Bill to require attorney-fee awards in property-tax appeals draws concerns and is tabled

Senator Amber Hull (District 30) told the House Taxation Committee that Senate Bill 208 would change when courts may award attorney fees in property-classification and assessment appeals, placing counties and taxpayers on equal footing in circuit-court actions.

Hull said the bill keeps local administrative remedies in place but would require a circuit court to award costs to a county when the county prevails and require awards to a taxpayer who reduces an assessment or changes classification by 20 percent or more; for changes below 20 percent the court would retain discretion to award fees. She also described a provision denying fee awards when an owner is responsible for obstructing necessary inspections.

Roger Telling, registered lobbyist for the South Dakota County Commissioners Association, said the language was negotiated with sponsors and expressed support while acknowledging counties’ concerns about inappropriate awards. Committee members pressed sponsors on incentive effects, asking whether converting a discretionary award into a mandatory one would increase litigation or encourage settlements. Telling and Hull said the 20 percent threshold was modeled on existing condemnation law and noted that courts use multiple factors to determine reasonable fee awards.

Several committee members raised constitutional and policy concerns. Representative Hughes and others warned that mandatory fee awards could deter property owners from pursuing meritorious challenges because of the risk of owing fees if they lose; they characterized the change as a departure from the American Rule that each side pays its own attorney unless statute provides otherwise. Sponsors and proponents replied that appeals reaching circuit court are relatively rare and that the bill was intended to level a system that currently allows fee awards only in some outcomes.

The committee considered substitute motions and multiple roll-call votes. After failing to obtain a do-pass majority in successive roll calls, the committee approved a motion to table Senate Bill 208 by roll call. Committee minutes record the tabling action as approved in committee (committee vote recorded in the hearing as 12 yes, 0 no, 1 excused). The bill was tabled and will not advance from this committee at this time.