Sevde v. Board of Review of City of Ames, No. 88-456

• Court: United States State Supreme Court of Iowa
• Writing for the Court: Considered by McGIVERIN; CARTER
• Citation: 434 N.W.2d 878
• Parties: Richard H. SEVDE and Marguerite Sevde, v. BOARD OF REVIEW OF the CITY OF AMES, Iowa, Appellant.
• Docket Number: No. 88-456
• Decision Date: 25 January 1989

Page 878

434 N.W.2d 878 Richard H. SEVDE and Marguerite Sevde,
v.
BOARD OF REVIEW OF the CITY OF AMES, Iowa, Appellant. No. 88-456. Supreme Court of Iowa. Jan. 25, 1989.

Page 879

John R. Klaus, City Atty., and Beth Ringgenberg, Asst. City Atty., Ames, for appellant.

Dale Sharp, Ames, for appellees.

Considered by McGIVERIN, C.J., and LARSON, SCHULTZ, CARTER, and ANDREASEN, JJ.

CARTER, Justice.

The Board of Review of the City of Ames appeals from an adverse decree in an action challenging a real estate tax assessment pursuant to Iowa Code section 441.38 (1987). The primary issue presented to this court is whether the district court incorrectly classified the subject real estate as agricultural rather than commercial. Because we conclude that it did not, we affirm that court's decree subject only to a remand for determination of omitted issues identified later in this opinion.

Plaintiffs, Richard H. and Marguerite Sevde, own a parcel of land located in the City of Ames consisting of approximately twenty-one acres. For assessment years 1985 and many years prior thereto, this property had been classified as "agricultural" for assessment purposes. The assessment of the property on January 1, 1985, pursuant to the agricultural classification, was $1045 per acre.

During the year 1985, plaintiffs constructed three buildings on the property each 160 feet by 30 feet. These buildings are partitioned into 123 separate storage areas offered for rent to the general public. In both 1985 and 1986, plaintiffs leased the remaining 19.6 acres for agricultural purposes, receiving a cash rent of $2100 in each of these years. Gross revenues received by plaintiffs from the storage enterprise in 1985 were $6372. Expenses for the storage business in that year totaled $6372, which included $2302 for depreciation. Gross revenues received by plaintiffs from storage in the calendar year 1986 totaled $33,649. Expenses for the storage business in that year totaled $33,649, which included $10,640 for depreciation.

Acting on the belief that there had been a change in the value of the subject real estate, the assessor, on January 1, 1986, a nonassessment year, reassessed plaintiffs' twenty-one-acre tract by applying a "commercial" classification to the property. ¹ The aggregate assessment was increased from $21,945 to $390,700. This aggregate was divided between buildings and land in the ratio of $201,700 (buildings) to $189,000 (land).

The plaintiffs protested the January 1, 1986, assessment to the defendant Board of Review. The Board granted no relief to the plaintiffs from the increase in assessment other than changes mandated by a state equalization order. Plaintiffs appealed the Board's decision to the district court as permitted by Iowa Code section 441.38 (1987).

The district court concluded that, notwithstanding the commercial activities associated with the storage business, the twenty-one-acre tract continued to be primarily used for agricultural purposes. The court's decree determined that the entire tract should be assessed as agricultural property and the valuations determined accordingly. The Board of Review has challenged that determination in the present appeal. Other facts bearing on the decision on appeal will be discussed in connection with our consideration of the legal issues presented.

I. Classification of Property as Agricultural.

The issues on appeal illustrate the "single tract" assessment concept which

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pervades the process of listing real property for assessment in this state. See, e.g., Iowa Code §§ 428.4, 428.7, 441.29 (1987). Prior to 1976, Iowa Code section 428.7 (without the italicized language) provided substantially as follows with respect to a maximum assessable land unit:

A description shall not comprise more than one city lot or other smallest subdivision of the land according to the government surveys, except in cases where the boundaries are so irregular that it cannot be described in the usual manner in accordance therewith. However, descriptions may be combined for...