from the Iowa District Court for Wright County, Christopher
C. Foy, Judge.
City of Eagle Grove challenges a district court order that
found awarding the City title to two abandoned properties
pursuant to Iowa Code section 657A.10A would constitute an
unconstitutional taking and dismissed the City's
petitions. REVERSED AND REMANDED.
Collins Seaba of Malloy Law Firm, LLP, Goldfield, for
J. Eide of The Law Office of Eric J. Eide, P.L.C., Fort
Dodge, for appellee.
City of Eagle Grove (City) filed petitions alleging two
properties owned by Cahalan Investments, LLC (Cahalan) were
abandoned and in an advanced state of disrepair. The
petitions prayed for a transfer of ownership from Cahalan to
the City under Iowa Code section 657A.10A (2014). The
district court dismissed the petitions, concluding the
transfer of ownership of the properties to the City without
just compensation to Cahalan would constitute an
unconstitutional taking. On appeal, the City contends the
district court erred in failing to transfer ownership of the
properties to it in furtherance of a lawful exercise of its
police power authorized by the statute. Cahalan urges
affirmance of the district court's decision, contending
the transfer of titles to the properties to the City under
section 657A.10A without just compensation would constitute
an unconstitutional per se taking under the standard set
forth in Lucas v. South Carolina Coastal Council,
505 U.S. 1003, 112 S.Ct. 2886 (1992). Because we find the
City's claim fits within the public-nuisance exception
recognized in Lucas, we conclude section 657A.10A
does not result in a taking requiring compensation to
Cahalan. We therefore reverse and remand for further
Background Facts and Proceedings.
recent years, small communities across Iowa have seen an
increase in the number of unoccupied, dilapidated, run-down
properties. These types of buildings not only detract from
the communities' aesthetic appeal and cause concern about
the effect on the value of neighboring properties but can
also constitute a danger to the public health, safety, or
welfare. It is difficult for these communities to address
this problem effectively because of the increased
proliferation of such properties and the proportionally
increased cost of abatement.
determining there were numerous abandoned, dangerous,
dilapidated, and blighted buildings within its city limits,
the City of Eagle Grove undertook a project to clean up and
eliminate them. In August 2014, the City passed Resolution
2014-25, approving an agreement between the City and the
Eagle Grove Community Development Corporation (CDC). Under
the agreement, the City agreed to allocate up to $250, 000
for the project and the CDC was tasked with acquiring,
repairing, rehabilitating, or demolishing certain problematic
properties identified by either the City or the CDC.
the properties deemed problematic by the City are located at
107 North Blaine Street (Blaine Street property) and 823
South Commercial Street (Commercial Street property). Cahalan
Investments, LLC owns both properties. The City chose
the two properties for inclusion in the project because they
were dilapidated, had been unoccupied and lacked water
service for several years, and were the subject of multiple
complaints made by others.
The Blaine Street Property.
purchased the Blaine Street property for $7000 on May 21,
2002, and the property has remained unoccupied since that
time. Kevin Cahalan started remodeling the property shortly
after purchasing it, but discontinued the work over ten years
ago. It has not been connected to water service since 2002.
September 14, 2014, a construction inspector hired by the
City inspected the property and the exterior of the building
on the property, and concluded it was unsafe for entry or
occupation. The inspector based his conclusion on missing
siding, a rotting roof, and broken windows exposing the
building's interior to the elements; a sagging addition
on the west side of the house; several holes allowing vermin-
such as squirrels and raccoons-to enter; multiple boarded up
windows; and some garbage and debris in the yard. A neighbor
told the inspector that the house was home for a family of
raccoons. Employees of a group home in the neighborhood
observed skunks, squirrels, and birds entering the house.
October 2, 2014, the City sent Cahalan a "Notice to
Abate Nuisance" for the Blaine Street property. The
notice-given to Cahalan under chapter 145 of Eagle
Grove's municipal code-described the property as "a
public nuisance that is a menace to the public health,
welfare and/or safety by reason of inadequate maintenance,
dilapidation, obsolescence, manifestly unsafe, or
abandonment." It notified Cahalan the nuisance must be
abated through either rehabilitation or removal of the
building within fourteen days, and if Cahalan failed to do
so, the City would eliminate the nuisance and assess the
costs to Cahalan.
October 31, 2014, the CDC sent Cahalan an offer of $2000 to
purchase the Blaine Street property for the purpose of
demolishing it. The City made the nominal offer in an attempt
to avoid the expense of litigation and to expedite the
elimination of the nuisance. On November 12, 2014, Cahalan
counter offered to sell the property for $15, 000. The City
did not respond to Cahalan's counteroffer.
The Commercial Street Property.
purchased the Commercial Street property for $23, 000 on
December 13, 2011, and the property has remained unoccupied
since that time. The property has no functioning toilet or
sink. The furnace in the house has not been operated since
Cahalan acquired the property. Only part of the house is
connected to electrical service.
September 9, 2014, the City sent Cahalan a "Notice to
Abate Nuisance" under chapter 145 of the municipal code.
Like the notice sent regarding the Blaine Street property,
this notice described the property as a public nuisance, gave
Cahalan fourteen days to abate the nuisance through either
rehabilitation or removal of the building, and informed
Cahalan that if it failed to abate the nuisance the City
would take steps to do so and assess the costs to the owner.
September 14, 2014, the same construction inspector who
inspected the Blaine Street property inspected the Commercial
Street property. The inspector noted a portion of the roof
had collapsed, causing severe water damage to the interior of
the building; mold was observed; some of the windows were
broken and boarded up; the foundation was broken or crumbling
in places; there were many access points for vermin to enter
the building; and there was garbage and debris in the
backyard. The inspector concluded this property was also
unsafe for entry or occupation.
