Court Opinion

ID: 4682735
Source: CourtListenerOpinion
Date Created: 2021-04-30 14:04:05.786813+00
Date Added: 2024-06-11T08:04:10.612973
License: Public Domain

IN THE SUPREME COURT OF IOWA
                               No. 19–0674

            Submitted March 23, 2021—Filed April 30, 2021

STATELINE COOPERATIVE,

      Appellant,

vs.

IOWA PROPERTY ASSESSMENT APPEAL BOARD and EMMET
COUNTY BOARD OF REVIEW,

      Appellees.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Emmet County, Don E.

Courtney, Senior Judge.

      The property assessment appeal board and a county board of review

seek further review of a court of appeals decision that a feed manufacturer

was entitled to property tax exemptions that the county and the board had
denied.   DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED.

      Mansfield, J., delivered the opinion of the court, in which all justices

joined.
                                   2

     Brant D. Kahler (argued), Adam C. Van Dike, and Steven C.

Schoenebaum (until withdrawal) of Brown, Winick, Graves, Gross,

Baskerville & Schoenebaum, P.L.C., Des Moines, for appellant.

     M. Brett Ryan (argued) of Watson & Ryan, PLC, Council Bluffs, for

appellee Emmett County Board of Review.

     Bradley O. Hopkins (argued) and Jessica Braunschweig-Norris, Des

Moines, for appellee Iowa Property Assessment Appeal Board.
                                     3

MANSFIELD, Justice.

      This tax case requires us to decide when bins for holding ingredients

qualify for a tax exemption as “[m]achinery used in manufacturing

establishments.”    Iowa Code § 427A.1(1)(e) (2014).         The Property

Assessment Appeal Board (PAAB) concluded that bins that primarily hold

raw material until it is needed in the manufacturing process do not

themselves constitute “machinery.” The district court declined to disturb

the PAAB’s ruling. However, the court of appeals disagreed. It found that

bins which are integrated into the manufacturing process and used for

temporary storage of ingredients fall within the statutory exemption.

Accordingly, the court of appeals found that the appellant was entitled to

an additional property tax exemption of $945,500.25.

      On further review, we are not entirely persuaded by either the

PAAB’s or the court of appeals’ approach. We conclude that customized

overhead bins within a building where feed is manufactured constitute,

essentially, part of a continuous piece of machinery within that building.

However, we conclude that two large stand-alone corn silos, although

connected to the feed manufacturing facility by an underground conveyor,

do not meet the ordinary definition of machinery. So we determine that
some, but not all, of the ingredient bins qualify for a tax exemption. We

also conclude that the court of appeals erred in making its own valuation

of the appellant’s exemptions. Accordingly, we vacate the decision of the

court of appeals, affirm in part and reverse in part the judgment of the

district court, and remand this case to the district court with instructions

to remand the proceeding to the PAAB. The PAAB should determine the

appropriate amount of the exemption for the ingredient bins located in the

feed manufacturing building.
                                      4

      I. Facts and Procedural History.

      A. The Feed Mill. StateLine Cooperative owns an industrial feed

mill located in Emmet County. It was constructed between 2012 and 2013

and consists of seven structures, including a feed mill building,

warehouses, two corn storage bins, and a Quonset on a 5.5-acre site. This

appeal focuses on three structures: the feed mill, the larger holding bin for

corn, and the smaller holding bin for corn. The larger corn storage bin—

really a separate silo building—has a capacity of 566,394 bushels and can

supply sixteen to twenty days of full-scale production at the feed mill. The

smaller corn storage bin—also a separate silo building—has a capacity of

147,456 bushels and can supply four to five days of full-scale production.

From the outside, both silos look similar to typical corn storage facilities.

      When needed for feed production, corn drops from the silos onto

conveyors that take it over to a leg, or elevator, at the feed mill building.

There, the corn is lifted to a holding space. The corn then goes through

roller mills where it is ground and deposited into certain of the feed mill’s

overhead ingredient bins. Thereafter, it is mixed with other ingredients

and processed into feed.

      On top of and incorporated into the feed mill, there are twenty-four
overhead bins holding milled corn and other components used in the

manufacturing process.       Above the bins is a rotating, mechanical

distributor that directs ingredients as they arrive into the proper bin.

