Court Opinion

ID: 5717437
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:04:33.642739+00
Date Added: 2024-06-11T08:41:01.719703
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 21-0258
                             Filed January 12, 2022

WEST DES MOINES HOTEL ASSOCIATES, LLC,
    Plaintiff-Appellant,

vs.

DALLAS COUNTY BOARD OF REVIEW,
     Defendant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Dallas County, Michael Jacobsen,

Judge.

      West Des Moines Hotel Associates, LLC challenges the Dallas County

Board of Review’s 2019 assessment of its West Des Moines hotel property.

AFFIRMED.

      Sarah K. Franklin and Deborah M. Tharnish of Dentons Davis Brown PC,

Des Moines, for appellant.

      John E. Lande and William R. Stiles of Dickinson, Mackaman, Tyler &

Hagen, P.C., Des Moines, for appellee.

      Heard by Greer, P.J., Badding, J., and Carr, S.J.*

      *Senior judge assigned by order pursuant to Iowa Code section 602.9206

(2022).
                                         2

CARR, Senior Judge.

       West Des Moines Hotel Associates, LLC (“Associates”) challenges the

Dallas County Board of Review’s approval of the 2019 assessment of the West

Des Moines Marriott (“Hotel”). The district court affirmed. On appeal, Associates

contends the court erred in determining the Board met its burden to prove the

property was not over assessed, highlighting the 2017 sale price and declining

performance of the Hotel. Associates also asserts the court should not have

credited the local board of review’s appraiser, claiming he wrongly relied on

national market data and improperly calculated the value of or misclassified recent

improvements to the property.

       Having considered the record evidence, testimony of the witnesses, and the

respective drawbacks of each appraisal, we conclude the Board has met its burden

to prove its valuation of the Hotel as of January 1, 2019, for $18,434,100 is not

excessive. We affirm.

I. Background Facts and Proceedings.

       This case is a property tax appeal of the county assessor’s 2019

$18,434,100 valuation of the Hotel. Associates filed a timely protest with the Dallas

County Board of Review (“Board”), claiming the valuation was excessive and

asserting the market value was $15,000,000. The Board denied the protest.

Associates appealed to the district court.

       In the district court, Associates maintained the correct value of the property

for the 2019 assessment year is $13,870,000.             The Hotel was originally

constructed in 1974 and is located at 1250 Jordan Creek Parkway, West Des

Moines, Iowa. It is a full-service hotel and convention center, with conference and
                                          3

banquet facilities, a restaurant, lounge, and an indoor pool. The Hotel is nine

stories’ tall, has 219 guestrooms, and has a gross building area of 160,096 square

feet.

        In July 2017, Associates, of which Kinseth Hospitality is the majority owner,

purchased the property for $19,000,000, with an immediate return to Associates

of $1.25 million labeled on the closing statement as “transferred FF&E cash”—

FF&E meaning furniture, fixtures, and equipment. The sale was an arms’ length

transaction between a sophisticated buyer and seller. The purchase price included

the land, hotel, other improvements, personal property, licenses and permits, and

all FF&E. The warranty deed declares a $17,750,000 purchase price and FF&E

of $3,840,000 categorized as personal property.

        The Hotel is a Marriott franchised property. With its purchase, Associates

paid $150,000 to secure transfer of a Marriott franchise agreement that calls for an

$11 million property improvement plan (PIP) for ongoing maintenance, required

replacement of FF&E items, and refreshment of Hotel décor. The PIP anticipated

a twenty-four month completion date. Between the purchase date and the January

1, 2019 valuation date, Associates spent approximately $2.1 million on property

improvements and an additional $300,000 on deferred maintenance items related

to air pressure issues and other site improvements.

        Don Vaske of Frandson & Associates, L.C., is a certified general real

property appraiser. Associates employed Vaske to appraise the Hotel for its

appeal of the 2019 tax assessment. Vaske employed three approaches to assess

the value of the property—the sales-comparison approach, cost approach, and

income approach. Under the sales-comparison approach, Vaske determined the
                                           4

market value of the Hotel as a going concern was $17,739,000; under the cost

approach, the value was $17,720,000; and under the income approach, the value

was $16,400,000. He then made adjustments and allowances and arrived at final

appraised value for the Hotel of $13,870,000.

