IN THE SUPREME COURT OF IOWA 

No. 115 / 06–1354 

Filed October 24, 2008 

TIMBERLAND PARTNERS XXI, LLP, 

EDWARD L. HENDRICKSON, and 

JAMES C. CONLIN, 

Appellants, 

vs. 

IOWA DEPARTMENT OF REVENUE, 

Appellee. 

________________________________________________________________________ 

Appeal from the Iowa District Court for Polk County, Don C. 

Nickerson, Judge. 

 Apartment building owners challenge the constitutionality of the 

different tax treatment given apartments and condominiums under Iowa 

Administrative Code rule 701—71.1(4), (5). AFFIRMED.

 Michael A. Dee and Rebecca A. Brommel of Brown, Winick, Graves, 

Gross, Baskerville and Schoenebaum, P.L.C., Des Moines, for appellants. 

 Thomas J. Miller, Attorney General, and Donald D. Stanley, Jr., 

Assistant Attorney General, for appellee. 
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BAKER, Justice. 

Apartment building owners appeal the district court’s ruling that 

Iowa Administrative Code rule 701—71.1(4), (5) (2005), under which 

apartment buildings are designated as commercial regardless of their use 

and are therefore subject to higher property taxes than non-commercial 

condominiums, does not violate the equal protection clauses of the 

United States and Iowa Constitutions. Because apartments and 

condominiums are not “similarly situated,” we find their dissimilar 

treatment does not violate equal protection. 

I. Background Facts and Proceedings. 

 Appellants Timberland Partners XXI, L.L.P., Edward L. 

Hendrickson, and James C. Conlin own numerous multi-unit residential 

apartment buildings in Iowa. Timberland filed a petition for declaratory 

order with the Iowa Department of Revenue requesting that Iowa 

Administrative Code rule 701—71.1(4), (5) be declared unconstitutional 

as violative of the equal protection clauses of the United States and Iowa 

Constitutions. This rule classifies apartment buildings as commercial 

property, regardless of their use, but classifies condominiums as 

commercial if used for a commercial venture and residential if used for 

human habitation. Timberland seeks to have its apartment buildings 

taxed as residential because residential properties are taxed at a much 

lower percentage of their assessed value than commercial properties. 

The department issued a declaratory order finding the rule did not violate 

equal protection. Timberland filed a petition for judicial review. The 

district court concluded that rule 701—71.1(4), (5) does not violate equal 

protection. 
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II. Scope of Review. 

We typically review a district court’s decision on a 

petition for judicial review of agency action for correction of 

errors at law. . . . The provisions of the Iowa Administrative 

Procedure Act, particularly the judicial review provisions of 

section 17A.19(8), govern this review. However, in cases 

such as this one, where “constitutional issues are raised, . . . 

we must make an independent evaluation of the totality of 

the evidence and our review . . . is de novo.” 

Brummer v. Iowa Dep’t of Corr., 661 N.W.2d 167, 171 (Iowa 2003) 

(quoting Simonson v. Iowa State Univ., 603 N.W.2d 557, 561 (Iowa 1999)). 

III. Discussion and Analysis. 

 Timberland contends the disparate treatment afforded apartments 

and condominiums under rule 701—71.1(4), (5) is unconstitutional and 

a violation of the equal protection clauses of the United States and Iowa 

Constitutions. 

A. The Rule. “By statute and administrative regulation, taxable 

real property in Iowa must be assessed within one of six categories: 

agricultural, residential, commercial, industrial, utilities, or railroads.” 

City of Newton v. Bd. of Review, 532 N.W.2d 771, 773 (Iowa 1995) (citing 

Sperfslage v. Ames City Bd. of Review, 480 N.W.2d 47, 48 (Iowa 1992)). 

Property is to be classified and valued “according to its present use and 

not according to its highest or best use.” Iowa Admin. Code r. 701—

71.1(1).

Rule 701—71.1 provides in relevant part: 

71.1(4) Residential real estate. Residential real estate shall 

include all lands and buildings which are primarily used or 

intended for human habitation . . . . 

An apartment in a horizontal property regime (condominium) 

. . . which is used or intended for use for human habitation 

shall be classified as residential real estate regardless of who 

occupies the apartment. . . . 

71.1(5) Commercial real estate. Commercial real estate shall 

include all lands and improvements and structures located 

thereon which are primarily used or intended as a place of 

business . . . . Commercial realty shall also include hotels, 
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motels, rest homes, structures consisting of three 

or more separate living quarters and any other buildings for 

human habitation that are used as a commercial venture. . . . 

However, regardless of the number of separate living 

quarters or any commercial use of the property, single- and 

two-family dwellings, multiple housing cooperatives 

organized under Iowa Code chapter 499A . . . shall be 

classified as residential real estate. 

An apartment in a horizontal property regime (condominium) 

referred to in Iowa Code chapter 499B which is used or 

intended for use as a commercial venture, other than leased 

for human habitation, shall be classified as commercial real 

estate. 

(Emphasis added.) 

In short, under the Iowa Administrative Code, apartment buildings 

are classified as commercial, regardless of their use, and condominiums 

are classified as commercial if used for a commercial venture and as 

residential if used for human habitation. This court has “recognized the 

commercial nature of apartment complexes and their resulting 

commercial classification for tax purposes.” Newton, 532 N.W.2d at 773 

(citing Sperfslage, 480 N.W.2d at 49). 

Timberland contends the disparate treatment between apartments 

and condominiums is a violation of equal protection because 

condominiums leased for human habitation are classified as residential, 

while apartments leased for human habitation are classified as 

commercial. 

B. Equal Protection. “[T]he Equal Protection Clause ‘is 

essentially a direction that all persons similarly situated should be 

treated alike.’ ” Racing Ass’n of Cent. Iowa v. Fitzgerald, 675 N.W.2d 1, 

7 (Iowa 2004) (quoting City of Cleburne v. Cleburne Living Ctr., 473 U.S. 