When an ingredient is needed to make a batch of feed, it is released onto

a scale and then combined with other ingredients in a four-ton mixer. An

automated feed batching system directs how much of each ingredient is to

be released from each bin depending on the feed product that is being

made. Next to the ingredient bins, there are also eighteen load-out bins
                                    5

that hold finished products until they are loaded into semitrucks for

delivery.

      B. The Initial Property Tax Assessment. The overall cost of the

feed mill project was slightly over $10 million. Its initial assessed value

for property tax purposes as of January 1, 2014, was $4,272,900. On May

1, StateLine petitioned the Emmet County Local Board of Review (County)

for a modification of the assessment, arguing the assessment included

machinery that was exempt from property tax. The board of review denied

StateLine’s petition. On June 16, StateLine appealed to the PAAB.

      C. The First PAAB Ruling. A hearing took place before the PAAB

on October 7, 2015. StateLine claimed that $3,402,200 of the $4,272,900

assessment consisted of exempt machinery. In fact, StateLine claimed

that almost all of the feed mill building and the entire value of the corn

storage bins were exempt. StateLine called its chief financial officer and

its feed department manager, who described the operations of the feed mill

and the basis for the claimed exemptions. The County called its assessor

and the appraiser she had engaged to assist in assessing the feed mill.

The appraiser pointed out that in the then-current version of Iowa Real

Property Appraisal Manual, there is a page on appraising feed mills that
includes instructions on valuing bucket conveyors, distributors, and

scales, as well as a separate page on valuing grain bins. The appraiser

testified that if an item was included in the manual, he had included it in

the assessment.

      On February 26, 2016, the PAAB issued its ruling. It noted, “[T]he

mere inclusion of an item in the Manual does not conclusively determine

its taxable status as real property.” The PAAB quoted Iowa Administrative

Code rule 701—71.1(7)(b)(1), which provides, “Machinery includes

equipment and devices, both automated and nonautomated, which is used
                                    6

in manufacturing as defined in Iowa Code section 428.20.        See Deere

Manufacturing Co. v. [Z]einer, 247 Iowa [1364], 78 N.W.2d 527 (1956).” The

PAAB also quoted dictionary definitions of “machinery.” Ultimately, the

PAAB concluded that certain items valued at $1,014,200 should be

removed from the tax assessment. These included scales, fans and dryers,

bucket conveyors, drag conveyors, and insulated fat tanks located in the

yard. The PAAB went on to suggest that portions of the feed mill building

and the two corn storage bins might not belong in the assessment because

they were machinery, but StateLine had failed to offer reliable evidence as

to the respective value of the exempt parts. The PAAB’s ruling reduced the

overall assessment from $4,272,900 to $3,258,700.

      D. The Petition for Judicial Review.       On March 17, StateLine

petitioned for judicial review in the Emmet County District Court. The

County filed a cross-appeal on March 23, arguing the original assessment

should have been sustained by the PAAB. StateLine moved to dismiss and

strike the County’s cross-appeal. StateLine also filed a motion to remand

to present additional evidence to the PAAB on the value of the claimed

exempt portions of the feed mill and the two corn storage silos. The PAAB

and the County resisted both motions.
      On August 9, the district court ruled on StateLine’s motions. It

denied the motion to dismiss and strike, reasoning that the cross-appeal

was an appropriate and timely attempt to intervene. However, the district

court granted StateLine’s motion to remand, finding that the evidence that

StateLine sought to present was material and StateLine had “good

reasons” for not having presented it earlier. See Iowa Code § 17A.19(7).

      E. The Remand Hearing Before the PAAB. A remand hearing took

place before the PAAB on August 30, 2017. StateLine’s chief financial

officer and feed department manager testified again and presented
                                    7

additional detail on the feed manufacturing process and the components

of the feed mill building and the corn storage silos. This time, though,

StateLine had retained an appraiser, Don Vaske, who testified at the

hearing. Using the County’s overall valuation of the feed mill building,

Vaske offered an opinion that $1,092,550 of that assessed value should

be allocated to the overhead bins (the ingredient bins and the load-out

bins) that StateLine claimed were exempt. This calculation was based on

the relative volume of space occupied by the bins in the overall structure.

