Riley v. Iowa City Bd. of Review, 94-1409

• Decision Date: 17 April 1996
• Docket Number: No. 94-1409,94-1409
• Parties: Nancy RILEY, Appellant, v. IOWA CITY BOARD OF REVIEW, Appellee.
• Court: Iowa Supreme Court

Page 289

549 N.W.2d 289

Nancy RILEY, Appellant, v. IOWA CITY BOARD OF REVIEW, Appellee.

No. 94-1409.

Supreme Court of Iowa.

April 17, 1996.

As Amended on Rehearing April 17, 1996.

Peter C. Riley of Tom Riley Law Firm, P.C., Cedar Rapids, for appellant.

Sarah E. Holecek, Assistant City Attorney, Iowa City, for appellee.

Considered by LARSON, P.J., and CARTER, NEUMAN, ANDREASEN and TERNUS, JJ.

CARTER, Justice.

This appeal entails a de novo determination of the market value of two apartment complexes in the City of Iowa City for purposes of the real estate tax assessment. The appellant, Nancy Riley, is the owner of the properties. The properties were purchased by her on January 11, 1992, for an aggregate sum of $1,640,000.

The local assessor reassessed these two properties in the same month that appellant purchased them. This was a reassessment in the interim tax assessment year of 1992. The market values of the property determined by the assessor were $380,120 and $1,454,410, respectively. Those valuations were ultimately confirmed on appellant's protest to the local board of review in May of 1992.

In 1993, a regular assessment year, the assessor determined the market value of these properties to be $428,130 and $1,634,130, respectively. Those valuations were also confirmed by the board of review on appellant's 1993 protest to that body. Pursuant to Iowa Code section 441.38 (1993), appellant pursued a statutory appeal to the district court from the final action of the board of review in each of the years at issue. The district court, as to each year, found that appellant had not shown the board of review's valuations to be excessive. Appellant has not sought review of the district court's decree as to the 1993 assessment, but does challenge the ruling affecting the 1992 assessment.

Because section 441.38 appeals are tried in equity, appellate review is de novo. Iowa R.App.P. 4. The court of appeals considered the valuation issues anew and found the most accurate evidence of value to be the January 11, 1992 sales price. It modified the assessment in each of the years at issue to correspond to that figure. We granted further review.

In challenging the court of appeals decision, the board of review asserts that under Iowa Code section 441.21(1)(b) (1993) a contemporaneous sale of the subject property does not conclusively fix its market value for purposes of assessment. We are satisfied that this assertion is correct. The language of the statute that bears on this point reads as follows:

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....

Iowa Code § 441.21(1)(b) (1993).

We think it is clear from the wording of section 441.21(1)(b) that a sales price for the subject property in a normal transaction just as a sales price of comparable property is a matter to be considered in arriving at market value but does not conclusively establish that value. A sales price in an abnormal transaction is not to be taken into account unless the distorting factors can be clearly accounted for. Our agreement with the board of review as to the meaning of the statute does little, however, to contradict the decision of the court of appeals for the 1992 assessment year. This is because that court did not assume that the contemporaneous sales price was conclusive as to the property's market value. It merely found that this was the most persuasive evidence...