City of Clive v. Iowa Concrete Block & Material Co.

• Decision Date: 12 November 1980
• Docket Number: No. 64221,64221
• Citation: 298 N.W.2d 585
• Court: Iowa Supreme Court
• Parties: CITY OF CLIVE, Appellant, v. IOWA CONCRETE BLOCK & MATERIAL COMPANY; E. Stephen Grask; Orville E. Crowley; Chicago, Milwaukee, St. Paul and Pacific Railroad Company; Bjornsen Investment Corporation; Pittsburgh-Des Moines Steel Company; and all Unknown Individuals and Corporations Having or Claiming an Interest in the Real Property to be Assessed as Part of the Construction of the 100th Street Improvement Program, 1979, Appellees.

Page 585

298 N.W.2d 585

CITY OF CLIVE, Appellant, v. IOWA CONCRETE BLOCK & MATERIAL COMPANY; E. Stephen Grask; Orville E. Crowley; Chicago, Milwaukee, St. Paul and Pacific Railroad Company; Bjornsen Investment Corporation; Pittsburgh-Des Moines Steel Company; and all Unknown Individuals and Corporations Having or Claiming an Interest in the Real Property to be Assessed as Part of the Construction of the 100th Street Improvement Program, 1979, Appellees.

No. 64221.

Supreme Court of Iowa.

Nov. 12, 1980.

Rehearing Denied Dec. 11, 1980.

Keith E. Luchtel of Nyemaster, Goode, McLauglin, Emery & O'Brien, Des Moines, for appellant.

Francis H. Becker of Patterson, Lorentzen, Duffield, Timmons, Irish & Becker, Des Moines, for appellees Iowa Concrete Block & Material Co. and Pittsburgh-Des Moines Steel Co.

Bertrand E. Gionet, Des Moines, for appellees E. Stephen Grask and Orville E. Crowley.

Considered by REYNOLDSON, C. J., and LeGRAND, McCORMICK, McGIVERIN, and SCHULTZ, JJ.

McGIVERIN, Justice.

This appeal involves an attempt by plaintiff City of Clive to levy special assessments, sections 384.37-.79, The Code 1979, against defendant property owners to pay the cost of turning a two-lane, gravel road into a four-lane, paved street. In January 1979 Clive petitioned the district court in equity under section 384.54 for a decree confirming the assessments. After trial, the court reduced the assessments from a total of $253,002.16 to $30,938.92. Clive appeals. We modify and affirm in part and reverse in part.

This appeal requires us to consider portions of Division IV of chapter 384, The Code, which became effective July 1, 1975, and replaced special assessment chapters 391, 391A and 417, The Code 1973.

In deciding this appeal, it is necessary that we address the following questions:

1. Does section 441.21(1), The Code 1979, which provides a special method for valuing agricultural land based on productivity, net earning capacity, and fair market value as agricultural land, apply to determine if a special assessment exceeds "twenty five percent of the value of the lot" under section 384.62?

2. In an action to confirm by decree the acts of the city council concerning a proposed public improvement, can the district court decide that lots within the boundaries of the assessment district established by the council do not receive any special benefit from a public improvement?

3. Should the amount of the special assessments levied against the lots be reduced because they exceed the special benefits conferred on the property by the improvement and, if so, should the deficiency be assessed against the city?

4. Is defendant Pittsburgh-Des Moines Steel Company entitled to a deferment of the special assessment under section 384.62, The Code 1979, because part of its land subject to the assessment is used and assessed agriculturally?

5. Is a property owner whose special assessment has been deferred under section 384.62 liable for interest during the period of the deferment?

The city council of Clive decided in 1978 to begin the statutory process toward paving N.W. 100th Street from University Boulevard north to Hickman Road, a distance of approximately 1,150 feet. The street is presently a two-lane gravel road running north and south. The improvement will result in a four-lane divided concrete street. The parties agree that Clive followed the proper procedural steps in adopting the resolution of necessity, plans, specifications, plats, and schedule of assessments. Clive drew an assessment district bordered generally by Hickman Road on the north, University Boulevard on the south, and extending 886 feet west of 100th Street and approximately 2600 feet to the east. We have attached a map of the assessment district.

To pay for the project, Clive proposed to assess the cost against twelve parcels or lots owned by defendants on the east and west sides of N.W. 100th Street. Lots 10 and 11, belonging to the Chicago, Milwaukee, St. Paul and Pacific Railroad Company are not involved in this case because of a stay order arising out of the railroad's bankruptcy proceedings. The owner of lot 5, Bjornsen Investment Corporation, did not appear in the district court suit, and therefore is in default. This appeal involves lot 12, belonging to Pittsburgh-Des Moines Steel Company (PDM), lot 9, belonging to Iowa Concrete Block & Material Company (ICBM), and lots 1-4 and 6-8, belonging to E. Stephen Grask and Orville E. Crowley.

