City of Atlantic v. County Bd. of Review of Cass County, 2--56540

• Decision Date: 12 November 1975
• Docket Number: No. 2--56540,2--56540
• Citation: 234 N.W.2d 880
• Parties: CITY OF ATLANTIC, Iowa, et al., Appellants, v. COUNTY BOARD OF REVIEW OF CASS COUNTY, Iowa, et al., Appellees.
• Court: Iowa Supreme Court

Page 880

234 N.W.2d 880

CITY OF ATLANTIC, Iowa, et al., Appellants, v. COUNTY BOARD OF REVIEW OF CASS COUNTY, Iowa, et al., Appellees.

No. 2--56540.

Supreme Court of Iowa.

Nov. 12, 1975.

Rehearing Denied Dec. 11, 1975.

Harold G. DeKay and J. R. Larson, Atlantic, for appellants.

Ronald W. Feilmeyer, and C. R. Yarham, County Atty., Atlantic, for appellee Bd. of Review.

William Oakes, Omaha, Neb., for appellees, Safeway Stores, Inc. and Bankers Life Co.

Heard by MOORE, C.J., and REES, UHLENHOPP, REYNOLDSON and McCORMICK, JJ.

MOORE, Chief Justice.

This court has adjudicated countless cases involving claimed overvaluation of real property by assessors and boards of review. This appeal presents for the first time a claim of undervaluation for property tax purposes.

After thorough study and survey to determine the needed area and most advantageous location for a new supermarket in Atlantic, Iowa, Safeway Stores, Inc. (Safeway) began taking options and finally purchased ten city lots and houses at a total price of $241,250. The cost of acquisition was initially estimated at $127,500. Safeway after removing the existing structures then commenced construction of a building designed for its particular use. The building, a large parking area, retaining walls and other necessary improvements for Safeway's supermarket operation were completed on July 30, 1970 at an additional cost of $358,970.

A few months after completion of construction and occupancy, Safeway sold the property by warranty deed to Bankers Life Company for the sum of $615,000. Concurrently Safeway and Bankers Life entered into a leaseback arrangement wherein Safeway leased the property for 20 years with options to renew at the end of that period. This 'net lease' requires Safeway to pay all taxes, insurance, maintenance and upkeep. It allows Bankers Life to recoup its entire investment of $615,000 plus nine percent interest by the end of the 20-year term.

In early 1971, Cass County assessor caused the property to be valued for tax assessment pursuant to Code chapter 441, specifically 441.21. That valuation set the actual value of the property at $336,162. Shortly thereafter plaintiffs filed a protest before the County Board of Review asking the Board to raise the valuation of the property asserting violations of their due process and equal protection constitutional rights. The Board affirmed the assessor's valuation. This action was then filed in the district court which affirmed the Board. Plaintiffs have appealed from the judgment and decree of the lower court.

The issues here raised turn primarily on interpretation of Code section 441.21. Plaintiffs assert the trial court erred in holding the sale by Safeway to Bankers Life with the lease back to Safeway was an 'abnormal transaction not reflecting market value' and that $336,162 was the actual value of the property.

Code section 441.21, as pertinent here, provides:

'441.21. Actual, assessed, and taxable value.

'1. All real and tangible personal property subject to taxation shall be valued at its actual value which shall be entered opposite each item, and shall be assessed at twenty-seven percent of such actual value, and such value so assessed shall be taken and considered as the taxable value of such property upon which the levy shall be made.

'The actual value of all property subject to assessment and taxation shall be the fair and reasonable market value of such property. 'Market value' is defined as the fair and reasonable exchange in the year in which the property is listed and valued between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and each being familiar with all the facts relating to the particular property. Sale prices of the property or comparable property in normal transactions reflecting market value, and the probable availability or unavailability of persons interested in purchasing the property, shall be taken into consideration in arriving at its market value. In arriving at market value, sale prices of property in abnormal transactions not reflecting market value shall not be taken into account; or shall be adjusted to eliminate the effect of factors which distort market value, including but not limited to sales to immediate family of the seller, foreclosure or other forced sales, contract sales, discounted purchase transactions or purchase of adjoining land or other land to be operated as a unit.

'* * *.

'In the event market value of the property being assessed cannot be readily established in the foregoing manner, then the assessor may consider its productive and earning capacity, if any, industrial conditions, its cost, physical and functional depreciation and obsolescence and replacement cost, and all other factors which would assist in determining the fair and reasonable market value of the property but the actual value shall not be determined by use of only one such factor. The following shall not be taken into consideration: Special value or use value of the property to its present owner, and the good will or value of a business which uses the property as distinguished from the value of the property as property. Upon adoption of uniform rules and regulations by the state tax commission or succeeding authority covering assessments and valuations of such properties, said valuation of such properties shall be determined in accordance therewith for assessment purposes to assure uniformity, but such rules and regulations shall not be inconsistent with or change the foregoing means of determining the actual market, taxable and assessed values.'

I. Our review of this case involving protests over the valuation placed on the parcel of real estate here involved is de novo. Milroy v. Board of Review of County of Benton, Iowa, 226 N.W.2d 814, 816; Power v. Regis, Iowa, 220 N.W.2d 587, 589, and citations. Weight is accorded trial court's findings but we are not bound by them. Rule 344(f)(7), Rules of Civil Procedure. Although we are not bound by trial court's findings on credibility of witnesses, we give weight to such findings. N. W. Mut. Life Ins. Co. v. Bd. of Review, Iowa, 225 N.W.2d 317, 319.

As we point out in Milroy v. Board of Review of County of Benton, supra, Iowa, 226 N.W.2d 814, 817, filed March 19, 1975, the following propositions are now well established by our case law and section 441.21: (1) there is no longer a presumption the valuation as made is correct, (2) the protesting taxpayer must prove the valuation is excessive, inadequate, inequitable or capricious and (3) only those matters raised in protest before the Board of Review may be asserted on appeal to the district court and only those matters raised and preserved in district court may be considered on appeal to this court.

II. The record before us discloses plaintiffs submitted next to no evidence pertinent to the issues involved, as compared to that of defendants.

Plaintiffs put in evidence the lease and warranty deed from Safeway to Bankers Life which showed the purchase price as $615,000. Plaintiffs then called R. L. Goeken, the owner of a small grocery in Marne, Iowa, who related his experience in the early fifties of buying land in several states for Northern Natural Gas Company and stated he had been an appraiser since 1958. He had appraised for several lending institutions and had appraised a...