UPDATED March 2019

The Time to Negotiate Iowa Property Tax Assessments is Now

On April 1, 2019, assessors around the state of Iowa will release their property tax assessment values.  This starts the clock for negotiations.

Pursuant to Iowa Code § 441.30, from April 2 until April 25, aggrieved taxpayers may contact local assessors and make an informal request that the assessment be changed.  This can result in a written agreement with the assessor to correct or modify the assessment, or an agreement by the assessor to file a recommendation with the local board of review that the assessment be changed.  Assessors around Iowa take this period seriously.  The time to consider negotiations is now.

Here is a brief overview of the Iowa appeal deadlines:

  • January 1 – Assessment date (Iowa Code § 441.46)
  • April 1 – Assessor’s release assessment values (Iowa Code § 441.23)
  • April 2-25 – Time to negotiate with assessors (Iowa Code § 441.30)
  • April 30 – Iowa Board of Review protests due (Iowa Code § 441.37)
  • Later date of May 31 or 20 days after board of review opinion – Deadline to file appeal with PAAB or district court (Iowa Code §§ 441.37A, 441.37B, 441.38)

This email address is being protected from spambots. You need JavaScript enabled to view it. and Elizabeth Carter
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Iowa Property Tax Update Archive

UPDATED March 2017

Narrow property tax appeal window opens in April 2017

Iowa property owners will have a narrow window to appeal their January 1, 2017, assessments – which values essentially apply to both the 2017 and 2018 tax years. Appeals to the local board of review may be filed no later than April 30, 2017.   Taxpayers may be able to achieve a reduction before the local Board of Review. If not, the Taxpayer may pursue relief before a local District Court or the Iowa Property Assessment Appeal Board. 

Brent A. Auberry
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Updated December 2016

District Court improperly found Retailer’s witnesses incompetent, but testimony from Board of Review’s experts supported assessments

On December 21, 2016, the Iowa Court of Appeals in Kohl’s Department Stores, Inc. v. Board of Review of Dallas County affirmed the 2013 assessment of Kohl’s retail store.  On appeal, Taxpayer argued that the district court (1) failed “to exercise its own independent judgment” in reviewing the property’s assessment, (2) should not have found Kohl’s witnesses incompetent, and (3) improperly concluded that the Board’s witnesses were more credible.  As to the first issue, the Court’s de novo standard of review allowed it to adequately scrutinize the record in light of the district court’s apparent adoption of large portions of the Board’s post-hearing brief.  Regarding Taxpayer’s second contention, the Court of Appeals agreed that the district court had improperly found witnesses for Kohl’s to be incompetent; two of Taxpayer’s appraisers reasonably applied the sales comparison approach and the third person was, in fact, a fact witness – not a valuation expert – so the “competency” requirement did not apply to his testimony.  Because Taxpayer presented competent testimony of two valuation experts, the burden of proof shifted to the Board.  The Board also presented evidence of two valuation experts, though only one was a certified Iowa appraiser.  That lack of certification did not disqualify that expert, the Court concluded.  Both of the Assessor’s experts applied the sales comparison approach to value, and their reports (despite any flaws) supported the underlying assessment.  The Court of Appeals thus rejected Taxpayer’s third and final argument, affirming the Board’s assessment. 

Brent A. Auberry
Faegre Baker Daniels
American Property Tax Counsel (APTC)

 

Updated September 2016

Iowa Department of Revenue discusses Assessment and Valuation of Solar Energy Property

On May 18, 2016, the Iowa Department of Revenue issued a memorandum to Assessors regarding solar energy property tax procedures.  The memorandum discusses the assessor’s responsibility of the assessor to determine when solar energy property is not locally assessed and to report the property to the Department, and it addresses the distinction between the valuation requirements for solar energy systems in Iowa Code §441.21(8)(b) and (d). 

The memorandum explains:
Assessors are responsible for determining whether property within their jurisdictions is subject to local assessment. Iowa Code §441.21. As part of the determination of whether property that generates electricity is subject to local assessment, the assessor must investigate whether the property is generating energy that is consumed by someone other than an owner, shareholder, member, beneficiary, partner, or associate of the person generating the electricity. SeeIowa Code §437A.3(27). If so, the electricity it is generating is subject to the replacement tax and the property generating the electricity is not locally assessed. Iowa Code §437A.6(1); 437A.16; 437A.3(27). However, solar energy property that only makes inadvertent and unscheduled deliveries to the grid is not subject to the replacement tax. Id. §437A.3(27) (emphasis added). Once the assessor has determined that solar energy property is subject to the replacement tax, the assessor shall notify the Department of Revenue pursuant to Iowa Code §441.17(9).

The memorandum further explains that “Iowa Code §441.21(8) requires that assessors disregard value for certain property containing solar energy systems."  According to the memo, "after the five years has expired, the actual value of the solar energy system property must be included in the assessment value of the overall property” but “the market value added to a building due to the fact that the property contains a solar energy system shall not be included in the assessment value at any time."