PDM's land, lot 12, is the only piece of property on the east side of the portion of 100th Street involved in this case. That entire parcel, approximately seventy-nine acres, is in the assessment district. The property abuts the length of the proposed improvement. Its eastern border is the eastern limit of the assessment district. This property is zoned M-2, heavy industrial.

ICBM's land, lot 9, is on the west side of 100th Street. It consists of approximately ten acres and abuts the southern 472 feet of the proposed improvement. The western border is 886 feet west of the street. Clive placed this entire parcel in the assessment district.

Grask and Crowley's land is north of ICBM's land. The lots are bisected by Hickman Court, a two-lane, east-west street which intersects 100th Street on the east. Lots 1 through 4 are north of Hickman Court with lot 1 abutting 100th Street. Lots 6 through 8 are south of Hickman Court with lot 8 abutting 100th Street. This property as well as that of ICBM is zoned M-1, light industrial.

We turn now to a discussion of the issues presented.

I. Valuation of agricultural land. When making a special assessment to pay for a public improvement, cities cannot exceed "twenty-five percent of the value of the lot." § 384.62, The Code 1979. To determine whether a special assessment exceeds this limit, section 384.46 directs the city council to value the lot at the "present fair market value of the property with the proposed public improvement completed."

All of ICBM's lot 9 and parts of PDM's lot 12 are presently assessed for purposes of property taxation as agricultural land. Under the 1979 Code the legislature has provided a special method for valuing agricultural land for purposes of assessing property taxes. The special method takes into account productivity, net earning capacity, and market value based solely on its use for agricultural purposes. § 441.21(1), fifth paragraph, The Code 1979. ICBM and PDM argued, and the trial court agreed, that when their property is valued as agricultural property, the special assessments exceed twenty-five percent of the value of their lots. Partly because it valued these lots as agricultural land, the court greatly reduced the special assessments against lots 9 and 12. Clive contends that it is an error of law to use the special method of valuation of agricultural property in section 441.21(1) to determine the upper limit of a special assessment under section 384.62. We agree.

The applicability of section 441.21(1) to other parts of the code is covered by section 441.21(3), which states:

3. "Actual value", "taxable value", or "assessed value" as used in other sections of the Code in relation to assessment of property for taxation shall mean the valuations as determined by this section; however, other provisions of the Code providing special methods or formulas for assessing or valuing specified property shall remain in effect, but this section shall be applicable to the extent consistent with such provisions....

The emphasized portion was added in 1980. 1980 Session, 68th G.A., ch. 1136, § 3.

PDM, ICBM, and the court relied heavily on Heins v. City of Cedar Rapids, 231 N.W.2d 16 (Iowa 1975). In that case, we decided that section 441.21(1), with its special method for valuing agricultural land, should be read into a special assessment statute, section 391.48, The Code 1973, to determine the value of the land. We previously noted that chapter 391, along with other chapters dealing with special assessments, have been replaced since Heins by current sections 384.37-.79. 1972 Session, 64th G.A., ch. 1088 § 199. For the reasons stated below, we conclude that the Heins case does not control here and therefore the special method for valuing farmland in section 441.21(1) does not apply in valuing land subject to a special assessment under section 384.46 and in computing the upper limit of the special assessment under section 384.62.

At the time of the Heins decision, section 391.48, The Code 1973, stated that special assessments, "shall not exceed twenty-five percent of the actual value of the lot at the time of levy ...." (emphasis added) We decided that because section 441.21(1), The Code 1973 (currently section 441.21(3)), stated that it applied to determine value wherever the words "actual value" were used in the code, and because section 391.48 used the words "actual value," section 441.21(1) applied to determine "actual value" under section 391.48. Heins, 231 N.W.2d at 18.

The problem with using this part of the Heins decision under the current special assessment statute is that sections 384.46 and .62 do not contain the words "actual value." Section 384.46 directs councils to value land subject to a special assessment at "the present fair market value of the property with the proposed public improvement completed." Section 384.62 puts the limit of a special assessment at "twenty-five percent of the value of the lot." Therefore, the command of section 441.21(3) to use section 441.21(1) to value land wherever the words "actual value" are used does not result in using section 441.21(1) in the current special assessment statutes.

Another basis for the Heins decision involved an analysis of whether the special assessment statute had its own special method or formula for valuing land. Under section 441.21(3), the methods of valuation in section 441.21(1) do not apply if other code sections have "special methods or formulas for assessing or...