City of Asbury v. Iowa City Development Bd.
| Decision Date | 27 October 2006 |
| Docket Number | No. 05-0818.,05-0818. |
| Citation | 723 N.W.2d 188 |
| Parties | CITY OF ASBURY, Iowa, Appellee, v. The IOWA CITY DEVELOPMENT BOARD, Appellant. and City of Dubuque, Intervenor-Appellant. |
| Court | Iowa Supreme Court |
Thomas J. Miller, Attorney General, and Michael H. Smith, Assistant Attorney General, for appellant Iowa City Development Board.
Frank Murray Smith, of Frank Smith Law Office, Des Moines, and Barry A. Lindahl, Dubuque, for appellant City of Dubuque.
Thomas Henderson, John F. Fatino, and Karin M. Sinnard of Whitfield & Eddy, P.L.C., Des Moines, for appellee.
When does a carrot become a stick? Competing for common ground, the City of Asbury objects to the tactics the City of Dubuque used to voluntarily annex land. After the City Development Board1 (CDB) approved Dubuque's annexation application, Asbury appealed to the district court arguing Dubuque's application should have been dismissed because Dubuque coerced property owners into consenting to the annexation by offering them tax and other financial benefits conditioned on each property owner's consent. In response, Dubuque argued the offered benefits merely encouraged property owners to consent to annexation. The district court agreed with Asbury and found Dubuque's annexation process invalid. Because we find Dubuque's tactics were not prohibited by law, we reverse.
Asbury is west of Dubuque. An irregular gap exists between the two cities. The territory at issue in this case is between the western boundary of Dubuque and the southern boundary of Asbury.
Callahan Construction, which owns approximately 114 acres of unincorporated land in this area, asked Dubuque to annex its land in order to facilitate the development of a housing subdivision. Dubuque also received annexation requests from various members of the Bahl family, who separately own several parcels of land totaling approximately 408 acres, which is most of the remaining unincorporated land between Dubuque and Asbury. Dubuque could not annex the Bahl and Callahan properties without also annexing the surrounding parcels of property. This is because the annexation of the Bahl and Callahan properties alone would have created "islands" of unincorporated land, which is prohibited by statute. See Iowa Code § 368.7(3) (Supp.2003)2 (); id. § 368.1(10) (). As a result, Dubuque pursued the annexation of twenty-nine parcels of land or approximately 704 acres. Callahan Construction owns two of these parcels (114 acres) and the Bahl family in total owns seven (408 acres). The remaining twenty parcels amount to 168 acres. Dubuque's annexation also included fifteen acres of county roads.
Dubuque sought annexation consents from the owners of the remaining twenty parcels in the proposed territory. Dubuque's city manager and several Dubuque employees attempted to personally contact each property owner in the annexation territory in order to discuss the annexation and the transition benefits Dubuque was proposing.3 Additionally, the city manager attended a neighborhood meeting with about thirty people in attendance.
In an effort to entice the property owners in the proposed territory to consent, Dubuque offered the following transition benefits to the property owners within the territory: (1) a five-year partial exemption from city property taxes; (2) a reduced cost to voluntarily connect to Dubuque sanitary sewer lines; (3) a reduced cost to connect to Dubuque water lines; (4) consideration by Dubuque to enlarge Middle Road; and (5) deferral of any sewer connection costs until the property is sold. These benefits were explained in an agreement entitled "Agreement between and among the City of Dubuque, Iowa and Certain Property Owners in Dubuque County, Iowa" ("Agreement"). The Agreement was sent to each property owner along with a letter from Dubuque's city manager dated August 8, 2003.4 In his letter, the city manager explained "only those property owners who choose to sign this Agreement [i.e. consent to Dubuque's annexation] will be entitled to the benefits of this Agreement." The Agreement gave the property owners until August 14, 2003 to respond. In the accompanying letter, the city manager stated "[h]opefully, all of the property owners will sign this Agreement and return it to my office not later than 5:00 p.m. on August 13, 2003 so that it may be placed on the Agenda for the Dubuque City Council meeting of August 18, 2003."