Vaske used this method even though he conceded there would be more

electrical components in the lower part of the building. Vaske also opined

that the County’s assessment of the corn silos should be reduced by 75%.

In Vaske’s view, that 75% represented the value of the walls and roof of

the bins, which StateLine claimed were exempt. Vaske thus would allow

25% to be assessed for the concrete floor and foundation of each silo,

which StateLine conceded were taxable.

      On March 23, 2018, the PAAB issued a ruling on remand affirming

its prior assessment. It disagreed with Stateline’s contentions that the

overhead bins and the corn silos were exempt. The PAAB explained,

      [W]e conclude StateLine has not shown the overhead bins
      (ingredient and loadout) or the large/small exterior grain
      bin[s’] walls and roof are machinery. We do not believe any of
      them would commonly be understood to be machinery. Their
      primary purpose is to hold raw material, protecting it from the
      elements, until it is needed in the manufacturing process.
      Similarly, the large and small grain bins’ primary purpose is
      to store raw material until it is needed in the manufacturing
      process.

The PAAB added that even if the various bins were exempt, StateLine had

not carried its burden of reliably showing their value. When site work was

taken into account, according to the PAAB, the walls and roofs of the corn

storage bins only accounted for about 70%, not 75%, of the overall
                                     8

assessed value. The PAAB also questioned Vaske’s method of valuing the

feed mill building, which treated every cubic foot of space as having the

same value as every other cubic foot. The parties then returned to the

district court.

      F. The District Court Order.         On March 29, 2019, the district

court entered an order overruling StateLine’s petition for judicial review

and the County’s cross-appeal.      StateLine appealed, the County again

cross-appealed, and we transferred the case to the court of appeals.

      G. The Court of Appeals Decision. On November 4, 2020, the

court of appeals affirmed in part and reversed in part. First, it rejected

StateLine’s jurisdictional challenges to the County’s standing to cross-

appeal, both at the district court level and at the appellate level. Second,

it concluded that the corn storage silos and the overhead ingredient bins

constituted       tax-exempt   machinery    used   in   a   manufacturing

establishment. As the court of appeals put it, “The structures essentially

amount to nonautomated equipment.”            The court added that “the

ingredient bins’ and grain bins’ storage feature is only temporary and

incidental, and their primary purpose is to serve directly in the

manufacturing process.”        The court concluded otherwise as to the
overhead load-bins because they contain finished product that is awaiting

off-loading. Finally, contrary to the PAAB, the court of appeals found that

StateLine had presented sufficient evidence to support a value of the

claimed exemptions.       As to the corn storage bins, the court adopted

StateLine’s methodology adjusting the multiplier from 75% to 70% as

suggested by the PAAB.

      The PAAB and the County applied for further review, and we granted

the applications.
                                       9

      II. Standard of Review.

      “In reviewing an agency decision on judicial review, we will apply the

standards of chapter 17A to determine if we reach the same results as the

district court.”   Naumann v. Iowa Prop. Assessment Appeal Bd., 791

N.W.2d 258, 260 (Iowa 2010). “If the agency’s action was based on an

erroneous interpretation of a provision of law whose interpretation has not

been clearly vested in the agency, we shall reverse, modify or grant other

appropriate relief from the agency action.” Id. “We are bound by PAAB’s

findings of fact if they are supported by substantial evidence.” Wendling

Quarries, Inc. v. Prop. Assessment Appeal Bd., 865 N.W.2d 635, 638 (Iowa

Ct. App. 2015); see also Iowa Code § 441.39.

      StateLine had the burden of proof before the County and the PAAB.

Iowa Code §§ 441.21(3)(b), .37A(2)(a). “On petition for judicial review to

the district court, the burden is on the party asserting the invalidity of the

agency action, in this case the taxpayer.” Wendling Quarries, 865 N.W.2d

at 638; see also Iowa Code § 17A.19(8)(a).

      We have said that tax exemptions are to be construed narrowly.

