Court Opinion

ID: 4175161
Source: CourtListenerOpinion
Date Created: 2017-06-07 15:12:58.43211+00
Date Added: 2024-06-11T14:39:16.392971
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                     No. 16-1552
                                 Filed June 7, 2017

AL BRUEGGEMAN, DAN BREUKER, TOM BREMER, ROGER BOSMA,
MARK DILLEHAY, RANDY ROWE, ALLEN ROWE, and JARROD WALLACE,
    Plaintiffs-Appellants,

vs.

OSCEOLA COUNTY, IOWA and THE CITY OF HARRIS, IOWA,
     Defendants-Appellees.
________________________________________________________________

       Appeal from the Iowa District Court for Osceola County, David A. Lester,

Judge.

       The plaintiffs appeal from the district court’s ruling granting the

defendants’ motion for summary judgment on the threshold issues of timeliness

and standing and dismissing the plaintiffs’ claims.      AFFIRMED IN PART,

REVERSED IN PART, AND REMANDED.

       Aaron W. Ahrendsen and John C. Werden Jr. of Eich, Van Dyke, Werden

& Steger, P.C., Carroll, for appellants.

       Stephen G. Kersten of Kersten, Brownlee, Hendricks, L.L.P, Fort Dodge,

for appellees.

       Heard by Danilson, C.J., and Potterfield and Bower, JJ.
                                              2

POTTERFIELD, Judge.

         The plaintiffs are named resident taxpayers of Osceola County and of the

Harris-Lake Park School District. They filed a petition for writ of certiorari and

declaratory judgment challenging a resolution and an effectuating ordinance

passed by or involving the defendants, Osceola County and the City of Harris. In

conjunction, the resolution and ordinance established an urban renewal area and

an urban renewal plan and divided the tax revenue levied on that area as tax

increment financing (TIF) to fund the plan. The plaintiffs challenged the actions

claiming they would be harmed as taxpayers. The defendants filed a motion for

summary judgment, and the district court granted it, finding the plaintiff’s lacked

standing to challenge the resolution and their claims involving the ordinance were

untimely.      The plaintiffs’ petition was dismissed.        On appeal, the plaintiffs

challenge the district court’s ruling and maintain the merits of their motion for

summary judgment should have been granted instead.

I. Background Facts and Proceedings.

         In general terms, this case is about the actions taken by Osceola County

and the City of Harris to fund improvements to Harris’s lagoon project, pursuant

to Iowa Code chapter 403 (2015).1 The following facts are undisputed:

1
    In a recent case, our supreme court provided a detailed explanation of chapter 403:
                   Iowa Code chapter 403 covers urban renewal in Iowa. Under that
           chapter, the governing body of the municipality must first determine by
           resolution that an area is “a slum area, blighted area, economic
           development area or a combination of those areas.” Iowa Code
           §§ 403.5(1), .17(23) (2013). This area, having been designated as
           appropriate for a renewal project, is known as an urban renewal area
           (URA). Id. The municipality also must prepare or cause to be prepared
           an urban renewal plan that lays out proposed projects for “the
           development, redevelopment, improvement, or rehabilitation” of the
           designated URA. Id. §§ 403.5(2)(a), .17(24).
                                          3

       In March 2015, Harris was under an administrative order from the Iowa

Department of Natural Resources to update its lagoon, but the city did not have

the debt capacity to take on the improvements. As a result, on March 10, the city

sent a letter to the Osceola County Board of Supervisors “asking for help with

possibly doing a TIF on the windmills for infrastructure within the City.” Within a

couple of weeks, at a meeting of the board, the Harris mayor “asked that the

supervisor consider establishing an urban renewal area including the turbines

and city of Harris to help fund needed projects.”

