of the road. T.C.A. '13-3-405 (1999). Moreover, in Hackett v. Smith County, 807 S.W.2d 695 (Tenn. Ct. App. 1990), this court explained that a road becomes public after there has been an offer of dedication of the road and an acceptance of its dedication to public use. Id. At 699. Acceptance of a road to public use may be implied through ongoing public use. Id. Here, the facts are inconsistent with any acceptance of the road to public use. It is undisputed that Brook Hollow remained the owner of the property on which the roads were located. Moreover, at the time Gibbs filed the lien, the final layer of asphalt had not yet been put on the roads; therefore, there could be no implied acceptance of the roads to public use through ongoing public use. Consequently, the roadways on which Gibbs performed work remained "private roadways"within the meaning of Section 66-11-107(7), and the work performed by Gibbs would be deemed an "improvement"within the meaning of Section 66-11-102, and subject to lien on the land owned by Brook Hollow.... [At 5]
Analysis of Question 2
There are two separate, but related special assessment statutes found at Tennessee Code Annotated, Title 32 and Title 33. In addition, your City is chartered under the general law mayor-aldermanic charter found at Tennessee Code Annotated, '6-1-101 et seq. Section 6-2-201(4) of that charter provides that, among the powers of the city, is the power to, "Make special assessments for local improvements.A Section 6-2-201(16)(A) provides that cities established under that charter can," Construct, improve, ....any streets ....and assess a portion of the cost of these imposements on property abutting on or adjacent to these streets .... under, and as provided by Title 7, chapters 32 and 33.... Needless to say, the charter is consistent with the two state statutes on special assessments. Note that absent an agreement by the property owners, the city must pay a part of the costs of the project.
Tennessee Code Annotated, Title 33 provides for the imposition of special assessments when the city issues bonds to finance the project in question.
I can find no reason that the City could not agree to accept the private roads or streets in the subdivision in exchange for the property owner's agreement to submit to a special assessment to bring them up to standard. Indeed, there appears no reason under those two state statutes and the city's charter why the city could not impose such special assessments absent the agreement of the property owners in the subdivision. I have located on Google a Hickman County resolution under which the county funded a project for certain road improvements under Tennessee Code Annotated, '7-32-118, under which the property owner can agree to foot the entire cost of a special assessment. However, that project cost only $60,000.
The rules governing special assessments under Tennessee Code Annotated, '7-33-101 et seq (where the issuance of bonds is contemplated) are somewhat different than where the special assessments are made under Tennessee Code Annotated, '32-101 et seq. But those differences are laid out pretty well in those statutes. Frankly, I am not sure which statute is the best one for the city to use.
We have a file on the use of special assessments. It includes at least one set of assessment documents that applies to the issuance of special assessments under Tennessee Code Annotated, '7-33-101 et seq., by the City of Oak Ridge, even though the city did not issue bonds for the street project in question. It also contains a history of special assessments in Tennessee done for the City of Oak Ridge. The documents and history date back to 1964, but the two special assessment statutes have not substantively changed much since then. I am trying to locate more recent documents reflecting special assessments made under those statutes. I will be glad to provide you with what documents I have on that subject, including any I might obtain in the near future.
Sidney D. Hemsley
Senior Law Consultant