In the end, twenty-one of the twenty-nine property owners (representing 643 acres) signed the Agreement and consented to Dubuque's annexation. The owners of the non-consenting parcels asked Asbury to annex their land. Asbury agreed and on December 16, 2003, Asbury filed an application for voluntary annexation with the CDB. On January 9, 2004, Dubuque filed its voluntary annexation application with the CDB for approximately 704 acres which included the land in Asbury's application. The CDB directed the two cities to meet and try to resolve their competing annexation proposals. After the two cities were unable to reach a compromise, the CDB dismissed Asbury's application because it would have created a proscribed island.
The CDB proceeded with Dubuque's application and conducted a public hearing in Dubuque on April 1, 2004. In its presentation to the CDB, Dubuque explained the necessity of the annexation as well as the services Dubuque would provide to the territory.
At the CDB hearing, Asbury objected to Dubuque's annexation application. Asbury accused Dubuque of "bad faith" in obtaining the consents of property owners in the proposed territory. Asbury claimed Dubuque did not give the property owners adequate time to consider the proposal. Asbury's biggest concern, however, was that Dubuque conditioned the receipt of transition benefits on each property owner's consent. Asbury argued this amounted to "undue pressure" and questioned the voluntariness of the property owners' consents.
Additionally, several property owners within the proposed territory spoke at the hearing. Members of the Bahl family spoke in favor of the annexation. Other property owners spoke against the annexation. For example, Joe and Mary Behnke through their attorney said they felt "pressured and coerced by the representatives of [Dubuque]" to annex their land. Francis McDonald told the CDB he signed the Agreement "under duress" in order to get the tax benefits.5 Another property owner, Pete Henkels, compared the conditioning of benefits on a property owner's consent to "bribery or extortion." Douglas Fritch also spoke out against the "unethical treatment" of him and his neighbors by Dubuque. According to Mr. Fritch, Dubuque estimated it would cost him about $10,000 for "mandatory sewer hookup." He signed the Agreement only to defer that "huge cost" until he sold his property. Mr. Fritch also said that he wanted to include a notation on the Agreement that he was reluctantly signing but Dubuque would not let him. In response to a question by one of the CDB members, Dubuque reiterated its intention to give the tax abatement only to the property owners in the territory who consented to annexation.
Shortly after the public hearing, Dubuque's City Council passed Resolution No. 174-04 which extended the transition benefits to those property owners in the territory who had not consented to annexation. Thereafter, Dubuque presented the CDB with a copy of the Resolution.
The CDB met in Des Moines to deliberate and determine Dubuque's annexation request. At least four-fifths of the CDB members voted to approve the annexation as required by Iowa Code section 368.7(1)(f). The CDB filed its written decision concerning the matter on July 7, 2004.
Asbury filed a petition for judicial review in the district court for Dubuque County. Based on the record, the district court reversed the CDB's decision approving Dubuque's annexation. The district court found the annexation process invalid because Dubuque "unfairly induced the property owners to the extent it placed the property owners in a position of either agreeing to the annexation and receiving financial benefits, or being denied financial benefits for refusing to agree to the annexation." Dubuque and the CDB appealed.
Iowa's city development statute specifically limits judicial review of a CDB decision. It states:
The judicial review provisions of this section and chapter 17A shall be the exclusive means by which a person or party who is aggrieved or adversely affected by agency action may seek judicial review of that agency action. The court's review on appeal of a decision is limited to questions relating to jurisdiction, regularity of proceedings, and whether the decision appealed from is arbitrary, unreasonable, or without substantial supporting evidence. The court may reverse and remand a decision of the board or a committee, with appropriate directions.
Iowa Code § 368.22 (2003). "On appeal, we decide whether the district court correctly applied the law." Pruss v. Cedar Rapids/Hiawatha Annexation Special Local Comm., 687 N.W.2d 275, 279 (Iowa 2004). If we reach the same conclusions as the district court, we affirm; if not, reversal may be required. Id.
"The law of annexation is purely statutory." Id. Nevertheless, substantial compliance with our annexation statutes is sufficient. City of Des Moines v. City Dev. Bd., 473 N.W.2d 197, 200 (Iowa 1991). We liberally construe "legislation establishing the method by which municipal corporate boundaries may be extended . . . in favor of the public." Id.
The question presented in this case is whether a city may offer tax and other financial benefits to property owners on the condition they...
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