Christensen v. Iowa Dep’t of Revenue, 944 N.W.2d 895, 904 (Iowa 2020)

(“We begin our analysis by noting that ‘[t]ax exemption statutes are
construed strictly, with all doubts resolved in favor of taxation.’ ” (quoting

Sherwin-Williams Co. v. Iowa Dep’t of Revenue, 789 N.W.2d 417, 424 (Iowa

2010))); Carroll Area Child Care Ctr., Inc. v. Carroll Cnty. Bd. of Rev., 613

N.W.2d 252, 254 (Iowa 2000) (en banc) (“[A]ny doubt about an exemption

is resolved in favor of taxation.”).   But see Antonin Scalia & Bryan A.

Garner, Reading Law: The Interpretation of Legal Texts 362 (2012)

(criticizing an approach that construes tax exemptions either broadly or

narrowly and stating that “a tax statute should be given its fair meaning,

and this includes a fair interpretation of any exceptions it contains”).
                                            10

       III. Legal Analysis.1

       A. Are the Bins “[M]achinery Used in [a] Manufacturing

Establishment[]”           Within    the    Meaning       of     Iowa      Code    Section

427A.1(1)(e)?       Under Iowa law, “[m]achinery used in manufacturing

establishments”       is    exempt     from      property      taxation.      Iowa       Code

§§ 427A.1(1)(e), 427B.17(3).         StateLine is engaged in manufacturing as

defined by the Code. See id. § 428.20 (“A person who purchases, receives,

or holds personal property of any description for the purpose of adding to

its value by a process of manufacturing, refining, purifying, combining of

different materials, or by the packing of meats, with a view to selling the

property for gain or profit, is a “manufacturer” for the purposes of this

Title.” (first emphasis added)). Yet there is no definition of “machinery” in

the Code.

       We previously held that the PAAB had not been vested with explicit

or implicit authority to interpret Iowa Code section 441.21(1)(d).

Naumann, 791 N.W.2d at 260. We think the same conclusion applies to

section 427A.1(1)(e). The Iowa Code does not expressly confer interpretive

       1A  preliminary issue is whether the cross-appeals filed by the County in the
district court and in this court were jurisdictionally proper. StateLine does not dispute
that the County can appear as a party-intervenor to defend the PAAB decision. The
disputed question is whether the County can seek affirmative relief from the PAAB ruling
when the County did not file its own petition for judicial review within thirty days of the
final agency decision. See Iowa Code § 17A.19(2), (3). We believe this issue has been
previously resolved in the County’s favor. In Doerfer Div. of CCA v. Nicol, we held that a
party that timely intervened as authorized by Iowa Code section 17A.19(2) could obtain
affirmative relief. 359 N.W.2d 428, 436–37 (Iowa 1984). We explained,
                To accept Wayne’s analysis would require all parties adversely
       affected by final agency action in a contested case to file a petition, setting
       out duplicative information, within thirty days. By waiting until the
       thirtieth day before filing, one party could strip other parties, dissatisfied
       with the decision but nonetheless willing to acquiesce, of any opportunity
       for affirmative relief. Such a theory finds no support in our law or in sound
       public policy.
Id. at 436. In any event, at this stage of the proceedings, the County is no longer seeking
affirmative relief from the PAAB’s ruling.
                                   11

authority on the PAAB, Naumann, 791 N.W.2d at 260, and machinery is

not “a substantive term within the special expertise of the [PAAB].” Renda

v. Iowa C.R. Comm’n, 784 N.W.2d 8, 14 (Iowa 2010); see also Wendling

Quarries, 865 N.W.2d at 638 (reviewing de novo the PAAB’s interpretation

of sections 427A.1(1)(c) and subsection (d)). Thus, we do not defer to the

PAAB’s statutory interpretation.

      The department of revenue (DOR) regulations on assessment

practices provide,

      Machinery includes equipment and devices, both automated
      and nonautomated, which is used in manufacturing as
      defined in Iowa Code section 428.20.               See Deere
      Manufacturing Co. v. [Z]einer, 247 Iowa [1364], 78 N.W.2d 527
      (1956).

Iowa Admin. Code § 701—71.1(7)(b)(1). Notably, the general assembly has

required the director of revenue to “promulgate rules subject to chapter

17A to carry out the intent of [section 427A.1].” Iowa Code § 427A.1(9).