       Mark Kenney of American Valuation Group, Inc., is a certified general real

property appraiser employed by the Board for this appeal.1 Kenney employed the

sales-comparison and income approaches to assess the value of the property. He

determined the cost approach was not applicable. Kenney determined the market

value of the Hotel under the comparison-sales approach was $20,800,000 and

under the income approach the value was $21,400,000.              After reconciliation,

Kenney arrived at an appraised value for the Hotel of $21,100,000.

       Bruce Kinseth of Kinseth Hospitality testified about the negotiations of the

purchase and ongoing operation of the Hotel. Kinseth testified a franchise adds

value to any hotel and “when you can affiliate with a Marriott . . . one of the top-tier

brands, it adds tremendous economic value. You get the business from Marriott.

Marriott Rewards Members are a humungous traveling public, as well as they pay

higher rates than your run-of-the-mill driver down the interstate.” Kinseth testified

1 Vaske also conducted the appraisal of the Hotel for Associates’ 2018 appeal and
Kennedy conducted the Board’s appraisal.
       The 2018 appeal involved the tax appeal relating to the 2017 revaluation of
the Hotel at an assessment of $17,956,710. Issues included the recent sale of the
subject property, sufficiency of comparable sales, derivation of FF&E value,
appropriate overall capitalization rate selection, impact of the PIP, and absence or
existence of intangible asset value. On January 28, 2019, the Property
Assessment Appeal Board issued a decision ruling that the assessment was
affirmed. Associates did not further appeal, though it was notified it could do so.
                                         5

Associates felt “good about the price that we got” at the time of the purchase but

“clearly we overpaid.”

       Kinseth testified Hotel performance after the purchase “went down”; “our

occupancy and average daily rate went down and our overall revenue went down

about five percent per occupied hotel room.” Kinseth observed the revenue per

available room is the “real driving number” in Smith Travel Research Reports—the

STAR report—which is relied upon in the hotel industry for “any market-based

decision.” He stated he had “never seen an appraisal done that doesn’t have the

most recent STAR report.” He criticized Kenney’s appraisal for not including the

STAR Report information about the Hotel’s local competitors. Kinseth disagreed

with Kenney’s appraisal value and, though the original protest stated the true value

was $15 million, he agreed with Vaske’s $13,870,000 appraisal for the Hotel’s real

property.

       The district court concluded the Board had proved the assessment was not

excessive. The court explained:

       In 2017 [Associates] obtained a mortgage against the [Hotel] from
       West Bank in the amount of $26,000,000. West Bank obtained an
       appraisal from certified appraiser Ranney Ramsey [of Nelsen
       Appraisal Associates, Inc.] Ramsey concluded that the [Hotel]’s
       value was $18,340,000 as a going concern. Ramsey also projected
       that the [Hotel]’s market value at completion of [PIP] construction, as
       a going concern, would be $30,845,000 in September of 2019.
       Ramsey’s valuation of the [Hotel] is consistent with the assessed
       valuation and Mr. Kenney’s final valuation of $21,100,000. As [the
       Board] has pointed out West Bank had no reason to overvalue the
       [Hotel], because the property secures West Bank’s lending.

       The court also rejected Associates’ claim that any value of the Marriott

franchise should be excluded. The court observed the franchise was one of the

reasons Associates was interested in purchasing the Hotel as a going concern.
                                         6

      The court concluded:

      Mr. Kenney’s valuation of the [Hotel] is more persuasive and
      consistent with the offered evidence at trial. Mr. Kenney’s assigned
      value for the FF&E is supported by his testimony and the prior
      appraisal by Ramsey. Mr. Kenney properly considered the fact that
      the [Hotel] is a Marriott Franchise which is its present use as a
      commercial hotel property. Finally, Mr. Kenney’s comparable sales
      approach used appropriate recent sales, within the area of the
      [Hotel], adjusted to the size of the [Hotel]. Taking all of Mr. Kenney’s
      valuation calculations along with adjustments, allowances and
      applied capitalization rate his final value of the property is more
      persuasive and consistent with the evidence offered at trial. In fact,
      Mr. Kenney’s expressed value of the [Hotel] for tax year 2019 is
      actually higher than the assessment. Defendant Board of Review
      met its burden of proof to uphold the valuation for assessed value
      ($18,434,100) of the property for tax year 2019. The assessment
      must therefore be affirmed.

