Miller v. Prop. Assessment Appeal Bd.

• Citation: 939 N.W.2d 118 (Table)
• Decision Date: 07 August 2019
• Docket Number: No. 18-0929,18-0929
• Parties: Chad MILLER, Plaintiff-Appellant/Cross-Appellee, v. PROPERTY ASSESSMENT APPEAL BOARD, Defendant-Appellee/Cross-Appellant, and Scott County Board of Review, Intervenor.
• Court: Court of Appeals of Iowa

939 N.W.2d 118 (Table)

Chad MILLER, Plaintiff-Appellant/Cross-Appellee,
v.
PROPERTY ASSESSMENT APPEAL BOARD, Defendant-Appellee/Cross-Appellant,
and
Scott County Board of Review, Intervenor.

No. 18-0929

Court of Appeals of Iowa.

Filed August 7, 2019

Stephen P. Wing of Dwyer & Wing, P.C., Davenport, for appellant/cross-appellee.

Jessica Braunschweig-Norris and Bradley O. Hopkins, Des Moines, for appellee/cross-appellant.

Robert L. Cusack, Assistant County Attorney, for intervenor.

Considered by Vaitheswaran, P.J., and Potterfield and Doyle, JJ.

POTTERFIELD, Judge.

Chad Miller appeals the district court decision affirming the ruling of the Iowa Property Assessment Appeal Board (PAAB) that his property should be classified as residential rather than agricultural. The PAAB cross-appeals the court’s determination the issue of inequitable assessment of Miller’s property should be remanded to the PAAB. We affirm the district court and the PAAB on the issue of the classification of Miller’s property as agricultural. We reverse the district court’s decision on the issue of inequitable assessment. We remand for an order affirming the PAAB’s decision on inequitable assessment.

I. Background Facts & Proceedings

Miller owns 10.22 acres of land in Scott County, which he purchased in 2008. About two acres of the property is considered the homestead and contains improvements, including a two-story house with a porch, deck, patio, and garage. About five acres is a slough, with streams and forest. Miller has 3.6 acres of cropland. The cropland is in a 100-year flood plain. In 2009 to 2011, he grew hay. In 2012 and 2013, he grew corn. He did not have any crops in 2014 due to weather conditions. In 2015, he had corn and pumpkins.

Miller lost money most years from his crops. He lost $5064 in 2012; $14,335 in 2013; and $4324 in 2014, but he earned $338 in 2015. He had a total negative net cash flow of $23,385 over the four-year period from 2012 to 2015. When questioned, Miller was unable to explain how he intended to make his crop production profitable. He sold some of his crops, gave some away, and used the rest to feed his family. The property is zoned agricultural.

For taxation purposes, Miller’s property is classified as residential. He challenged the classification in 2013. The Scott County Board of Review (Board) denied his claim. He appealed to the PAAB, which found, "Because of the short-period of agricultural use prior to the assessment date and the other uses made of the property, we find Miller has not demonstrated that the property’s primary use as of January 1, 2013, was agricultural."

Miller challenged the residential classification of his property again in 2015. He also claimed the property was inequitably assessed to be worth $873,220. The Board denied his petition, and he appealed to the PAAB. On the issue of classification, the PAAB found:

Turning to intended profit, we do not deny that Miller is engaged in growing produce and he has spent considerable time, money, and energy to develop a portion of the site for farming. However, Miller testified that he was unable to determine what his profit may be in the future and that the crop he does produce is primarily for personal use, bartered, or given away. Miller’s ambiguity about potential future profits causes us to seriously question whether this agricultural use is being done with any intent to profit.

Miller testified to his subjective intent that the property will become profitable at some point in the future. Under the current circumstances, however, we do not find this to be objectively reasonable. Given the small size of the farmable area, its minimal income-producing capacity, the large upfront capital expenditures, and the lack of any apparent plan designed to bring the operation into profitability, we are not convinced the subject property is being operated with an intent to profit from the agricultural use.

On the issue of inequitable assessment, Miller presented to the PAAB five properties he claimed were comparable and showed his property had been inequitably assessed. The PAAB determined four of the properties were not comparable and did not consider them. Concerning the remaining property, the PAAB determined Miller needed to present more than one comparable property to establish inequity. The PAAB concluded Miller failed to establish the assessment of his property was inequitable.

Miller filed a petition for judicial review. The district court determined there was substantial evidence to show the primary use of Miller’s property was for residential purposes and affirmed on this ground. On the issue of inequitable assessment, the court found, "PAAB committed legal error in concluding the statute required more than one" comparable property to show an inequitable assessment. The court reversed on this issue and remanded the matter to the PAAB. Miller appealed the decision of the district court, and the PAAB cross-appealed.

II. Standard of Review

On an appeal from a decision of the PAAB, "the court’s review shall be limited to the correction of errors at law." Iowa Code § 441.39 (2015). "In reviewing an agency decision on judicial review, we will apply the standards of chapter 17A to determine if we reach the same results as the district court." Naumann v. Iowa Prop. Assessment Appeal Bd. , 791 N.W.2d 258, 260 (Iowa 2010). "We are bound by PAAB's findings of fact if they are supported by substantial evidence." Wendling Quarries, Inc. v. Prop. Assessment Appeal Bd. , 865 N.W.2d 635, 638 (Iowa Ct. App. 2015).

"If the agency’s action was based on an erroneous interpretation of a provision of law whose interpretation has not been clearly vested in the agency, we shall reverse, modify or grant other appropriate relief from the agency action." Naumann , 791 N.W.2d at 260. Where the PAAB does not have explicit or implicit authority to interpret a statute, the court may substitute its interpretation of the statute. See Wendling Quarries , 865 N.W.2d at 638.

III. Classification of Property

Miller claims the PAAB erred by determining his property should be classified as residential rather than agricultural. He states the...