R.J. WETLAUFER and MARY WETLAUFER, Plaintiffs - Appellees, vs. FAYETTE COUNTY BOARD OF REVIEW, Defendant - Appellant.
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IN THE COURT OF APPEALS OF IOWA
No. 8-890 / 08-0721
Filed February 4, 2009
R.J. WETLAUFER and MARY WETLAUFER,
Plaintiffs-Appellees,
vs.
FAYETTE COUNTY BOARD OF REVIEW,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Fayette County, George C. Stigler,
Judge.
The Fayette County Board of Review appeals from the district court order
reducing its assessment of the Wetlaufers’ property. REVERSED.
M. Brett Ryan, Bruce B. Green, and Frank W. Pechacek, Jr. of Willson &
Pechacek, P.L.C., Council Bluffs, for appellant.
Patrick J. O’Connell of Lynch Dallas P.C., Cedar Rapids, for appellee.
Considered by Sackett, C.J., and Eisenhauer and Doyle, JJ.
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EISENHAUER, J.
R.J. and Mary Wetlaufer own property in Fayette County that they use as
an industrial laundry facility. The Board of Review of Fayette County assessed
the property at $919,250 in 2005 and $1,063,000 in 2006.
The Wetlaufers
appealed, contending the property tax assessments were excessive. The board
denied the appeal. The Wetlaufers appealed to the district court, which found the
Wetlaufers’ property had a value of $690,000 as of January 1, 2005, and of
$800,000 as of January 1, 2006. The board appeals.
An appeal of the board's decision to the district court is heard in equity and
issues before the board are triable anew. Payton Apartments, Ltd. v. Bd. of
Review, 358 N.W.2d 325, 327 (Iowa Ct. App. 1984). Review of the district court
decision by this court is de novo. Id. While we are not bound by the findings of
the district court, we do give weight to them, especially where the credibility of
witnesses is involved. Id.
The Wetlaufers have the burden of proving the board’s assessment is
excessive. See id. However, the burden shifts to the board if the Wetlaufers
offer competent evidence by at least two disinterested witnesses that the market
value of the property is less than the market value determined by the assessor.
See id.
Here, there is no dispute the Wetlaufers offered evidence by two
disinterested appraisers that the appraised value was excessive. The question
posed by the board is whether the appraisers offered “competent” evidence.
“We have interpreted [the] requirement of competence to mean that the
testimony of the disinterested witnesses must comply with the statutory scheme
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for property valuation for tax assessment purposes.” Boekeloo v. Bd. of Review,
529 N.W.2d 275, 279 (Iowa 1995).
All property subject to taxation shall be
valued at is actual value, which is the “fair and reasonable market value of such
property.” Iowa Code § 441.21(1)(a), (b) (2005).
The board complains that the Wetlaufers’ appraisers utilized foreclosure
sales and sales of distressed properties as comparable sales.
The statutory
scheme for property valuation specifically excludes the utilization of foreclosure
sales and sales of distressed properties in arriving at market value unless
adjustments are made. See id. § 441.21(1)(b) (“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, including but not limited to sales to immediate family of the
seller, foreclosure, or other forced sales, contract sales, discounted purchased
transactions of purchase of adjoining land or other land to be operated as a
unit.”).
In appraising the Wetlaufers’ property, one of their experts used a
property that was sold in foreclosure as a comparable sale without making an
adjustment.
Of the four other properties utilized as “comparable sales,” the
expert had misinformation as to the condition, features, usage or age of the
buildings.
The other expert used two properties that had been sold in
foreclosure as comparable sales without making any adjustment.
Of the
remaining two properties utilized, the expert was unaware of repairs made to one
building or a change in usage of the other building. The experts did not comply
with the statutory scheme outlined in section 441.21.
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Upon our de novo review, we conclude the Wetlaufers’ have failed to
provide competent evidence from two disinterested witnesses that the property is
valued at less than its assessed value. Because they have failed in their burden
of proving the assessed value is excessive, we reverse the district court order
assessing the Wetlaufers’ property at $690,000 as of January 1, 2005, and
$800,000 as of January 1, 2006, and reinstate the board’s original assessment.
REVERSED.
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