      Associates appeals.

II. Scope and Standard of Review.

      Our standard of review is de novo. See Compiano v. Bd. of Rev., 771

N.W.2d 392, 395 (Iowa 2009). We give weight to the district court’s fact-findings,

especially with regard to witness credibility, but are not bound by them. Soifer v.

Floyd Cnty. Bd. of Rev., 759 N.W.2d 775, 782 (Iowa 2009).

III. Discussion.

      As an initial observation, our supreme court has recognized: “The valuation

of property has never been an exact science. In colonial times valuing property

was known as the ‘rule of common estimation.’           Although valuation for tax

purposes is necessarily expressed in quantitative terms, the appraisal process has

never been and is not now a mathematical exercise.” Wellmark, Inc. v. Polk Cnty.

Bd. of Rev., 875 N.W.2d 667, 672 (Iowa 2016) (internal citation omitted).
                                        7

      A. General Principles Applicable to Assessment Proceedings. All non-

exempt real property is subject to taxation. See Iowa Code § 427A.1(1) (2019).

Pursuant section 427A.1(c), for property taxation purposes, the following are be

taxed as real property: “Buildings, structures, or improvements, any of which are

constructed on or in the land, attached to the land, or placed upon a foundation

whether or not attached to the foundation.”         Also, “[b]uildings, structures,

equipment, machinery, or improvements, any of which are attached to the

buildings, structures, or improvements.” Id. § 427A(1)(d). For purposes of this

statutory provision, “attached” means any of the following: “[c]onnected by an

adhesive preparation,” ”[c]onnected in a manner so that disconnecting requires the

removal of one or more fastening devices, other than electric plugs,” or

“[c]onnected in a manner so that removal requires substantial modification or

alteration of the property removed or the property from which it is removed.” Id.

§ 427A.1(2). However, “property is not ‘attached’ if it is a kind of property which

would ordinarily be removed when the owner of the property moves to another

location.” Id. § 427A.3. Black’s Law Dictionary defines the term “fixture” as “an

article in the nature of personal property which has been so annexed to the realty

that it is regarded part of the land.” Thus, unless otherwise exempt, fixtures are

taxed as real property. See, e.g., Stateline Coop. v Iowa Prop. Assessment Appeal

Bd., 958 N.W.2d 807, 813–16 (Iowa 2021) (discussing exemption under section

427A.1(e), “machinery used in manufacturing establishment”).

      For taxation purposes, property is assessed at its “actual value,” meaning

“the fair and reasonable market value.” Iowa Code § 441.21(1)(a), (b). “Market

value” means “the fair and reasonable exchange in the year in which the property
                                           8

is listed and valued between a willing buyer and a willing seller.”                 Id.

§ 441.20(1)(b)(1). “Sale 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

in arriving at its market value.” If assessors cannot readily establish the value of

the property by this method, they

       may determine the value of the property using the other uniform and
       recognized appraisal methods including its productive and earning
       capacity, if any, industrial conditions, its cost, physical and functional
       depreciation and obsolescence and replacement cost, and all other
       factors which would assist in determining the fair and reasonable
       market value of the property but the actual value shall not be
       determined by use of only one such factor.