This directive goes beyond mere rulemaking authority, but appears to

grant authority to the DOR to interpret—i.e., “carry out the intent of”—

section 427A.1. See Renda, 784 N.W.2d at 12–13. Thus, we give deference

to the DOR’s view that machinery does not have to be automated. See
Iowa Code § 17A.19(11)(c).

      Our caselaw in this area is somewhat limited.        In Griffin Pipe

Products Co. v. Board of Review of County of Pottawattamie, we emphasized

that “all machinery, attached or unattached, fixtures or moveable items,

falls within the scope of [Iowa Code section 427A.1(1)(e)].” 789 N.W.2d

769, 775 (Iowa 2010). Thus, we held that a foundry was entitled to a

property tax exemption for a three-floor cupola used to melt metals, a

vertical annealing furnace, and an exhaust smokestack. Id. at 770.
                                       12

      In Rose Acre Farms, Inc. v. Board of Review of Madison County, we

concluded that chicken cages, a feeding and watering system, a manure

removal system, and bulk bins all constituted “equipment” or “machinery”

within the meaning of Iowa Code section 427A.1(1)(d). 479 N.W.2d 260,

261–63 (Iowa 1991). All of these items were “brought in and put together

much like an erector set.” Id. at 261. They could be “removed by reversing

the installation process, again using the erector set analogy.” Id.2

      Other states have discerned a difference between “machinery” and

“storage.”   Thus, Pennsylvania has a number of precedents analyzing

whether tanks and other containers used in an industrial operation are

taxable or not. Pennsylvania law, somewhat similar to Iowa law, exempts

“machinery, tools, appliances and other equipment contained in any mill,

mine, manufactory or industrial establishment.” 53 Pa. Cons. Stat. § 8811

(2021). The critical distinction in the cases is whether the container was

essentially used for storage.         In In re Borough of Aliquippa, the

Pennsylvania Supreme Court offered the following thumbnail of the

exemption:

      [U]nder the statute involved, improvements, whether fast or
      loose, which are used directly in manufacturing the products
      that the establishment is intended to produce and are
      necessary and integral parts of the manufacturing process
      and are used solely for effectuating that purpose, are excluded
      from real estate assessment and taxation. On the other hand,
      improvements which benefit the land generally and which
      may serve various users of the land, are not in this category.
      Neither are structures, which are not necessary and integral
      parts of the manufacturing process and which are separate
      and apart therefrom within the exclusion. A structure used
      for storage, for example, is part of the realty and subject to
      real estate taxation.

175 A.2d 856, 861–62 (Pa. 1961).

      2The egg farm also had “a complete modern feed mill with storage.” Rose Acre
Farms, 479 N.W.2d at 261.
                                    13

      Hence, in United States Steel Corp. v. Board of Assessment &

Revision of Taxes of Bucks County, the Pennsylvania Supreme Court

classified as tax exempt ore-yard facilities that not only provided a three

to ten days’ supply of ore for the blast furnaces but also were

      used fundamentally and primarily for the programmed
      spreading, layering and blending of the nonuniform
      shipments of grades and sizes of ore received in various
      cargoes, so as to achieve uniformity for processing in respect
      to chemical analysis and physical characteristics.

223 A.2d 92, 95–96 (Pa. 1966) (per curiam). As the court explained, any

“temporary storage” use was “minimal and purely incidental to their use
as necessary and integral parts of the process of manufacturing steel.” Id.

at 96. That court also found that stock bins underneath a railway trestle

that “serve[d] directly as a material-handling facility for the gathering,

combining and mixing of raw materials in the process flow to the blast

furnaces” were tax-exempt despite their “incidental, temporary or ‘in-

transit’ storage aspect.” Id. Additionally, in Gulf Oil Corp. v. Delaware

County Board of Assessment Appeals, the Pennsylvania Commonwealth

Court held that tanks that were used to remove water from oil that had

been offloaded from ships were not taxable.       489 A.2d 321, 325 (Pa.
Commw. Ct. 1985).

