Opinion
No. 4-122 / 03-1270
Filed March 10, 2004
Appeal from the Iowa District Court for Story County, Dale E. Ruigh, Judge.
Petitioner-appellant Scott Randall appeals the district court decision affirming the decision of the City of Ames Board of Review denying Randall's appeal of his property assessment on the basis that the property was improperly reclassified. AFFIRMED.
Larry Curtis of Pasley Singer Law Firm, L.L.P., Ames, for appellant.
John Klaus, Ames, for appellee.
Considered by Sackett, C.J., and Vaitheswaran and Eisenhauer, JJ.
Petitioner-appellant Scott Randall appeals the district court decision affirming the decision of the City of Ames Board of Review (Board) denying Randall's appeal of his property assessment on the basis that the property was improperly reclassified. On appeal Randall claims the district court erred in (1) ruling the primary use of the property was not agricultural; (2) applying an incorrect standard for purposes of interpreting Iowa Administrative Code rule 701-71.1(3); and (3) finding the primary or intended use of the property at issue was commercial. We affirm.
I. BACKGROUND FACTS AND PROCEEDINGS
The property at issue in this appeal consists of three adjoining lots comprising approximately seventy-five acres which are owned or partially owned by petitioner Randall, a developer in Ames, Iowa. Randall bought two of the three lots in 1990 for $140,000. He bought the third in 2000 for $900,000. All three parcels had been used as agricultural land and classified "agricultural" for property tax assessment purposes when they were purchased. In January of 2001 Randall applied for, and later received, a special use permit for establishment of a golf course on the property. In applying Randall indicated that, "Construction of a golf course is consistent the [sic] intent of the Highway oriented Commercial zone. The golf course will be a commercial operation and operate as a business." Randall testified that in approximately July of 2001 he decided to proceed with the golf course development on the property. Beginning in late September of 2001 and continuing to December 2001 Randall began developing the property by removing part of the crops and moving dirt. By January 1, 2002, he testified the land not set aside for the golf course had been restored and prepared for planting. This land, which continues to be farmed, comprises about half of the seventy-five-acre property.
The parties stipulated before trial that improvements to the property during 2001 for earth moving and improvement construction cost $726,940. They also stipulated engineering costs prior to these improvements totaled $15,000.
The Ames City Assessor reclassified each of the three lots as "commercial" for property tax purposes as of January 1, 2002. At that time the golf course was not completed, and the only active use of the property was for agriculture. In June of 2002 Randall began construction on a clubhouse and a maintenance barn. The clubhouse was granted a liquor license in March of 2003, and there was no evidence it could not be a site for the commercial sale of alcohol. It was anticipated the golf course would open in July of 2003.
II. SCOPE OF REVIEW
The district court hears appeals from decisions of a board of review with reference to protests of assessment in equity. Iowa Code §§ 441.38, 441.39 (2001). We review cases brought in equity de novo. Iowa R. App. P. 6.4; see Cott v. Board of Review of City of Ames, 442 N.W.2d 78, 80 (Iowa 1989).
III. ANALYSIS
At issue here is whether Randall could legitimately develop half of his seventy-five-acre property into a golf course while still maintaining the "agricultural" property tax classification by farming the other half. Each of the three separate parcels comprising the seventy-five-acre property must be classified as either entirely "agricultural" or "commercial," as there is no authorization granted the assessor to subdivide the historic legal descriptions of properties for purposes of separately assessing individual portions thereof. Sevde v. Board of Review of City of Ames, 434 N.W.2d 878, 880 (Iowa 1989). Where, as here, the assessment is required to be made under a statutory formula tied to a particular use of the property and some portion of the property is used differently than other portions, problems can arise in applying the formula valuation to each unit as a whole. See id. However, neither party in this case seems to question that each parcel at issue must ultimately be classified as either entirely agricultural or entirely commercial. Id.
Iowa Administrative Code rule 701-71.1(3) defines agricultural real estate to include, "all tracts of land and the improvements and structures located on them which are in good faith used primarily for agricultural purposes. . . ." Rule 701-71.1(5) defines commercial real estate to include "all lands and improvements and structures located thereon which are primarily used or intended as a place of business where goods, wares, services, or merchandise is stored or offered for sale at wholesale or retail."
We agree with the district court that under the above definitions Randall's land was properly reclassified as "commercial." Other than indicating that approximately half of the sum of the acres comprising the three lots was farmed, Randall made no clear showing that any one of those parcels was used primarily for agriculture. Given the evidence at trial we agree the land at issue was intended for commercial development and use. By January 1, 2002, Randall had invested at least about $750,000 into the property solely for the golf development. Testimony also indicated that by this January 1 date the property had been significantly altered, even if some of the farmland had been restored for farming purposes. The golf development was promoted in the special use permit application as a commercial operation. We are not convinced that the fact that the commercial project was in its development stages removes it from the commercial context, especially considering the priority given to the development and the substantial investment made in converting the land. The primary use of the land was for the golf development. We affirm the district court.