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City of Iowa City v. Iowa City Board of Review

Supreme Court of Iowa

May 15, 2015

CITY OF IOWA CITY, IOWA, Appellant,
v.
IOWA CITY BOARD OF REVIEW, Appellee, and PRESTIGE PROPERTIES, Intervenor.; CITY OF IOWA CITY, IOWA, Appellant,
v.
IOWA CITY BOARD OF REVIEW, Appellee, and MYRTLE GROVE HOUSING, INC., Intervenor

Appeal from the Iowa District Court for Johnson County, Paul D. Miller, Judge. A city appeals a decision of the district court affirming a board of review's decision to classify the property owned by eleven multiple housing cooperatives as residential properties for purposes of property taxes.

Eric R. Goers, Assistant City Attorney, Iowa City, for appellant.

Charles T. Traw of Leff Law Firm, LLP, Iowa City, for appellee.

Kirsten H. Frey and Michael W. Kennedy of Kennedy, Cruise, Frey & Gelner, LLP, Iowa City, for intervenors.

WIGGINS, Justice. All justices concur except Mansfield, J., who concurs specially. MANSFIELD, Justice (concurring specially).

OPINION

Page 664

WIGGINS, Justice.

A city's board of review reclassified eighteen properties held by eleven multiple housing cooperatives from commercial to residential for property tax purposes. The city appealed the board's decision to the district court. The district court affirmed the board's decision on summary judgment. On appeal, we find that two Iowa corporations may organize a multiple housing cooperative under Iowa Code chapter 499A (2011).[1] We also find the Code does not require a one-apartment-unit-per-member ownership ratio for a multiple housing cooperative to be properly organized. Accordingly, these multiple housing cooperatives meet the organizational test we announced in Krupp Place 1 Co-op, Inc. v. Board of Review, 801 N.W.2d 9, 16 (2011). Therefore, we affirm the judgment of the district court that affirmed the decision of the board classifying the cooperatives as residential for property tax purposes.

I. Background Facts and Proceedings.

The Iowa Code permits the classification of residential property to include all land and buildings of multiple housing cooperatives organized under chapter 499A. Iowa Code § 441.21(11). On May 25, 2012, the Iowa City Board of Review sent notices to eighteen properties indicating the Board changed the classification for these properties from commercial to residential for

Page 665

property tax purposes. The properties were reclassified pursuant to Iowa Code section 441.21(11) because they had been recently organized as multiple housing cooperatives. The parties agree that two Iowa corporations organized each of the multiple housing cooperatives for the purpose of owning residential property in a cooperative. The corporations who organized the cooperatives are still involved in the ownership of the cooperatives.

On June 19, the City of Iowa City filed a notice of appeal with the district court, objecting to the Board's reclassification. The City argued the Board's reclassification of the properties as residential was improper because two natural persons, not two corporations, must organize multiple housing cooperatives under the Code. They also argued the Code requires a one-apartment-unit-per-member ownership ratio for a multiple housing cooperative to be properly organized. The district court allowed the multiple housing cooperatives to intervene in the action.

The Board filed a motion for summary judgment. The Board argued as a matter of law two corporations can organize a multiple housing cooperative because section 499A.1(1), which dictates the requirements for organizing a cooperative, defines a corporation as a person for purposes of chapter 499A. Iowa Code § 499A.1(1).

The City filed a response and its own motion for summary judgment. The City argued as a matter of law at least two of the organizers were required to be natural persons for the cooperative to be properly organized. Additionally, the City argued the organizers did not properly organize the cooperatives because each cooperative has more apartment units than members and Iowa Code section 499A.11 requires a one-to-one ratio.

The intervenors filed a resistance and their own motion for summary judgment. The intervenors argued as a matter of law chapter 499A specifically permits two corporations to come together to form a cooperative, not just natural persons. The intervenors also argued chapter 499A does not limit membership to one member per apartment unit.

The district court granted summary judgment in favor of the Board and the intervenors. The district court held section 499A.1(1) defines persons to include corporations, and therefore, the general assembly intended corporations to be able to act as organizers of a multiple housing cooperative. The district court further concluded nothing in section 499A.11 was relevant to the determination of whether the cooperative was properly organized. The City appeals.

II. Issues.

The first issue in this case is whether the Board correctly classified the cooperatives as residential properties when two Iowa corporations organized the cooperatives under chapter 499A. The second issue is whether the Code requires a one-apartment-unit-per-member ownership ratio for a multiple housing cooperative to be properly organized.

III. Scope of Review.

Ordinarily, if an appeal is from a decision of the local board of review, the district court hears the appeal in equity. Iowa Code § 441.39. However, because the district court adjudicated the issue on appeal by summary judgment, our review is for correction of errors at law. Am. Legion, Hanford Post 5 v. Cedar Rapids Bd. of Review, 646 N.W.2d 433, 437 (Iowa 2002). Summary judgment is proper if there is no genuine issue as to any material fact in dispute and the moving party is

Page 666

entitled to a judgment as a matter of law. Iowa R. Civ. P. 1.981(3).[2]

IV. The Organizational Test.

Our most recent case interpreting chapter 499A is Krupp, wherein we held the proper test for determining if a property could be classified as residential pursuant to Iowa Code section 441.21(11), is whether the multiple housing cooperative was properly organized, not the actual use of the property. See 801 N.W.2d at 16 (" We therefore conclude section 441.21(11) requires property owned by residential cooperatives, properly organized under chapter 499A, to be classified as residential and taxed at residential property rates." ). Thus, our task is to determine whether the issues the City raised on appeal lead to the conclusion that the multiple housing cooperatives were not properly organized.

V. Whether the Board Correctly Classified the Cooperatives as Residential Properties When Two Iowa Corporations Organized the ...


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