Id. § 441.21(2).2

       The burden is on the taxpayer to prove one of the statutory grounds for

protest by a preponderance of the evidence. See id. § 441.21(3)(b)(2) (“For

assessment years beginning on or after January 1, 2018, the burden of proof shall

be upon any complainant attacking such valuation as excessive, inadequate,

inequitable, or capricious. However, in protest or appeal proceedings when the

complainant offers competent evidence that the market value of the property is

different than the market value determined by the assessor, the burden of proof

thereafter shall be upon the officials or persons seeking to uphold such valuation

to be assessed.”); see Compiano, 771 N.W.2d at 398 (“Evidence is competent

2 The approved approaches to valuation include the “cost approach,” “sales
comparison approach,” and “income approach.” Iowa Dep’t of Revenue, Iowa Real
Property            Appraisal             Manual           1-2–1-3       (2020),
https://tax.iowa.gov/sites/default/files/2020-01/Introduction.pdf  (last  visited
11/29/2021).
                                          9

under the statute when it complies ‘with the statutory scheme for property valuation

for tax assessment purposes.’” (citation omitted)).

       B. Burden to Uphold the Assessment. Associates spends considerable

argument on the district court’s initial ruling, which misstated the burden of proof.

However, the court filed an amended ruling following Associates’ Iowa Rule of Civil

Procedure 1.904(2) motion. In any event, we recognize the burden rested with the

Board to uphold the valuation assessed. See Iowa Code § 441.21(3)(b)(2). “[A]nd

in our de novo review, that is where we place it.” Ross v. Bd. of Rev. of City of

Iowa City, 417 N.W.2d 462, 465 (Iowa 1988).

       Associates contends the Board did not meet its burden because Kenney’s

appraisal “contains serious flaws and is not reliable.” First, Associates argues

Kenney selected poor comparable sales and made unsupported adjustments.

Associates primarily focuses on its complaint that Kenney did not consider the sale

of the Hotel in his comparable-sales analysis. While Kenney did not use the sale

of the Hotel to Associates as a “comparable sale,” it is clear Kenney did consider

the sale in his analysis.

       Kenney’s appraisal report summarized the ownership and property history

as follows:

               As of the valuation date of January 1, 2017, the property rights
       being appraised were held in the ownership of IA Lodging West Des
       Moines, LLC, an affiliate of Xenia Hotels & Resorts a publicly-traded
       Real Estate Investment Trust (REIT). The current owner received
       legal title to the [Hotel] by a deed dated April 10, 2010 and recorded
       in Deed Book 2010, Page 56 I 2. Consideration at that time was
       $18,070,000 ($82,511 per room). This transfer was the purchase of
       the [Hotel] for continued hotel operation and use. We are not aware
       of any transfers of the [Hotel] within three years prior to the date of
       this valuation. To the best of our knowledge, the [Hotel] is not
       currently under agreement of sale, option, or listing to sell.
                                  10

        Sale of the [Hotel]
        The [Hotel] did sell soon after the valuation date. A Lodging
West Des Moines, LLC sold the [Hotel] to West Des Moines Hotel
Associates, LLC (as to an undivided 62.73% interest), GDA
Investments, LLC (as to an undivided 15.15% interest), and
S.DUB124, LLC (as to an undivided 13.94% interest), all buyers c/o
Kinseth Hotel Corporation of North Liberty, IA. This transfer was
recorded on July 12, 2017 as recorded in Deed Book 2017, Page
13391. According to this deed and [declaration of value], the total
consideration was $13,874,000 ($63,352 per room), with an
allocated consideration for personal property of $3,840,000 ($17,534
per room), and a remaining consideration for real property only of
$10,034,000 ($45,817 per room).
        According to the subject’s Purchase And Sale Agreement
dated April 27, 2017 and the First Amendment to Purchase and Sale
Agreement dated May 31, 2017 (see Appendix C), the original
agreed purchase price of $19,500,000 was reduced by the First
Amendment to $19,000,000 ($86,758 per room), including the land,
improvements, personal property, licenses and permits, contract
rights/intangible property and transferred FF&E cash, but excluding
all Excluded Assets identified in Section 2.2. The purchase price
shall be allocated among the Property, goodwill and franchise rights,
Personal Property and Transferred FF&E Cash for federal income
tax purposes under Section 1060 of the Internal Revenue Code by
Consultant (defined as Ryan). According to Ryan’s Acquisition Price
Allocation—Valuation Summary Report (see Appendix D), the
subject’s tangible personal property was estimated at $1,510,000, or
$6,895 per room (see Pages 4 of 19 and 10 of 19).
        ....
        According to the Final Settlement Statement ( see Appendix
E), the total consideration was $19,000,000 ( consistent with the First
Amendment purchase price and represents $86,758 per room) with
an FF&E cash account buyer credit of $1,250,000, which generates
a net purchase price of $17,750,000 ($81,050 per room), and
includes a mortgage loan amount of $13,687,500 ($62,500 per room
and a 72.0% Loan-to-Price ratio).
        ....
        [Hotel] Mortgage Appraisal
        A mortgage loan appraisal supporting the mortgage provided
was prepared by Nelsen Appraisal Associates, Inc. for West Bank,
dated May 31, 2017, with a “Market Value As Is–Ongoing Concern”
as of May 9, 2017 of $19,600,000 ($89,498 per room), including
allocations for “Real Estate–As Is” of $18,340,000 ($83,744 per
room), “Intangible Property–As Is” of $700,000 ($3196 per room),
and “Personal Property–As Is” of $560,000 ($2557 per room). In
addition, this appraisal provided “Market Value at Completion of
Construction–Ongoing Concern” of $30,845,000 ($140,845 per
                                        11