      Yet, in In re West Penn Power Co., that court held that oil tanks

connected to a power plant’s boilers were storage tanks and were not tax-

exempt. 588 A.2d 997, 1000 (Pa. Commw. Ct. 1991). In BFC Hardwoods,

Inc. v. Board of Assessment Appeals, the Pennsylvania Supreme Court

found that drying kilns were machinery and equipment because they were

“the sine qua non of the industrial establishment” (a lumber drying

business) and “the Board offered insufficient evidence to adequately
                                     14

support its contention that the kilns could be practically used for storage.”

771 A.2d 759, 767 (Pa. 2001).

      There are precedents from other jurisdictions as well. In Geis v. City

of Fond du Lac, the Wisconsin Court of Appeals determined that three silos

used in a concrete manufacturing plant constituted “manufacturing

machinery and specific processing equipment” under Wisconsin tax law.

409 N.W.2d 148, 149–51 (Wis. Ct. App. 1987). The court noted,

      The silos used to store the sand and stone have probes and
      weeping holes. These silos assure a consistent mix in the
      gravel, prevent the “fines” (very fine sand) from blowing away
      and allow the moisture content of the sand to be monitored
      and regulated through the use of probes and weeping holes.
      The silos also prevent the sand from being contaminated with
      mud or other impurities.

Id. at 149. Notably, Wisconsin law defines “manufacturing machinery and

specific processing equipment” to include “any combination of electrical,

mechanical or chemical means, including special foundations therefor,

designed to work together in the transformation of materials or substances

into new articles or components.” Id. at 150 (quoting Wis. Stat. § 70.11(27)

(1987)). Accordingly, Wisconsin precedent granted an exemption to any

structure that was “an integral part of the manufacturing process.” Id. at
150–51.

      On the other hand, in Barton Enterprises, Inc. v. Ramsey County, the

Minnesota Supreme Court decided that oil tanks that were part of an

interconnected network used to fabricate asphalts were not exempt from

tax. 390 N.W.2d 776, 778 (Minn. 1986) (en banc). The court agreed with

the tax court that “the basic function of the tanks was to contain and
shelter oils—a function similar to that performed by buildings.” Id. at 777.

Minnesota law appears to offer a broader exemption than Iowa law,

covering “tools, implements, machinery, and equipment attached to or
                                     15

installed in real property for use in the business or production activity

conducted thereon, regardless of size, weight or method of attachment.”

Id. (quoting Minn. Stat. § 272.03, subd.1(c)(i) (1984)).

      In   American Crystal     Sugar     Co. v.   Traill   County   Board   of

Commissioners, the North Dakota Supreme Court found that conditioning

silos used at a processing plant for curing sugar for a minimum of seventy-

two hours were tax-exempt machinery under that state’s law. 714 N.W.2d

851, 861–62 (N.D. 2006). The court explained,

             Kennedy’s testimony clearly establishes that the
      sprinkler system, the leveling equipment, and the
      temperature control system contained within the structures
      of the conditioning silos are items used directly in and solely
      for effectuating the process of converting sugar beets into
      sugar that is marketable. We do not believe Kennedy’s
      testimony establishes that the bin structures themselves are
      items used directly in and solely for effectuating the process.
      Although the Weibull silos are purchased as a unit, the
      evidence reflects that the bins themselves would not effectuate
      the conditioning of the sugar if it were not for the special
      equipment attached to the bins.

Id. at 861. In other words, it was important in American Crystal that part

of the manufacturing process occurred within the bins themselves. Id.

      Webster’s defines “machinery” as “machines in general or as a
functioning unit” and “the working parts of a machine.” Machinery,

Merriam-Webster’s Collegiate Dictionary (10th ed. 2002). On our review,

we conclude the two stand-alone corn silos are not machinery used in a

manufacturing establishment. They are separate buildings. They look

similar to numerous other grain storage facilities. In fact, the smaller of

the two corn silos was erected in 1978 and stood for approximately thirty-

five years before the feed mill came along.

      No processing or manufacturing occurs at the silos themselves.

Rather, the grain drops onto conveyors and is carried over to overhead
                                     16

bins in the feed mill building. The two silos collectively hold twenty to

twenty-five days’ worth of corn for feed mill production. They should thus

be viewed as storage buildings. Just as the load-out bins are the epilogue

to the manufacturing process, and thus not a part of the process itself, the

corn silos are the prologue.    See New England Milling Co. v. Board of

Assessors of Ayer, No. 98–P–1502, 2000 WL 1476332, at *1 (Mass. App.