       In August 2015, an attorney hired by the county sent a letter to the county

auditor, indicating, “It is our understanding that the initial focus of our

representation will be on establishing an urban renewal area and TIF district and

                The governing body submits the urban renewal plan to the
       municipality’s planning commission for review and recommendation as to
       whether it complies with the general plan of development for the
       municipality. Id. § 403.5(2)(a). The governing body then holds a public
       hearing on the plan. Id. § 403.5(3). After the hearing, the governing body
       may approve the plan. Id. § 403.5(4). . . .
                Chapter 403 also authorizes a unique form of financing for urban
       renewal projects. This is known as tax increment financing (TIF). Id.
       § 403.19. TIF works on the theory that any projects completed in the
       URA will increase the taxable value of the properties included within the
       area. Upon approval of a TIF district, the assessed value of the
       properties within the district is frozen for purposes of normal tax
       assessment by the municipality. Id. § 403.19(1)(a). Then, the tax
       collected for any enhanced value above this base is allocated to a
       separate fund designated to pay for any indebtedness incurred to
       complete the improvements. Id. Presumably, that is because the
       improvements bring about the increased property value. “In theory, the
       process is a closed circuit: the incremental revenues pay for the public
       expenditures, which induce the private investment, which generates the
       incremental revenues, which pay for the public expenditures.” Richard
       Briffault, The Most Popular Tool: Tax Increment Financing and the
       Political Economy of Local Government, 77 U. Chi. L. Rev. 65, 68 (2010).
       ...
Concerned Citizens of Se. Polk Sch. Dist. v. City of Pleasant Hill, 878 N.W.2d 252, 254
(Iowa 2016).
                                          4

adopting an urban renewal plan (the “Plan”) to facilitate the use of tax increment

financing.”

       At the October 20 board meeting, the board conducted a public hearing on

and ultimately adopted Resolution 10-15/16. It stated, in part:

              Resolution to declare necessity and establish an urban
       renewal area pursuant to section 403.4 of the Code of Iowa and
       approve urban renewal plan and project for Osceola County Urban
       Renewal Area 7.
              ....
              WHEREAS, a portion of the Property lies within the
       corporate boundaries of the City of Harris (the “City”), and a joint
       agreement (the “Joint Agreement”) has been executed and
       delivered by the City in satisfaction of the consent requirement of
       section 403.17 of the Code of Iowa.
              ....
              WHEREAS, the proposed Plan will authorize initial projects
       to be undertaken in the Urban Renewal Area entailing the use of
       tax increment financing to support the undertaking of the economic
       development and blight alleviation initiatives in the City . . . .

The adoption of the resolution established the urban renewal area and the urban

renewal plan.

       At the same meeting, the board also introduced Ordinance No. 47 for “its

initial consideration.”2 The ordinance stated, in part:

               An Ordinance Providing for the Division of Taxes Levied on
       Certain Taxable Property in the Osceola County Urban Renewal
       Area 7, Pursuant to Section 403.19 of the Code of Iowa.
               ....
               Section 8. Purpose. The purpose of this ordinance is to
       provide for the division of taxes levied on certain taxable property in
       Osceola County Urban Renewal Area 7, each year by and for the
       benefit of the state, city, county, school districts or other taxing
       districts after the effective date of this ordinance in order to create a
       special fund to pay the principle of and interest on loans, moneys

2
 Pursuant to Iowa Code section 331.302(6)(a), the ordinance was considered and voted
on, but it could not be passed until it was “considered and voted on for passage at two
meetings of the board prior to the meeting at which it [was] to be finally passed.”
                                        5

      advanced to or indebtedness, including bonds proposed to be
      issued by Osceola County to finance projects in such area.
              ....
              “TIF district” shall mean the following taxable real property
      situation in Osceola County Urban Renewal Area 7 . . . .

The ordinance, once adopted, would establish the TIF district—freezing the value

of the properties in Urban Renewal Area 7 for purposes of normal tax

assessments by the municipality and then allocating the tax collected for the

enhanced value above that base to the separate TIF fund to finance the

improvements named in the urban renewal plan.

      On October 27, at another meeting of the board of supervisors, Ordinance

No. 47 was “given its second consideration.”

