September 12, 1988

Roger A. Schiager 
Sioux Falls City Attorney 
224 West Ninth Street 
Sioux Falls, South Dakota 57102

Official Opinion No. 88-41

Status of Special Assessment Lien on Property Foreclosed by South Dakota Housing Development Authority

Dear Mr. Schiager:

You have requested my official opinion on the following factual situation:

FACTS: 

The South Dakota Housing Development Authority forecloses many mortgages and these foreclosures sometimes affect special assessments of municipalities for sewer and water improvements, which special assessments were filed and assessed prior to the SDHDA mortgage.

Concerning this you have asked the following question:

QUESTION: 

For the purposes of SDCL 9-43-28 is the South Dakota Housing Development Authority considered "this state," thus exempting it from the provisions of said statute and effectively granting the mortgage held by the South Dakota Housing Development Authority a superior lien to that of the municipality for water and sewer special assessments? 

SDCL 9-43-28 provides: 

Any special assessment lawfully levied upon real property assessed pursuant to Chapters 9-47 and 9-48, except that land which is used for agricultural purposes as defined in Section 10-5-31, is a continuing lien thereon as against all persons except the United States and this state.  The lien shall continue from the date of the filing of the certified copy of the assessment  roll in the office of the Municipal Treasurer until barred by Section 9-43-60.

The SDHDA created pursuant to SDCL 11-11-10 as a body politic incorporate is also declared to be an independent public instrumentality exercising essential public functions.  The Authority has certain corporate powers which are expressed in §  11-27 but in the carrying out of its duties, SDCL 11-11-49 provides that obligations issued by the Authority are not deemed to constitute a debt or liability or obligation of the State or any political subdivision thereof or a pledge of the faith and credit of the State.  Further, that neither the faith and credit nor the taxing power of the State or any political subdivision is pledged to the payment of the principle or interest of the obligation.  SDCL 11-11-51 provides that no other department, division, commission, board, body bureau or agency of the State may control the issuance of bonds or notes by the Authority.

It is my opinion that for the purposes of SDCL 9-43-28 the Housing Authority, while it is an independent quasi-governmental agency, does not come within the contemplation of the term "this state."  Therefore special assessment levies on real property made in accordance with §  9-47 and 9-48 continue to be liens against the property which may be the subject of Housing Authority foreclosure action.

SDCL 11-11-102;  however, provides that the Authority shall not be  required to pay any tax or assessment of any kind on any property owned by the Authority under the provisions of SDCL 11‑11.  There is no doubt that the Authority owns property in the contemplation of this statute once it has foreclosed upon the same.  Thus, the Authority would not be subject to payment of any tax on that property or of any special assessments against the property.

The answer to your question is that while the lien against the property for special assessments continues after foreclosure by the Authority, the Authority is not required to pay such lien, neither is it required to pay taxes on the property but the lien for special assessments and taxes would follow that property into the hands of any subsequent purchaser and at that time the appropriate governmental entity may take action to collect the tax or special assessment.

Respectfully submitted,

Roger A. Tellinghuisen
Attorney General