432, 439, 105 S. Ct. 3249, 3254, 87 L. Ed. 2d 313, 320 (1985)). 

 “The first step of an equal protection [analysis] is to identify the 

classes of similarly situated persons singled out for differential 

treatment.” Ames Rental Prop. Ass’n v. City of Ames, 736 N.W.2d 255, 
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259 (Iowa 2007) (citing Grovijohn v. Virjon, Inc., 643 N.W.2d 200, 

204 (Iowa 2002)). “ ‘If people are not similarly situated, their dissimilar 

treatment does not violate equal protection.’ ” Bowers v. Polk County Bd. 

of Supervisors, 638 N.W.2d 682, 689 (Iowa 2002) (quoting In re Morrow, 

616 N.W.2d 544, 548 (Iowa 2000)). If a plaintiff fails to articulate, and 

the court is unable to identify, a class of similarly situated individuals 

who are allegedly treated differently under the challenged statute, the 

plaintiff “has not satisfied the first step of an equal protection analysis,” 

and the court need not address whether the “statute has a rational 

relationship to a legitimate government interest.” Grovijohn, 643 N.W.2d 

at 204; see also Glen Haven Homes, Inc. v. Mills County Bd. of Review, 

507 N.W.2d 179, 183 (Iowa 1993) (noting equal protection does not 

require dissimilar entities be treated similarly).

 Timberland contends that “[a]partments and condominiums are 

similarly situated in their use, market characteristics, and structure.” 

According to the district court, “[t]he similarities of condominiums and 

apartments . . . are not as pronounced as they are alleged to be.” The 

court concluded that “[c]ondominiums’ characteristics as separate and 

identifiable parcels of real property make them rationally more akin to 

single family residences than apartments for classification purposes,” 

and that “[b]ased on this factor alone, the court believes the agency 

clearly has a rational basis for making the distinction . . . .” The trial 

court went on to identify other factors that differentiate condominiums 

from apartments, including market characteristics, structural 

differences, and the “bundle of rights” associated with condominium 

ownership. The trial court concluded that “what truly makes the 
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difference in this case is that the two types of property are simply not 

similarly situated.”1

 Timberland contends the district court erred in focusing on the 

ownership of condominiums rather than focusing on the similar uses of 

condominiums and apartments. It argues the market characteristics of 

the two “are so similar as to be virtually identical,” because both compete 

for the same occupants, i.e., “many condominium units are marketed as 

leaseholds, just like apartments,” and they are similar in structural 

design and in the rules applied to residents. The State counters that the 

“record is totally void of any evidence to support [appellants’] claim that 

condominiums are routinely marketed and leased throughout the state 

in the same manner as multi-unit apartment complexes.” 

 We determine that any similarities between apartments and 

condominiums are insufficient to consider them “similarly situated” for 

equal protection analysis. Although condominiums may be marketed 

and leased like apartments and are similar in structural design and in 

the rules applied to residents, unlike apartments, each condominium 

unit is treated as a separate real estate parcel and could be marketed as 

a single-family unit. See Iowa Code § 499B.10 (Supp. 2008) (declaring 

that in a horizontal property regime, “each individual apartment . . . shall 

constitute . . . a separate parcel of real property and shall be . . . 

completely and freely alienable . . . .”). In this respect, for classification 

purposes, condominiums are more like single-family residences than 

apartments. See Sperfslage, 480 N.W.2d at 49 (recognizing “the 

 1Although the district court determined that apartments and condominiums are 

not similarly situated, it then engaged in a rational basis analysis to determine “a 

rational basis exists for the classification of apartment complexes . . . as commercial 

property and condominiums . . . as residential property.”
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appropriateness of factoring market classifications into property 

valuations”). 

In addition to the individual ownership rights of condominium 

owners, under chapter 499B an owner of a condominium, unlike an 

apartment tenant, has certain rights, including the right to participate in 

the management and operation of the unit or complex. See Iowa Code § 

449B.15 (providing the minimum requirements to be contained in the 

bylaws for the governance of the condominium). Condominium owners 

also bear increased stewardship expectations. Iowa Code section 

499B.20 outlines the requirements for apartment-to-condominium 

conversions. It states: 

[A]n existing structure shall not be converted to a horizontal 

property regime unless the converted structure meets local 

city or county, as applicable, building code requirements in 

effect on the date of conversion or the state building code 

requirements, as adopted pursuant to section 103A.7, if the 

local city or county does not have a building code. 

Id. § 499B.20. This statute provides a minimum standard that property 

owners must meet when attempting to convert apartment buildings into 

condominiums and outlines the State’s heightened stewardship 

requirements for owner-occupied property. 

Under the statute, the ultimate question for classification is the 

use of the property. A condominium is typically occupied by the owner 

whereas an apartment is always a commercial enterprise. City of 

Newton, 532 N.W.2d at 773 (“We, like other jurisdictions, have 

recognized the commercial nature of apartment complexes and their 

resulting commercial classification for tax purposes.”). The primary use 

of each is dissimilar. One is typically residential whereas the other is 

exclusively commercial. As a result, apartments are not similarly 

situated to condominiums. Because we, like the district court, cannot 
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find a class of similarly situated individuals who are allegedly 

treated differently under the challenged statute, Timberland has not 

satisfied the first step of the equal protection analysis. Therefore, we 

need not address whether the classification meets “the rational basis 

prong of the equal protection analysis.” Bowers, 638 N.W.2d at 690. 

IV. Disposition. 

We affirm the district court judgment in favor of the Iowa 

Department of Revenue. 

AFFIRMED.

All justices concur except Appel, J., who takes no part.