This post was authored by Amy Lavine, Esq.
In a case decided in 2021, the Nebrasks Supreme Court concluded that a sanitary and improvement district is not a “person” having “private property” for which it can bring a takings claim against the state. Rather, as a political subdivision, the district was created by and subject to the state, and was thus it could not assert an inverse condemnation action seeking compensation from the state.
Sanitary and improvement districts are formed under Nebraska law as units of local government, with their primary purpose being to install and maintain public improvements such as streets, sewers, utility lines. Sanitary & Improvement Dist. No. 67 was created to serve a subdivision located to the east of Highway 75 near Bellevue, Nebraska. It maintained two access routes to the highway for subdivision residents until 2003, when the Nebraska Department of Transportation and Sarpy County rerouted both access routes as part of a project to reconstruct Highway 75. The district contended that it was the “owner” of these access routes based on a dedication included in the subdivision plat and that it was entitled to just compensation because the rerouting constituted a “taking” or “damaging” of its property. It failed to attach a copy of this dedication to its petition, however, and it conceded that an alternative route continued to afford highway access from the streets and roads within the subdivision.
The trial court dismissed the district’s inverse condemnation suit based on a lack of standing, finding that it failed to establish that it was a real party in interest because its pleadings neither alleged that its property had been taken nor that it was an “abutting landowner” to the blocked highway accesses. As it concluded, the subdivision plat “did not grant [the district] an ownership interest in this property; quite the contrary, it divested [the district] from any ownership interest it may have had and transferred ownership to the public[,] thereby converting the private roads constructed by [the district] into public roads.”
The Nebraska Supreme Court affirmed this dismissal on appeal. Although the district argued that the issue of ownership was a question of fact that shouldn’t have been decided at the pleading stage, the court explained that the district wasn’t entitled to an evidenciary hearing because the motion to dismiss presented a facial challenge to the court’s subject matter jurisdiction and the trial court wasn’t required to consider evidence outside the pleadings to resolve this issue.
In its second assignment of error, the district argued that the trial court erred in finding that “it was not the real party in interest” and thus lacked standing. The trial court had reached this conclusion based on its belief that a “dedication instrument could not have conveyed to [the district] ownership of the roads at issue.” The Nebraska Supreme Court agreed that the district wasn’t a real party in interest, but it relied on slightly different grounds, finding that the district wasn’t a “person” capable of bringing an inverse condemnation action. As it explained:
the [district] ‘is a legislative creature, a political subdivision of the State of Nebraska.’ Statutes prescribe the [district’s] formation as ‘a public corporation of this state.’ Once formed, the [district] has no inherent authority to hold an interest in property; it, unlike a ‘person,’ can exercise only those powers expressly granted to it by statute or necessarily implied to carry out its expressed powers.’… so too could the Legislature ‘”‘at its pleasure . . . take without compensation such property'”‘ as it has allowed the [district] to hold.
Accordingly, because the district was not a “person” having “private property,” it was not a real party in interest and therefore lacked standing to bring an inverse condemnation action against the state.
Sanitary & Improvement Dist. No. 67 of Sarpy Cty. v. State of Neb. Dep’t of Roads, 309 Neb. 600 (2021).
LAW OF THE LAND 
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