Stein v. Calhoun County Board of Review, 3-015 / 02-0241.

• Decision Date: 25 June 2003
• Docket Number: No. 3-015 / 02-0241.,3-015 / 02-0241.
• Parties: DAVID J. STEIN, SR., as Co-Trustee of the GARWIN J. STEIN TRUST, Plaintiff-Appellee/Cross-Appellant, v. CALHOUN COUNTY BOARD OF REVIEW, Defendant-Appellant/Cross-Appellee.
• Court: Iowa Court of Appeals

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DAVID J. STEIN, SR., as Co-Trustee of the GARWIN J. STEIN TRUST, Plaintiff-Appellee/Cross-Appellant, v. CALHOUN COUNTY BOARD OF REVIEW, Defendant-Appellant/Cross-Appellee.

No. 3-015 / 02-0241.

Court of Appeals of Iowa.

Filed June 25, 2003.

Appeal from the Iowa District Court for Calhoun County, Michael J. Moon, Judge.

The defendant appeals, and plaintiff cross-appeals, from a district court ruling affirming in part and reversing in part the board of review's classification and tax assessment of the plaintiff's property. AFFIRMED.

James Brick of Brick, Gentry, Bowers, Swartz, Stoltze, Schuling, & Levis, P.C., Des Moines, for appellant.

Gregg Owens of Ladegaard, Maah, & Owens, Spirit Lake, for appellee.

Heard by Sackett, C.J., and Miller and Eisenhauer, JJ.

EISENHAUER, J.

The defendant, Calhoun County Board of Review (Board) appeals a district court ruling affirming in part and reversing in part its decision regarding classification and tax assessment of the plaintiff's property. The Board contends the district court erred in (1) concluding the valuations assessed to the plaintiff's property was excessive, (2) improperly assigning the burden of proof, (3) reducing the valuation of plaintiff's property, and (4) assessing it all costs. On cross-appeal, the plaintiff argues the district court erred in (1) failing to reduce the back lots' assessed values to at least their 1999 assessment values, and (2) not reclassifying the property from residential to agricultural. We affirm.

I. Background Facts and Proceedings. The property at issue is part of the Manson farm located in Calhoun County adjacent to the northern of two Twin Lakes, and is part of the Garwin Stein trust created for the benefit of Garwin's wife. Either Garwin or the trust farmed the land continuously until 1969, when the county condemned a portion of the land to construct a roadway along the lake. That same year, the trust created Stein's Fourth Subdivision and sold residential lots adjoining the lake. Across the road, an additional ten lots were created, known as the "back lots". The back lots did not have a view of or direct access to the lake. Although the lots were classified by the county as residential, the land adjacent to the back lots was classified agricultural. The back lots remained unsold until 1999, when Lot R was purchased for $29,000 to provide the buyer with access to the lake through Lot N. No improvements have been made to Lot R.

The parties' first tax dispute regarding assessment of the properties occurred in 1979. Although the properties were considered residential, the Board valued Lots 1 through 46 based on what prime agricultural land was selling for in the area. On appeal the district court concluded the lots would be considered residential, but reduced the valuation on some of them based on their specific characteristics. In 1998, the parties again disputed the properties' valuation. The district court valued the back lots at $47,970. The decree provided that the county would have the right to increase the stipulated values for the 2000 assessment year.

In 2000, the county assessed a valuation to the properties of $88,200. For year 2001, the county assessed the properties at $259,800. The trust challenged the valuation and classification of the properties. The trust argued the back lots had failed to sell except for one and were worth a fraction of the assessed value, and that the properties should be reclassified as agricultural.

At trial, John Lawson, deputy assessor for Calhoun County, testified he used a Vanguard computer program to assess the properties' values, but admitted the only criteria for such a dramatic increase in 2000 was the sale of Lot R. For 2001, Lawson testified he adopted the appraisal conducted by Robert Ehler. Ehler testified he conducted his 2001 assessment by conducting a fee appraisal on Lot R.

The trust called John Kesterson and Timothy Dubois to testify regarding the properties' value. Kesterson stated the best use of the back lots was agricultural. He maintained they had minimal residential appeal since none offered a view of the lake. Timothy Dubois testified the back properties should be classified agricultural. He asserted there were similar properties in Webster County and that even though they were classified residential, they were used for crops.

The district court concluded the properties would remain classified residential since they have been classified as such for twenty years and were part of a subdivision on which numerous homes were built. The court, however, concluded the increased assessments were excessive, and assessed the properties' value at $45,600. The defendant appeals, and the plaintiff cross-appeals.

II. Scope of Review. Our review of the Board's action is de novo. Riley v. Bd. of Review, 549 N.W.2d 289, 290 (Iowa 1996). There is no presumption as to the correctness of the Board's valuation. Iowa Code § 441.39 (2001). The trust has the burden to prove by a preponderance of the evidence (1) the challenged valuation is excessive, inadequate, or capricious, and (2) what the valuation should be. Post-Newsweek Cable, Inc, v. Bd. of Review, 497 N.W.2d 810, 813-14 (Iowa 1993). The trust also has the burden of showing there has been a change in the condition or use of the land before a reclassification may occur. State v. Cott, 442 N.W.2d 78, 81 (Iowa 1989).

III. Assessment. The Board contends the district court erred in ruling its tax assessment of the lots was excessive. It contends its use of a contract sale to determine the proper assessment was permissible under Iowa Code section 441.21 (2001). The Board further maintains the trust failed to introduce testimony regarding value from two disinterested parties and thus failed to meet its burden of proof of showing the Board's valuation was excessive.

In order to challenge the Board's assessment, the trust must (1) show it was excessive, and (2) introduce testimony from two disinterested parties that the market value is less than that determined by the assessor, (3) show the market value at issue, and (4) demonstrate that the owner's property is assessed at a higher proportion of its market value than the ratio of the assessed and market values of comparable properties. Iowa Code § 441.21(3) (2001); Metropolitan Jacobson Dev. Venture v. Bd. of Review, 524 N.W.2d 189, 192 (Iowa 1994). Once a complainant satisfies this burden of proof, the burden of proof shifts to the Board. Post-Newsweek Cable, 497 N.W.2d at 813; Milroy v. Bd. of Review, 226 N.W.2d 814, 817 (Iowa 1975).

One basis upon which an assessment may be appealed is that "the property is assessed for more than the value authorized by law." Iowa Code § 441.37(1)(b). The value authorized by law is the fair and reasonable market value of the property. Boekeloo v. Bd. of Review, 529 N.W.2d 275, 277 (Iowa 1995). The Board maintains the trust failed to show reasonable market value by failing to introduce the testimony of two disinterested witnesses regarding the properties' value.

The trust called Kesterson and DuBois to support their contention the Board's assessment was excessive. Kesterson, a certified appraiser, testified the best use of the back lots was agricultural, and offered an opinion regarding the value of the land if so classified. He stated the back lots had no value as residential lots. He testified there were no comparable sales in the area since Lot R was purchased in 19...