       room) as of September 2019 and “Market Value As Renovated &
       Stabilized–Ongoing Concern” of $32,000,000 ($146,119 per room)
       as of September 2021.

       Kenney’s appraisal analyzes the Hotel’s surrounding area and traffic and

concludes the hotel is in an “excellent location.” Also considered was the “unique

zoning of this project,” providing “a special value enhancement which was

established through the efforts of and paid for by the developer, but adheres to the

[Hotel] and benefits the present subject.” Kenney determined the highest and best

use of the [Hotel] is “for ‘continued’ full service hotel use utilizing the existing

improvements.”

       Kenney’s appraisal noted, “The property sold in July 2017, and the buyer

(present property owner noted above) plans to undertake a $11.5 mil. Planned

Improvement Program (PIP) renovation. This project was progressing in 2018,

with approximately $2.9 mil. having been spent.” Kenney testified that because

this was the “subject property,” he selected five other hotel sales for his

comparable-sales analysis, all located in the Des Moines metropolitan area.

Kenney explained his reasons for including each hotel in his valuation analysis and

the bases for his adjustments. Based on Kenney’s analysis, he arrived at a per-

room value of $95,000, or a comparable-sales value of $20,800,000 for the Hotel.

       Associates criticizes Kenney’s failure to consider the declining performance

of the Hotel or explain how the valuation could increase while performance

decreased.    The Board suggests an alternative explanation for the declining

performance of the Hotel may be found in Associates’ management decisions.

Vaske’s appraisal shows that after Associates acquired the property fees paid to

hotel management have increased and money spent on marketing has been cut
                                         12

in half. In addition, the Hotel requires $11 million of improvements under the PIP,

but less than $3 million has been spent on the property. Notwithstanding Kinseth’s

testimony to the contrary, the FF&E was at or near the end of its life when the

property was acquired in 2017 and the PIP—a condition of the Marriott franchise—

required, among other things, replacement of beds and other “soft goods” in the

guest rooms. All improvements were anticipated in be completed within twenty-

four months. Associates does not explain how, despite the more than $2 million

in expenditures on the Hotel, its value declined.

         We observe there are flaws in each appraisal.          Kenney’s appraisal

misallocates about $450,000 of the $2.9 million of capital expenditures as real

estate improvements. Vaske’s appraisal does not account for the effect of a PIP

on one of his comparable sales (the downtown Marriott sale was subject to a $20

million PIP or $48,000 per room), which he acknowledged in his testimony could

have a downward pressure on the sale price. Kenney allocated a thirty percent

upward adjustment to the downtown Marriott sales, recognizing the impact the PIP

had. Vaske’s valuation of the Hotel did not include the expected $11 million PIP,

which was to be completed within twenty-four months of the July 2017 sale.