      On November 3, the plaintiffs filed their petition for writ of certiorari and

declaratory judgment. In it, the plaintiffs claimed the defendants had “adopted a

Resolution that created an urban renewal area that includes the City of Harris

and wind energy conversion property, as defined in Iowa Code [section] 427B.26,

located outside the City of Harris” and the “Resolution is unlawful because it

violates Iowa Code Chapter 403 and the Iowa Constitution.”

      On November 10, the board of supervisors approved the final

consideration of Ordinance No. 47 and adopted it.

      At the November 30 special session meeting of the board, the board

entered “into a written agreement with Osceola County confirming prior verbal

agreement and understanding.”       The agreement in question is the “urban

renewal joint agreement” that was referenced in Resolution 10-15/16 as the “joint

agreement [that] has been executed and delivered by the City in satisfaction of

the consent requirement.” The written Urban Renewal Joint Agreement states
                                          6

the city and county has entered into the agreement verbally in August 2015 and,

at the request of the city, the county had “approved this written contract to

memorialize the Joint Agreement.”        Additionally, the written agreement was

“intended to memorialize the prior verbal agreement between the parties and to

meet the statutory requirements of paragraph 4 of section 403.17 of the Code of

Iowa and shall be effective upon execution as of the date first listed above.” The

agreement was backdated to October 20, 2015—the date Resolution 10-15/16

was passed by the board.

       In February 2016, the plaintiffs filed a motion for summary judgment.

They maintained Osceola County had acted illegally when the board established

Urban Renewal Area 7, part of which lies within the City of Harris, without first

entering into the written Urban Renewal Joint Agreement with Harris.

Additionally, the plaintiffs asserted that Urban Renewal Area 7 was not an “area”

because it is not connected and the inclusion of wind energy conversion property

violated the spirit of chapter 403. The defendants resisted the motion, and after

a hearing on it, the district court overruled it, finding there was a material factual

dispute about the timeliness of plaintiffs’ challenge to the ordinance—namely,

whether Ordinance No. 47 was adopted on October 20 or November 10.

       Shortly thereafter, the plaintiffs filed a motion for leave to amend their

petition.   The plaintiffs asked “the Court for leave to amend their petition to

include challenging the October 27, 2015 consideration of Ordinance No. 47 and

the November 10, 2015 consideration of Ordinance 47” and “to have the

amended Petition for Writ of Certiorari considered filed after the November 10,

2015 reading and adoption [of Ordinance 47].”
                                          7

       The defendants resisted the plaintiffs’ motion to amend their petition, and

they filed their own motion for summary judgment. In the defendants’ motion for

summary judgment, they asserted that insofar as the plaintiffs challenged

Ordinance No. 47, their petition was untimely.           Additionally, the defendants

claimed the plaintiffs did not have standing to challenge Resolution 10-15/16

because the plaintiffs were not parties to the agreement and had not claimed

they were “injured in a special manner, different from that of the public generally”

by the creation of the Urban Renewal Area 7 and the urban renewal plan. The

city and county also maintained the plaintiffs’ claims could be dismissed by

summary judgment on the merits because the defendants had satisfied the

statutory requirements regarding the joint agreement and the “area” in Urban

Renewal Area 7 was “consistent with the purposes of the urban renewal statute

[section] 403 and is neither arbitrary or capricious.”

       On September 2, the district court granted in part the plaintiffs’ motion to

amend their petition. The court allowed the plaintiffs to amend their petition “to

include claims challenging Defendant[s’] consideration of Ordinance No. 47 on

October 27, 2015 and November 10, 2015, with that amended petition being

deemed filed and served in the form attached to Plaintiff[s’] motion.” However,

the court denied the plaintiffs’ request that it “enter an order deeming that

amended petition as having been filed on November 10, 2015.” Rather, the court

ruled the plaintiffs’ amended petition “shall be deemed as relating back to the

filing date of their original petition, which was November 3, 2015.” The plaintiffs’

amended petition included the claim that “Defendants . . . purportedly adopted an

Ordinance. Meetings in an attempt to adopt the Ordinance were held on October
                                          8

20, 2015; October 27, 2015; and November 10, 2015”: and the “Resolution and

Ordinance [are] unlawful.”

