TUNIS E. DEN HARTOG, SHIRLEY ANN SCHWEERTMAN, LEONARD G. LYBBERT, MARY ELLEN MOLINARO, WILLIAM JAMES ROBERT, and MARK D. FISHER, Appellants,
CITY OF WATERLOO, IOWA, Appellee. SUNNYSIDE SOUTH ADDITION, LLC, Intervenor-Appellee,
CITY OF WATERLOO, IOWA, Intervenor-Appellant.
from the Iowa District Court for Black Hawk County, Richard
D. Stochl, Judge.
appeal district court ruling dissolving injunction and
denying sanctions for sale of land from discontinued
Nagle, Waterloo, for appellants.
Kristine Stone of Ahlers & Cooney, P.C., Des Moines, and
David Zellhoefer, City Attorney, for appellee City of
L. Riley of Swisher & Cohrt, P.L.C., Waterloo, for
intervenor-appellee Sunnyside South Addition, LLC.
case returns to our court a third time. See Den Hartog v.
City of Waterloo (Den Hartog I), 847 N.W.2d 459
(Iowa 2014); Den Hartog v. City of Waterloo (Den
Hartog II), 891 N.W.2d 430 (Iowa 2017). In this latest
appeal, we revisit whether the City of Waterloo complied with
Iowa Code section 306.23 (2018) to transfer land from an
unused right-of-way to a developer of a residential
subdivision. The statute provides a preference of sale to the
original owners and adjacent owners of the right-of-way and
imposes notice and appraisal requirements to help get the
best price. The plaintiffs challenging the transfer are
adjacent landowners and taxpayers who allege the City
violated the statutory requirements. The district court dissolved
an injunction that had precluded the sale after ruling that
the City ultimately complied with section 306.23. The
district court refused to hold the City in contempt. The
taxpayers appealed. The district court later dismissed the
taxpayers' mandamus claim and application for sanctions,
and the taxpayers did not appeal from that ruling. We
retained the taxpayers' appeal but do not address the
mandamus and sanctions ruling that was not appealed.
our review, we affirm the district court. The City's
appraiser used a permissible method to determine the fair
market value of the property, and the taxpayers failed to
show the City's notices or bidding requirements violated
section 306.23. Accordingly, the district court properly
lifted its injunction and denied sanctions, including
Background Facts and Proceedings.
We repeat our overview of this litigation:
The State of Iowa acquired property in Black Hawk County for
purposes of constructing a state highway in 1959. The highway
had originally been planned as, and enough land had been
acquired for, a four-lane project, but the highway was
eventually constructed with just two lanes. In 1983, the
state transferred control of the highway and attendant
property to the City of Waterloo (the City), in accordance
with the terms of Iowa Code chapter 306, entitled
"Establishment, Alteration, and Vacation of
Highways." After the transfer, the highway property
became known as San Marnan Drive in Waterloo. The City has
retained jurisdiction and control over the property in the
years since and has maintained it with grading, mowing, and
The City has now indicated its intention to transfer the
property to Sunnyside South Addition, LLC (Sunnyside), as
part of a development agreement. Under the terms of the
agreement, Sunnyside proposes to relocate San Marnan Drive by
reconstructing it approximately eighty feet south of its
current position and intends to retain the property on which
the current San Marnan Drive sits for purposes of residential
construction. The City proposes to transfer the highway
property to Sunnyside according to the agreement for the sum
Taxpaying residents of Waterloo (the taxpayers) became aware
of and objected to the proposed transfer in 2011. They filed
in the district court a petition for writ of mandamus and
temporary injunction requesting postponement of the sale on
the ground the City's proposed transaction failed to
comply with certain appraisal, notice, right-of-first
refusal, and public bid requirements set forth in chapter
Den Hartog I, 847 N.W.2d at 460-61.
In Den Hartog I,
[t]he fighting issue was whether a statutory preference given
to certain persons when unused right-of-way land is intended
to be sold appl[ies] not only to land acquired for highway
purposes but never used, but also land used for highway
purposes that were later discontinued.
Den Hartog II, 891 N.W.2d at 434. "[T]he
district court held the statutory preference procedures did
not apply to the sale of the right-of-way land in this case
and dismissed the motion to enjoin the sale and the petition
for writ of mandamus." Id. The taxpayers
appealed. While the first appeal was pending,
the City entered into a contract to sell the right-of-way
land to Sunnyside. It also entered into a development
agreement with Sunnyside. Under the agreement, Sunnyside was
required to develop the unused right-of-way, which ran next
to a country club and golf course, into lots for residential
development. The City also gave Sunnyside a special warranty
deed to the land. During the pendency of the appeal, the City
platted the land for the development, and Sunnyside relocated
San Marnan Drive to the south. Sunnyside also graded the land
for the housing development and installed curbs, gutters,
storm sewers, utilities, and took other action necessary to
complete the development site for home construction.
reversed the district court and held "the statutory
sales preference did apply to land formerly used for highway
purposes." Id. We remanded the case to the
district court to impose an injunction. Id. On
remand, the district court entered an injunction prohibiting
"the City 'from selling or transferring the property
in this proceeding without first following the procedures
prescribed in Iowa Code section 306.23.'"
2015, the City "proceeded to give the notices of the
intended sale under the preference statute. [In response, ]
[t]he taxpayers filed an application to find the City in
contempt of court for noncompliance with the statutory
requirements of the notices." Id. at 434-35.
The district court found that the City violated the notice
requirement of the statutory sales preference in section
306.23, but "it found the deficiencies in the notices
were not willful and did not amount to contempt."
Id. at 435.
second appeal, the taxpayers argued that the notices the City
sent were deficient in four ways. First, the City sent a
notice to Sunnyside, although it was not "a present
owner of land adjacent to the right-of-way from which the
right-of-way was acquired." Id. at 438. We
concluded that "the City should not have sent notices to
Sunnyside" because "a sale of the right-of-way land
from the City did not make Sunnyside the present owner of
land adjacent to the right-of-way." Id.
the City gave Sunnyside a bid credit, but we did "not
address this claim because the record . . . d[id] not support
a finding that Sunnyside qualified as a preferential bidder
under the statute." Id.
the taxpayers claimed that the descriptions of the property
to be sold were deficient, but we rejected that assertion
because the "statute does not specifically require the
selling agency to describe the land intended to be
sold," and the description that the City did provide was
the taxpayers claimed that the notices were deficient because
the City used "the fair market value of the right-of-way
land in the notices prior to the time the land was improved
by Sunnyside." Id. We agreed with the taxpayers
and found that
the statutory-notice process implies the fair market value
would be the value at or near the time the notice of
impending sale is given. Accordingly, the fair market value
in this case would include the value of the improvements ...