         Here, with respect to the income approach both Kenney and Vaske first

determined a net operating income.        Kenney found a stabilized income was

$2,381,006; Vaske found a stabilized income of $2,287,445. However, the two

appraisers utilized different capitalization rates.3 Kenney used a capitalization rate

3   As explained in Kenney’s report,
         This net income stream is capitalized into value by using an overall
         rate based on competitive returns in the mortgage and equity
         markets. The conclusion regarding the expected equity return for the
                                         13

of 11.80%, leading to value of $21,400,000; Vaske used a capitalization rate of

13.95%, leading to a value of $16,400,000.

       Associates argues the Board erred in relying on national market data to

determine the capitalization rate. Vaske testified that using national market data

was an “apple-and-orange” comparison. However, Kinseth (the majority owner of

the Hotel) and Marriott are national in scope. Kinseth owns or manages hotels in

twelve states. And the market for large, full-service hotels such as the subject

property is national. It is not unreasonable for Kenney to consider the national

market in determining the capitalization rate.4

      subject property and typical existing mortgage terms are combined
      in order to develop an overall capitalization rate (OAR).
4 The Nelsen appraisal for the mortgagor explained [app1206]:

             An additional survey from CBRE—1stHalf, 2016 provides
      capitalization data by metropolitan TIER. The Des Moines area
      would be probably in the lower end of the TIER III [e.g., San Diego,
      Minneapolis, Atlanta, Oakland, Philadelphia, Phoenix, Dallas/Fort
      Worth, San Jose, Houston] with capitalization rates ranging from
      8.25% to 8.30% for a stabilized property.
             Several investment attributes were considered while selecting
      an overall cap rate (Ro). Again, Ro is used to convert the subject’s
      net operating income (NOI) into value. Investment attributes affect
      risk, which is major factor in the selection of an appropriate cap rate.
      When risk is low, a commensurate cap rate should be low, and vice
      versa.
             All issues necessary to produce a value indication via the
      income approach were presented and explained. After careful
      consideration of all factors pertaining to and influencing this
      approach, the following formula capitalizes or converts net income
      into value.
                                         14

       A central bone of contention here is the value of the FF&E. Kenney’s

appraisal used the mortgagor’s $560,000 figure for the FF&E in 2017, and then

considered the amount spent under the PIP:

               Present Use & Planned Renovation
               As of the valuation date, the [Hotel] was partially occupied,
       operated and utilized as a full service Marriott Hotel. According to
       Rodney Carmichael, Engineering Manager for the [Hotel],
       renovations in accordance with the Planned Improvement Plan (PIP)
       of $11,500,000 ($52,511 per room) were beginning on our prior
       inspection date of April 23, 2018, and were expected to be completed
       by mid-2020 (see complete PIP as “Exhibit H” of Purchase And Sale
       Agreement in Appendix C). In 2018, the PIP was underway with $2.9
       mil. having been spent (see Appendix K). Our breakdown of
       renovation construction costs between real estate and furniture,
       fixtures and equipment (FF&E) are presented in the Improvements
       section of this report. Of the total figure, $2,347,719 was for real
       estate construction improvements, and only $550,860 was for
       Furniture, Fixtures & Equipment (FF&E).

Adding $550,860, Kenney valued the FF&E at $1.1 million. He testified his value

assumed a ninety percent depreciation rate because the FF&E was getting close

to the end of its useful life.

       For his part, Vaske’s appraisal addresses FF&E:

       Based on discussions with representatives for the subject
       concerning the subject FF&E, the subject property had all new “case
       goods” (excluding beds) installed in the guest rooms in 2012. The
       conditions of the beds are assumed to be near the end of their
       economic life. The furniture, fixtures, and equipment within full
       service hotels with convention facilities, including full kitchen, bar,
       dining, and banquet/conference meeting space, typically has an
       economic life of 10 to 15 years. Considering the age and overall
       condition of the subject’s FF&E (as of January 1, 2019), depreciation
       attributable to the FF&E is estimated at 60%. This indicates a
       depreciated cost for the FF&E of $2,628,000.