       On September 16, the district court ruled on the defendants’ motion for

summary judgment. The court concluded the plaintiffs’ petition—which was filed

on November 3, 2015—was timely to challenge the passing of Resolution 10-

15/16 (which occurred on October 20) but was filed early and untimely as to the

final approval and adoption of the Ordinance No. 47 (which took place on

November 10). The court determined the untimely filing deprived it of jurisdiction

to decide the plaintiffs’ claims about the ordinance, leaving only the plaintiffs’

claims regarding the legality of the board’s actions in passing the resolution.

       In deciding whether the plaintiffs lacked standing to challenge the

resolution, the district court distinguished between the result of the adoption of

Resolution 10-15/16 and Ordinance No. 47. The court found the resolution had

merely created Urban Renewal Area 7, which the plaintiffs had not shown had

harmed them in any way, while “the passage of the Ordinance . . . provided for

the TIF district which, in turn, could possibly affect property taxation by freezing

the tax receipts going to basic services so that more money can go to pay for

rehabilitation in Area 7.”   The court concluded the plaintiffs could not show

Resolution 10-15/16 had harmed them in some special manner, so they lacked

standing to challenge it. The court did not reach the merits of plaintiffs’ claims

and dismissed the plaintiffs’ petition; they appeal.

II. Standard of Review.

       “We review a grant of a motion for summary judgment for correction of

errors at law.” Concerned Citizens, 878 N.W.2d at 258. “Issues of statutory
                                         9

construction are legal questions and ‘are properly resolvable by summary

judgment.’” Id. “Our task on appeal is to determine only whether a genuine

issue of material fact exists and whether the law was correctly applied.” Rants v.

Vilsack, 684 N.W.2d 193, 199 (Iowa 2004).

III. Discussion.

       A. Timeliness and Jurisdiction.

       The plaintiffs maintain the district court erred in finding its petition was

untimely as to the ordinance; they assert the board acted illegally on each of the

three occasions it considered Ordinance No. 47 (October 20 and 27, and

November 10) and claim “each individual action that the county took is

challengeable by certiorari.” We disagree.

       Pursuant to Iowa Rule of Civil Procedure 1.1402(3), petitions for writ of

certiorari “must be filed within 30 days from the time the tribunal, board or officer

exceeded its jurisdiction or otherwise acted illegally.” Our case law provides that

“the time at which a tribunal acted illegally occurs when the underlying

proceeding becomes final.” Sergeant Bluff-Luton Sch. Dist. v. City Council of

Sioux City, 605 N.W.2d 294, 297 (Iowa 2000) (emphasis added) (citing Iowa

Rule of Civil Procedure 307(c), now renumbered as rule 1.1402(3)).               The

adoption of Ordinance No. 47 was not final until November 10. See Iowa Code

§ 331.302(6)(b) (“A proposed ordinance . . . shall be considered and voted on for

passage at two meetings of the board prior to the meeting at which it is finally

passed.”). The plaintiffs attempt to muddy the waters by claiming it is unclear

what constitutes a “final action” in adopting an ordinance, but section
                                            10

331.302(6)(b) explicitly states that it is a meeting after an ordinance is twice

considered and voted on “at which it is finally passed.” (Emphasis added.)

       Because the final action in the adoption of the ordinance took place on

November 10, the plaintiff’s November 3 petition challenging the ordinance 3 was

untimely.    See Iowa R. Civ. P. 1.1402(3).           “An untimely petition for writ of

certiorari deprives the court of subject matter jurisdiction.” Sergeant Bluff, 605
N.W.2d at 297. Thus, the district court did not err in dismissing the plaintiff’s

claims insofar as they challenged Ordinance No. 47. See Lloyd v. State, 251
N.W.2d 551, 558 (Iowa 1977) (“If the court has no subject matter jurisdiction it

has no power to enter a judgment on the merits and must dismiss the action.”).

       B. Standing.

       Here, the district court found that the plaintiffs had not been injuriously

affected by the creation of Urban Renewal Area 7 and the corresponding urban

renewal plan, and thus they lacked standing to challenge the board’s decision to

adopt the resolution.