Changes to dates to protest assessments

A taxpayer may now contact the assessor starting April 2 through and including April 25 (previously, it was April 1 to May 4) of the year of assessment to request an informal review.  The Department of Revenue has modified its regulations to reflect that a county board of review may act only on written protests that have been filed with the board on or after April 2 to and including April 30 (previously, it was April 16 to May 5). 

Todd P. Langel
Faegre Baker Daniels
American Property Tax Counsel (APTC)

 

Updated June 2016

Property And Other Tax Relief For Disaster Response Efforts In Iowa

The Iowa Legislature enacted the “Facilitating Business Rapid Response to State-Declared Disasters Act” (Senate File 2306, retroactively effective to January 1, 2016), which provides for a property tax exemption for property of an out-of-state business that conducts operations within Iowa solely for the purpose of performing disaster or emergency-related work during a disaster response period. The Act aims to “provide for the rendering of mutual aid among the political subdivisions of the state and with other states, to cooperate with the federal government with respect to the carrying out of emergency management functions, and to ensure the state government and its departments and agencies facilitate the rapid response of businesses and workers in the state and other states to a disaster.”

Under the Act, an out-of-state business that conducts operations within the state solely for the purpose of performing disaster or emergency-related work during a disaster response period shall not be considered to have established a level of presence that would subject the out-of-state business to certain requirements for local registration, license, state income tax, employment security, use taxes and property taxes. The Act would apply only in the instance of a declared state disaster or emergency, including a disaster declaration by the governor or the U.S. President, and would apply only for a period of sixty days following the end of the declared disaster or emergency.

Todd P. Langel
Faegre Baker Daniels
American Property Tax Counsel (APTC)

Evidence Considered In Central Assessment Property Tax Appeals Expanded

Effective May 27, 2016, House File 2468 requires the Director of Revenue to consider all evidence and witnesses offered by the taxpayer as well as all evidence and witnesses offered by the Department of Revenue for property tax appeal procedures for certain centrally assessed property, including telephone, railway, electric transmission and pipeline property. Before the change, the statute only expressly required the consideration of the taxpayer’s evidence.

Todd P. Langel
Faegre Baker Daniels
American Property Tax Counsel (APTC)

 

Updated March 2016

Market Data Which

Iowa Supreme Court Defers to Cost Approach to Value Corporate Headquarters, Limits Obsolescence; Court of Appeals Affirms Classification Challenge

Wellmark v. Polk County Board of Review, Iowa Supreme Court, No. 14-0093

In Wellmark v Polk County Board of Review, Iowa Supreme Court, the issue was whether the Wellmark property should have been valued as if it were a multitenant office building – the most likely use that would result if the property were sold in the limited Des Moines market – or whether the Wellmark property should have been valued according to its current use – a single-tenant headquarters building.

The Court determined that the Wellmark property’s value could not be “readily established” through market analysis (using comparable sales). The court was not convinced that the multitenant properties, as used by taxpayers' experts, were comparable, even though it agreed that multitenant use would be the most likely use that would occur upon sale of the property. The court adopted the view of other jurisdictions that “under the circumstances, value should be based on the presumed existence of a hypothetical buyer at its current use.” 

In the absence of an active market for comparable properties, the court noted that the cost approach was the more acceptable means of valuing the property.  The court then construed Wellmark’s claim for obsolescence as one for depreciation and refused to agree that the value was any lower than the $99 million established by the Board (the property had cost over $150 million to construct).   The court recognized the availability of obsolescence in reducing the value of newly constructed buildings, but determined that the record established did not justify the degree of obsolescence sought by Wellmark in this particular setting (52%).  The court noted “that there is no science in this determination, only judgment based on the record before us.”  Thus, in the absence of an active market the court may look to the cost approach, and in certain circumstances apply substantial discounts if they are supported by the record.

Warren County Board of Review v. Property Assessment Appeal Board, Iowa Court of Appeals, No. 14-1135

In Warren County Board of Review v. Property Assessment Appeal Board, Iowa Court of Appeals, No. 14-1135, the Warren County Board of Review appealed the classification of land as “residential” rather than “commercial” after United Properties Investment Company (“United”) acquired five parcels of land and tore down the homes on four of these parcels. Specifically, the Board claimed it had no notice of the classification issue, as United did not raise the issue in writing. While the court agreed that United’s notices of appeal did not explicitly challenge reclassification, it explained that United’s representative unequivocally expressed a desire to have the land classified as “residential”. Thus, the Board had actual notice. The Board then claimed that the Property Assessment Appeal Board (“PAAB”), in returning the properties’ classification to “residential”, failed to comply with due process. The court, however, had determined that the Board had notice, so it was unnecessary to address this argument. Finally, the Board claimed that PAAB’s decision was arbitrary, capricious, and unsupported by substantial evidence. The court found that the record included a detailed summary by PAAB of the evidence and rationale for rejecting the Board’s decision to classify the land as “commercial.” The court affirmed the district court’s affirmance of PAAB’s decision requiring reclassification of United’s property to "residential."

Brent A. Auberry
Todd P. Langel
Faegre Baker Daniels
American Property Tax Counsel (APTC)