       When asked how Associates arrived at the 2017 declared FF&E value of

$3,840,000 million, Kinseth testified:
                                          15

       Well, I think—you know, if you just sit down and add up 219 rooms
       times the amount of FF&E and the 38 additional parlors, suites. Then
       you go down and say, Okay, there are ten offices, all with desks, all
       with computers, all with side chairs. Then you go into the restaurant
       and count the tables, the chairs, the linen, the banquet linen, the
       silverware, all the banquet table types, the AV equipment that is
       sitting on the wall and the carts and the portable bars and all of the
       furniture in the pre-function area, all of the furniture in the lobby, the
       vans, all the computer systems, all of the TVs in the rooms, all of the
       fitness equipment, you know, there is just a tremendous, tremendous
       amount of furniture and fixtures and personal property in there.

Kinseth agreed with counsel’s statement “$3.84 million divided by 219 rooms is

about $17,500 per room” and noted that to “outfit a new hotel” would cost between

$25,000 and $35,000 per room. Kinseth testified Kenney’s $1.1 million FF&E

value was “laughable.”

       On our de novo review,5 we agree with the district court when it observed:

       One of the hotly contested facts in the trial was the value of the FF&E
       that is included in the purchase cost of the [Hotel]. [Associates]
       contends the FF&E was worth at least $3,840,000 when [Associates]
       purchased the [Hotel] in July 2017 for $19,000,000. Vaske found
       that the FF&E was $2,628,000 and Kenney valued the FF&E at
       $1,000,000 based partly upon the Ramsey appraisal which valued
       the FF&E at approximately $560,000 in 2017. Kenney did add
       approximately $500,000 in value to account for FF&E added since
       his previous valuation. The evidence suggests that the value of the
       FF&E is much closer to Kenney’s value than that of Mr. Vaske or
       [Kinseth]. Therefore, Mr. Vaske’s assigned value for FF&E is too
       high thus lowering the valuation of the [Hotel] which skewed his sales
       comparison approach to a lower value.

       Vaske’s appraisal overestimates the FF&E. Additionally, he fails to account

for the value of the Marriott franchise. Kinseth testified Associates would not have

purchased the Hotel if Marriott was unwilling to continue the franchise. He stated

5Also in the record is an “Acquisition Price Allocation Valuation Summary Report”
prepared by Ryan, LLC., which considered the “tangible personal property”
acquired in Associates’ purchase had a value of $1,510,000.
                                        16

the Marriott franchise was of “[t]remendous value.”        This is an appropriate

consideration in the valuation process.      See Soifer, 759 N.W.2d at 785 (“An

assessor can ‘consider intangibles in arriving at the actual value of the taxable

property’ provided the intangibles specified in section 441.21(2) are not

considered.” (citation omitted)). As the Soifer court noted:

       [V]aluing the Soifers’ property as if it were not a viable McDonald’s
       would be contrary to the principle that assessed property is valued
       based on its present use, including any functioning commercial
       enterprise on the property. In Riso [v. Pottwattamie Board of
       Review], this court held that an assessor is “entitled to consider the
       use of the [assessed] property as a going concern.” 362 N.W.2d
       [513,] 517 [(Iowa 1985)]; accord Maytag Co. [v. Partridge], 210
       N.W.2d [584,] 590 [(Iowa 1973)]; Lake City Elec. Light Co. [v.
       McCrary], 110 N.W. [19,] 20 [(Iowa 1906)]. As we stated in Maytag,
       “[w]hen an assessor considers the use being made of property, he is
       merely following the rule that he must consider conditions as they
       are.” 210 N.W.2d at 590 (rejecting an expert’s analysis that valued
       machinery in use in the Maytag factory based on the used machinery
       market price).

759 N.W.2d at 788.

       Having considered the record evidence, testimony of the witnesses, and the

respective drawbacks of each appraisal, we conclude the Board has met its burden

to prove its valuation of the Hotel as of January 1, 2019, for $18,434,100 is not

excessive. We therefore affirm.

       AFFIRMED.