       In order to have standing to sue, “a party must have ‘sufficient stake in an

otherwise justiciable controversy to obtain judicial resolution of that controversy.’”

Alons v. Iowa Dist. Ct., 698 N.W.2d 858, 863 (Iowa 2005) (citations omitted). “As

far as Iowa law is concerned, this means ‘that a complaining party must (1) have

a specific or personal legal interest in the litigation and (2) be injuriously

affected.’” Id. at 864 (citation omitted). “Only a likelihood or possibility of injury

need be shown. A party need not demonstrate injury will accrue with certainty, or

3
  As noted above, the plaintiffs’ original petition did not challenge the ordinance, but the
district court allowed the plaintiffs to amend their petition and ruled the amended petition
would be considered as filed on the same date as the original.
                                        11

already has accrued.”     Iowa Bankers Ass’n v. Iowa Credit Union Dep’t, 335
N.W.2d 439, 445 (Iowa 1983).

              Certiorari, which is an extraordinary remedy, is available to
       all persons who show a substantial interest in the activity
       challenged. Generally, only a party to an action may obtain the
       writ. An exception exists, however, when the public is concerned
       with the subject matter of the action, in which case anyone
       interested may petition. In order for persons who are not parties to
       assert a claim, they must prove that they have been injured in a
       special manner, different from that of the public generally.

State v. West, 320 N.W.2d 570, 573 (Iowa 1982) (citations omitted).

       In other words, because the plaintiffs were not parties to the resolution,

they must satisfy the public interest exception in order to have standing. See

Alons, 698 N.W.2d at 864. “It is clear that mere citizenship confers no right to

maintain the action.” Polk Cty v. Dist. Ct., 110 N.W. 1054, 1054 (Iowa 1907). “A

general interest shared by all citizens in making sure government acts legally is

normally insufficient to support standing . . . .” Godfrey v. State, 752 N.W.2d 413,

423–24 (Iowa 2008). However, a taxpayer can acquire “standing by showing

some link between higher taxes and the government action being challenged.”

Id. at 424.

       The defendants maintain the plaintiffs have failed to allege any damages

or injuries.   We disagree.    In their petition, the plaintiffs contend they are

“residents and taxpayers of Osceola County” and “[t]hey reside and pay taxes in

Osceola County.”      This assertion is supported by the individual plaintiffs’

response to interrogatories. And as our supreme court has recognized, “By its

nature, TIF diverts property tax revenue that would otherwise be available to the

regular taxing districts.” Concerned Citizens, 878 N.W.2d at 254. “[A] taxpayer
                                          12

may maintain an action in his own name to prevent unlawful acts by public

officers which would ‘increase the amount of taxes he is required to pay, or

diminish a fund to which he has contributed.’” Polk Cty, 110 N.W. at 1055. In

their resistance to the defendants’ motion for summary judgment, the plaintiffs

echoed these sentiments, claiming:

       The money captured in tax increment comes from wind energy
       conversion property in Osceola County. Diverting this money into
       the tax increment removes the money from the county’s tax rolls
       and limits the general funds available for county projects and
       expenses. All Plaintiffs, as taxpayers, contribute to the county’s tax
       revenue. . . . The litigants are facing higher taxes as the result of
       illegal action by Defendant.       A successful challenge to the
       governmental action at issue in this case will result in theoretically
       lower taxes.

Additionally, the district court’s ruling granting the defendants’ motion for

summary judgment based its decision on the plaintiffs being taxpayers, noting

that to have standing, the plaintiffs had to “show their property taxes will be

increased.” While the defendants question whether the plaintiffs have alleged an

injury, we believe the issue turns on whether that injury is “purely hypothetical”—

as the district court found—or “sufficiently likely,” so to confer standing.