Ct. June 29, 2000) (upholding determination that silos in a flour mill were

not machinery); Agri Tech Indus., Inc. v. Comm’r of Rev., No. 8414–R, 2012

WL 6217536, at *5 (Minn. Tax Ct. Dec. 11, 2012) (concluding that a silo

was a storage building rather than farm machinery even though a machine

controlled the unloading of the silo).

      Yet we join the court of appeals in finding that the ingredient bins

at the feed mill are machinery used in a manufacturing establishment.

They are part of the sequential manufacturing process at the feed mill

building. They discharge directly into the scale and then the mixer. They

do not appear to have any independent value as storage apart from this

particular manufacturing process.         Nor does the fact that they are

structurally part of the building alter the situation. See Griffin Pipe, 789

N.W.2d at 775.
      Accordingly, we affirm in part and reverse in part the district court

on this issue. We conclude the corn silos are not machinery within the

meaning of Iowa Code section 427A.1(1)(e), but the overhead ingredient

bins are.

      B. Did StateLine Provide Sufficient Evidence of the Value of the

Exempt Property, i.e., the Overhead Ingredient Bins? As an alternative

ground for denying StateLine’s appeal, the PAAB found that StateLine had

not offered reliable evidence of the value of the overhead bins and the corn

silos and, therefore, was not entitled to any exemption for them. The court
                                      17

of appeals decided that the PAAB had acted unreasonably, arbitrarily, and

capriciously in not assigning any value to the overhead ingredient bins or

the walls and roofs of the corn silos. It therefore adopted Vaske’s opinions

as to the value of the exemptions, although based on some language in the

PAAB’s remand order, it adjusted downward from 75% to 70% the

allocation between walls/roof and site/foundation for the corn silos.

      We need not address the hypothetical value of an exemption for the

corn silos because we have concluded no exemption is warranted. Turning

to the overhead ingredient bins, we agree with the court of appeals that

the PAAB acted unreasonably, arbitrarily, and capriciously in attributing

no value to them for exemption purposes. The County’s own expert in the

remand proceeding had valued the overhead bins (including the loadout

bins) at $778,240.     We cannot accept the PAAB’s view that there is

insufficient evidence to support any valuation just because “Vaske’s

allocations are not reliable reflections of [the bins’] value.”

      At the same time, we think the court of appeals erred in simply

adopting Vaske’s per-cubic-foot methodology and then doing its own math

based on that methodology.         The role of an appellate court in an

administrative review proceeding is not to be primary fact-finder. While
there was “sufficient evidence in the record to reach values of the claimed

exemptions,” the evidence on value was disputed, so the court of appeals

should not have determined value itself. As we have said,

      A remand is for the purpose of allowing the agency to re-
      evaluate the evidence. However, a remand for agency fact-
      finding is unnecessary when the facts are established as a
      matter of law. The reviewing court can determine the facts as
      a matter of law when the relevant evidence is both
      uncontradicted and reasonable minds could not draw
      different inferences from the evidence.
                                    18

Armstrong v. State of Iowa Bldgs. & Grounds, 382 N.W.2d 161, 165 (Iowa

1986) (en banc).

      Assigning no value to the overhead ingredient bins was arbitrary,

but given the conflicting evidence as to the appropriate exemption amount,

this case should be returned to the PAAB. See Iowa Code § 17A.19(10)

(“The court may affirm the agency action or remand to the agency for

further proceedings.”); Des Moines Indep. Cmty. Sch. Dist. v. Dep’t of Job

Serv., 376 N.W.2d 605, 610–11 (Iowa 1985) (“If the agency ruling does not

disclose a sound factual and legal basis for its decision, the [appellate]

court should remand for findings of facts.”).

      IV. Conclusion.

      For the foregoing reasons, we vacate the decision of the court of

appeals.   We affirm the district court’s order except to the extent it

sustained the PAAB’s determination to deny an exemption for the overhead

ingredient bins. We reverse and remand for further proceedings consistent

with this opinion.

      DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT

JUDGMENT      AFFIRMED       IN   PART,   REVERSED      IN   PART,   AND

REMANDED.