Opinion ID: 1782662
Heading Depth: 1
Heading Rank: 1

Heading: General Principles of Law Applicable to Assessment Proceedings.

Text: We start our discussion of this appeal with a review of the legal concepts governing valuation of real estate for taxation purposes, as we believe it is helpful to have these principles in mind before reviewing the background facts and prior proceedings. The relevant statutory framework for the assessment and valuation of property is contained in Iowa Code chapter 441. See Iowa Code ch. 441 (2005). All property subject to taxation shall be valued at its actual value.... Id. § 441.21(1)( a ). Actual value is the fair and reasonable market value of [the] property. Id. § 441.21(1)( b ). Market value is defined as the fair and reasonable exchange in the year in which the property is listed and valued between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and each being familiar with all the facts relating to the particular property. Id. In determining market value, [s]ales 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. [2] Id. The statute also instructs that 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. Id. Although the assessor may consider any factor that would assist in determining the fair and reasonable market value of the property, the assessor may not take into consideration [s]pecial value or use value of the property to its present owner, and the good will or value of a business which uses the property as distinguished from the value of the property as property. Id. § 441.21(2). The Iowa Administrative Code requires an assessor to classify and value property according to its present use and not according to its highest and best use. [3] Iowa Admin. Code r. 701-71.1(1). [P]roperty subject to a lease is taxed as a whole and measured by the value of its fee. Merle Hay Mall v. City of Des Moines Bd. of Review, 564 N.W.2d 419, 422 (Iowa 1997). A property owner who is dissatisfied with the county assessor's valuation may protest the assessment to the board of review. Iowa Code § 441.37(1). Among other grounds, the protest may be based on a claim [the] assessment is not equitable as compared with assessments of other like property in the taxing district or on a claim the property is assessed for more than the value authorized by law. Id. § 441.37(1)( a ), ( b ). If the property owner is not content with the board's disposition of the protest, the taxpayer may appeal to the district court. Id. § 441.38(1). Although the taxpayer is limited to the grounds raised before the board, the taxpayer may introduce evidence in the district court to sustain those grounds. Id. The district court hears the appeal in equity and determine[s] anew all questions arising before the board. Id. § 441.39. There is no presumption as to the correctness of the valuation of assessment from which the appeal is taken. Id. If the property owner `offers 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,' the burden shifts to the board of review to uphold the assessed value. Boekeloo v. Bd. of Review, 529 N.W.2d 275, 277 (Iowa 1995) (quoting Iowa Code § 441.21(3) (1993)). If the taxpayer fails to offer competent evidence of two disinterested witnesses, then the burden of persuasion remains with the taxpayer to establish that the assessed valuation was excessive. Id. at 279; Foreman & Clark of Iowa, Inc. v. Bd. of Review, 286 N.W.2d 169, 172 (Iowa 1979). When a property owner claims the valuation was excessive, in addition to proving the excessiveness of the board's valuation, the property owner must establish the correct valuation. Heritage Cablevision v. Bd. of Review, 457 N.W.2d 594, 598 (Iowa 1990); Iowa Code § 441.21(3). Having in mind this general introduction to the statutory scheme governing property assessments and appeals from them, we turn now to the facts of this case.