       According to case law, plaintiffs who want to challenge the inclusion of

certain land in an urban renewal plan and TIF district must file their challenge

within thirty days of the board’s decision to include that land in the project rather

than waiting until the resulting taxes are levied. See Sergeant Bluff, 605 N.W.2d

at 295 (“Had the city not designated [the land] as urban renewal property, the

school district could not have been affected by the TIF tax plan levied

therefrom. . . . Stated another way, the legality of the tax levy is dependent upon

the legality of the classification of the property from which the levy flows.”). Here,
                                              13

the plaintiffs did so; they filed their petition for writ of certiorari within thirty days of

the land being placed in the urban renewal area and the adoption of the urban

renewal plan.4

       We do not believe establishing an urban renewal area is always sufficient

to confer standing on individuals. However, under these undisputed facts, the

adoption of the resolution creating the urban renewal area was part of an overall

plan to create a TIF district, which was imminent, or at least likely, at the time the

plaintiffs’ filed their petition. Cf. Iowa Bankers, 335 N.W.2d at 445 (“A party need

not demonstrate injury will accrue with certainty, or already has accrued.”); see

Godfrey v. State, 752 N.W.2d 413, 421–22 (Iowa 2008) (“[T]he plaintiff must

establish ‘a causal connection between the injury and the conduct complained of’

and that the injury is ‘likely, as opposed to merely speculative’ ‘to be redressed

by a favorable decision.’” (citations omitted)). In other words, we believe there is

a link between the passing of Resolution 10-15/16 and the intended (and partially

completed) goal of passing Ordinance No. 47, and we believe the passing of

Ordinance No. 47 was “likely, as opposed to merely speculative.” 5 Godfrey, 752
N.W.2d at 421–22.

4
  If Sergeant Bluffs stands for the proposition that the plaintiffs must challenge the
legality of the urban renewal area and plan, but the district court is right that the “specific
injury” which gives the parties standing comes from the adoption of the TIF district,
future plaintiffs could be prevented from ever being able to challenge a board’s decision;
county boards could simply choose to pass resolutions creating the urban renewal area
and plan and then wait more than thirty days to pass the ordinance adopting the TIF
district.
5
  The district court disagreed, finding “[a] challeng[e] only to the legality of the Resolution
and corresponding creation of Area 7 is a purely hypothetical risk contingent on the
passage of the Ordinance establishing the TIF district.” In doing so, the district court
seems to ignore all the facts, as they existed at the time the plaintiff’s filed their petition,
surrounding the ordinance. We agree that the plaintiffs’ motion was untimely as to the
consideration of whether the ordinance was legal, but we do not believe that requires us
                                          14

       The county had to pass the resolution creating the urban renewal area in

order to pass Ordinance No. 47 creating the TIF district.            See Iowa Code

§ 403.19 (“A municipality may provide by ordinance that taxes levied on taxable

property in an urban renewal area each year by or for the benefit of the state,

city, county, school district, or other taxing district, shall be divided as

follows . . . .” (emphasis added)). Additionally, we know that the resolution was

passed in anticipation of establishing the TIF district. The city’s first letter on the

subject, in March of 2015, asked the county to create a TIF district; the attorney

hired by the county had written a letter in August 2015 expressing his

understanding that he was being hired to create a TIF district; and the ordinance

that would actually create the TIF district and cause the specific harm was two-

thirds of the way to being adopted when the plaintiffs filed their petition.

       Because the defendants had to first pass Resolution 10-15/16 in order to

create the TIF district, and it was likely Ordinance No. 47 would pass and the

resulting specific harm would occur, the plaintiffs have standing to bring their

challenge to the resolution.

IV. Conclusion.

       We agree with the district court that the plaintiffs’ petition for writ of

certiorari and declaratory judgment was untimely to challenge Ordinance No. 47,

and we affirm the district court’s grant of defendants’ motion for summary

judgment on that ground and dismissal of the corresponding claim. However,

because we find the plaintiffs have standing to bring their challenge to Resolution

to ignore facts surrounding the county board’s actions as they pertain to whether the
ordinance was likely to be passed.
                                        15

10-15/16, we reverse and remand for further proceedings.      On remand, the

plaintiffs may refile their motion for summary judgment or the claims regarding

Resolution 10-15/16 may be set for trial.

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.