October 31, 2014, the CDC sent Cahalan a nominal offer of
$2000 to purchase the Commercial Street property for the
purposes of demolishing it and avoiding litigation. On
November 12, 2014, Cahalan counter offered to sell the
property for $20, 000, but the City did not respond.
December 1, 2014, the Eagle Grove City Council held a hearing
to determine whether the two properties were public nuisances
in violation of chapter 145 of the municipal code. Kevin
Cahalan attended the hearing, but he did not present evidence
tending to prove the properties complied with the municipal
code. He offered no plan for correcting the properties'
structural deficiencies. Instead, he requested the City grant
him more time to rehabilitate the two structures. The council
rejected his request for additional time and decided to
continue forward with the process it had commenced under
chapter 145 of the municipal code.
believing the problem of dilapidated and dangerous buildings
was an "epidemic" in the community and concluding
Eagle Grove was not in the business of rehabilitating such
properties, the City chose a different course of action in
late December 2014. The City filed petitions in equity
against Cahalan under Iowa Code section 657A.10A, seeking an
award of title to the two properties. Cahalan resisted the
City's petitions, contending the acquisition of the
properties under section 657A.10A would violate due process
and constitute a taking without just compensation in
violation of the Fifth Amendment to the United States
Constitution and article I, sections 9 and 18 of the Iowa
November 17, 2015, in preparation for trial, the construction
inspector hired by the City completed a supplemental
inspection of the interior of the Blaine Street property and
concluded the property remained dangerous and uninhabitable.
The inspector noted the inside of the house was under heavy
construction and was "basically gutted"; there were
no sanitary toilet facilities; the water lines in the
basement were not hooked up and were unusable in the rest of
the house; one side of the addition on the west side of the
house was not properly tied into the house, allowing vermin
to enter, water damage, and decay in the interior; the
original basement walls and retaining walls were bowed in;
and several stair steps were missing.
consolidated trial commenced on December 2, 2015. At trial,
Kevin Cahalan testified he had no intention of making either
property habitable in the foreseeable future. Cahalan offered
expert testimony that the buildings were not
"structurally unsafe or in danger of collapsing or
otherwise harming anyone." The City claimed it had no
public use for the properties and that it filed the petitions
in furtherance of its efforts to rehabilitate residential
areas by removing abandoned and dilapidated structures within
the city. After removing the structures, it was the
City's intent to sell the lots if possible.
sides offered evidence as to the properties' values.
Relying on the Wright County assessor's assessed
valuations, Cahalan opined the value of the Blaine Street
property is $15, 700 ($5400 for the land and $10, 300 for the
dwelling) and the Commercial Street property is worth $20,
900 ($8900 for the land and $12, 000 for the dwelling). In
the alternative, Kevin Cahalan testified the Blaine Street
property is worth at least $10, 000 because he agreed to sell
it on contract to a third party for that amount shortly after
the petitions were filed in this case.
City presented evidence tending to prove the assessed
valuations of the properties do not represent their actual
value. In particular, the assessed valuations are based on a
presumption that the properties were habitable. Because the
properties in question were clearly uninhabitable and in an
advanced state of deterioration and disrepair, the City urged
the district court to find the assessed valuations are not
probative of their actual value.
record includes expert testimony on the cost of rendering the
properties habitable. The construction inspector estimated it
would cost $15, 000 to $20, 000 to make the Blaine Street
property habitable. He further estimated it would cost $25,
000 to $30, 000 to render the Commercial Street property
habitable. After considering the cost of rehabilitation and
the postrehabilitation market value of the property, the bank
holding a mortgage on the Commercial Street property
concluded the project would not be a prudent investment.
the City intended to demolish the existing structures on both
properties, the expected costs of demolition were also
presented at trial. A contractor hired by the City estimated
the cost of demolishing the Blaine Street property would be
$10, 999. The contractor further testified that the cost of
demolishing the Commercial Street property would be $12,
parties filed posttrial briefs addressing Cahalan's claim
that the award of title to the City would result in an
unconstitutional taking. Although the district court found
both properties were abandoned under the criteria set forth
in section 657A.10A(3), it dismissed the City's
petitions. The court concluded the relief requested by the
City would deny Cahalan all use of its properties and result
in a taking without just compensation. The court also found
the properties had more than nominal value, although it did
not determine the fair market value of either.
City appealed and we retained the appeal. On appeal the City
claims the district court erred in dismissing its petitions
because the actions brought under section 657A.10A are a
valid exercise of police power for which no compensation is
owed to Cahalan. Conversely, Cahalan claims the relief sought
by the City would constitute a per se taking for which
compensation is required under the Lucas standard.
Scope and Standard of Review.
review of cases tried in equity is de novo. Iowa R. App. P.
6.907; City of Waterloo v. Bainbridge, 749 N.W.2d
245, 247 (Iowa 2008); see Iowa Code §
657A.10A(1)(b) (requiring actions under section
657A.10A be in equity). Nevertheless, we give weight to the
factual findings of the district court, especially with
respect to determinations of witness credibility. Green
v. Wilderness Ridge, L.L.C., 777 N.W.2d 699, 702 (Iowa
review constitutional challenges to a statute de novo."
State v. Thompson, 836 N.W.2d 470, 483 (Iowa 2013)
(quoting State v. Seering, 701 N.W.2d 655, 661 (Iowa
2005)); see Rolfe State Bank v. Gunderson, 794
N.W.2d 561, 564 (Iowa 2011) ("To the extent
constitutional issues are raised [with respect to an issue of
statutory interpretation], review is de novo.").