City of Council Bluffs v. Pottawattamie County

• Decision Date: 25 May 1977
• Docket Number: No. 2-57982,2-57982
• Citation: 254 N.W.2d 18
• Parties: The CITY OF COUNCIL BLUFFS, Iowa, a Municipal Corporation, Appellee, v. POTTAWATTAMIE COUNTY, Iowa, et al., Appellants.
• Court: Iowa Supreme Court

Page 18

254 N.W.2d 18

The CITY OF COUNCIL BLUFFS, Iowa, a Municipal Corporation, Appellee, v. POTTAWATTAMIE COUNTY, Iowa, et al., Appellants.

No. 2-57982.

Supreme Court of Iowa.

May 25, 1977.

Lyle A. Rodenburg, Council Bluffs, for appellants.

Porter, Heithoff, Pratt & Reilly, Council Bluffs, for appellee.

Heard before MOORE, C. J., and LeGRAND, UHLENHOPP, REYNOLDSON and HARRIS, JJ.

LeGRAND, Justice.

This is an appeal from a summary judgment under which the trial court held certain property in Council Bluffs, Iowa, owned by the city and intended to be used for urban development exempt from taxation. The defendants in the suit are a number of governmental bodies and the individuals who serve on them. The city filed a motion for summary judgment to establish its exempt tax status. Defendants filed a cross-motion for summary judgment. The trial court entered judgment for plaintiff and denied defendants' motion. All the defendants appeal except Luella Olderog, City Treasurer. We reverse and remand for entry of an order dismissing plaintiff's petition.

The stipulated facts may be summarized as follows: On April 20, 1970, the city by eminent domain took title to the property here involved as part of its urban renewal program. See Chapter 403, The Code, 1966.

When the city acquired the property, Mid-America Oil Corporation was a tenant and was operating the premises as a gasoline service station. After the city acquired the property, they entered into a lease with Mid-America Oil Corporation under the terms of which the corporation remained as a tenant pending demolition of the area in preparation for the urban renewal project.

This lease was terminated on February 20, 1973, when the lessee vacated the premises. The property was demolished late in March, 1973, in preparation for urban renewal work.

The city received gross rental of $14,266.68 under the Mid-America Oil Corporation lease. It paid out $1,876.35 for maintenance, realizing a net rental of $12,390.33. This rental was allocated to the urban renewal project and did not become part of the city's general fund.

The city assessor did not remove the property from the assessment roll until the premises were vacated and subsequently demolished. The city received tax bills from the county for 1970, 1971 and 1972 totaling $6,586.72.

The city refused to pay the taxes. On July 2, 1970, the city's attorneys held a conference with the city assessor requesting that the property be removed from the rolls. He refused to do so. It did not, however, seek administrative relief from the assessments from the Board of Review. See § 441.37, The Code.

Two issues are raised. First, defendants contend the city failed to exhaust its administrative remedy before seeking relief in the courts; and, second, assuming the first issue is resolved against them, defendants insist the property is subject to tax under the provisions of § 403.11(2), The Code, 1966.

We decide the case on the first issue and do not reach the second.

The statute under which the city claims to be exempt from taxation is here set out (§ 403.11(2)):

"1. * * *

"2. The property of a municipality, acquired or held for the purposes of * * * (urban renewal), is declared to be public property used for essential public and governmental purposes, and such property shall be exempt from all taxes of the municipality, the county, the state, or any political subdivision thereof: Provided, that such tax exemption shall terminate when the municipality sells, leases or otherwise disposes of such property in an urban renewal area to a purchaser or lessee which is not a public body entitled to tax exemption with respect to such property." (Emphasis added.)

The emphasized portion is the provision on which this contest turns. The city assessor held the conditioned exemption of the statute inapplicable because the property was leased to Mid-America Oil Corporation.

The question then becomes whether the general exemption of the statute is defeated here by the lease between the city and Mid-America Oil Corporation.

Ordinarily an administrative remedy must be exhausted before courts will intervene to grant relief. Rowen v. LaMars Mutual Insurance Company of Iowa, 230 N.W.2d 905, 909 (Iowa 1975); Charles Gabus Ford v. Iowa State Highway Commission, 224 N.W.2d 639, 647 (Iowa 1974); Oliver v. Iowa Power & Light Co., 183 N.W.2d 687, 691 (Iowa 1971); Elk Run Telephone Co. v. General Telephone Co., 160 N.W.2d 311, 315 (Iowa 1968); see generally 2 Am.Jur.2d Administrative Law § 595 (1962) and 73 C.J.S. Public Administrative Bodies and Procedure §§ 40, 41 (1951). See also Davis, Administrative Law Text (3d ed. 1972), § 20.01 at 382.

In Rowen, supra, we said the exhaustion rule does not control unless two conditions are present. An administrative remedy must exist for the claimed wrong, and the statute must expressly or impliedly require that remedy to be exhausted before resort to the courts. Both those conditions are met here.

The city claims its property was not assessable because of the provisions of § 403.11(2). This complaint is a specific ground for appeal from the assessor to the Board of Review under § 441.37, The Code, 1966. We quote from that statute:

"Any property owner or aggrieved taxpayer who is dissatisfied with his assessment may file a protest against such assessment with the board of review * * * Said protest shall be in writing and signed by the one protesting or by his duly authorized agent. Taxpayer may have an oral hearing thereon if request therefor in writing is made at the time of filing the protest. Said protest must be confined to one or more of the following grounds:

(1) * * *

(2) * * *

(3) That his property is not assessable and stating the reasons therefor * * *. " (Emphasis supplied.)

We hold the statute contemplates complaints such as the one made here shall be first heard and decided by the Board of Review before judicial relief may be had. The second Rowen requirement that an administrative remedy exists is also satisfied. The Board has statutory authority to correct erroneous assessments. See §§ 441.35-441.37.

The city argues the tax imposed was void because the property was exempt from taxation. This, the city says, permits it to go directly to the courts without first seeking relief from the Board of Review. Whether the property was exempt from taxation under the wording of § 403.11(2), of course, is the very question to be decided. The rule that administrative procedures need not be resorted to when the tax is unconstitutional or is levied without authority does not apply to questions such as the one presented here.

If the city is right, any taxpayer who claimed his property should not have been assessed at all could ignore the Board of Review and go directly to the courts; but this would manifestly be contrary to both the express provisions and the purpose of § 441.37 heretofore set out. The statute permits the urban renewal property to be taxed under certain circumstances. The parties disagree as to whether these circumstances are present here. This is a matter well within the authority of the Board of Review. Cf. Bednar v. Carroll, 138 Iowa 338, 342-343, 116 N.W. 315, 317 (1908).

Neither is it any objection to...