James Naumann Vs. Iowa Property Assessment Appeal Board

IN THE SUPREME COURT OF IOWA
No. 09–0161
Filed December 3, 2010
JAMES NAUMANN,
Appellant,
vs.
IOWA PROPERTY ASSESSMENT APPEAL BOARD,
Appellee.
Appeal from the Iowa District Court for Adair County, David L.
Christensen, Judge.
Property owner appeals from the district court‘s judicial review of
the decision of the Iowa Property Assessment Appeal Board. AFFIRMED.
Mark L. Smith of Jordan, Oliver & Walters, P.C., Winterset, for
appellant.
Jessica Braunschweig-Norris and Curtis Swain, Des Moines, for
appellee.
James E. Brick and James E. Nervig of Brick Gentry P.C., Des
Moines, intervenor-appellee Adair County Board of Review.
Thomas J. Miller, Attorney General, Donald D. Stanley, Jr., Special
Assistant Attorney General, and James D. Miller, Assistant Attorney
General for amicus curiae, the Director of the Iowa Department of
Revenue.

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HECHT, Justice.
An owner of agricultural property in Madison and Adair Counties
contests the valuation of his property in Adair County, contending it
violates Iowa Code section 441.21(1)(d) (2007), because the valuation of
his Adair County agricultural land exceeds by more than five percent the
valuation of his adjacent agricultural land in Madison County. Because
we conclude section 441.21(1)(d) does not apply to agricultural property,
we affirm.
I. Background Facts and Proceedings.
James Naumann owns approximately nine hundred acres of
agricultural property spanning the Adair-Madison County line. After
receiving January 1, 2007, property assessments from both counties,
Naumann filed a petition to the Adair County Board of Review for each of
his thirteen parcels of land located in Adair County, asserting his
property was assessed for more than was authorized by law. The board
of review denied each of his petitions, concluding Naumann had not
provided ―sufficient [evidence] to prove the assessment was excessive.‖
Naumann appealed to the Iowa Property Assessment Appeal Board
(IPAAB), contending his Adair County property was assessed at a value
more than five percent higher than his adjacent Madison County
property in violation of Iowa Code section 441.21(1)(d). After an
evidentiary hearing, the IPAAB concluded the Adair County Assessor
properly assessed the value of Naumann‘s land and the assessments
were neither excessive nor done in error.
Naumann petitioned for judicial review of the IPAAB‘s decision.
The district court allowed the Adair County Board of Review to intervene.
Following oral arguments, the district court affirmed the IPAAB‘s
decision.

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Naumann appeals, contending the IPAAB erred in failing to adjust
downward the valuation of his Adair County real estate under section
441.21(1)(d) and asserting the district court erred in overruling his offer
of new evidence supporting his theory of valuation.
II. Scope of Review.
In reviewing an agency decision on judicial review, we will apply
the standards of chapter 17A to determine if we reach the same results
as the district court. Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8,
10 (Iowa 2010). If the agency‘s action was based on an erroneous
interpretation of a provision of law whose interpretation has not been
clearly vested in the agency, we shall reverse, modify or grant other
appropriate relief from the agency action. Iowa Code § 17A.19(10)(c).
The IPAAB was created ―for the purpose of establishing a consistent, fair,
and equitable [statewide] property assessment appeal process.‖ Id.
§ 421.1A(1). The IPAAB has been delegated the authority to adopt rules
―for the administration and implementation of its powers‖ and rules
―necessary for the preservation of order and the regulation of proceedings
before the board.‖ Id. § 421.1A(4)(e), (f). However section 421.1A does
not give explicit authority to the IPAAB to interpret section 441.21(1)(d).
Neither party contends, and we do not conclude, the IPAAB has implicitly
been granted authority to interpret section 441.21(1)(d). Accordingly, we
will not give deference to the interpretation applied by the IPAAB and will
substitute our own judgment for that of the IPAAB if we conclude it made
an error of law. Id. § 17A.19(10)(c); see also Renda, 784 N.W.2d at 14–
15.
To the extent a challenge to a district court ruling on the
admissibility of evidence requires the interpretation of a statute, our

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review is for errors at law. See State v. Stone, 764 N.W.2d 545, 548 (Iowa
2009).
III. Discussion.
The IPAAB concluded section 441.21(1)(e) and (f) provided the
basis for determining the value of the agricultural property in Iowa,
implicitly rejecting Naumann‘s argument that the limitations on property
valuation found in section 441.21(1)(d) also applied to agricultural
property. The IPAAB then concluded Naumann‘s property had been
correctly valued pursuant to section 441.21(1)(e) and (f). Naumann
contends the IPAAB erred in concluding section 441.21(1)(d) does not
apply to agricultural land.
To assess Naumann‘s claim, we begin with a review of section
441.21(1), describing how taxable property is to be valued in Iowa.
a. All property subject to taxation shall be valued at its
actual value . . . and, except as otherwise provided in this
section, shall be assessed at one hundred percent of its
actual value . . . .
b. The actual value of all property subject to assessment
and taxation shall be the fair and reasonable market value of
such property except as otherwise provided in this section.
. . . .
d. Actual value of property in one assessing jurisdiction
shall be equalized as compared with actual value of property
in an adjoining assessing jurisdiction. If a variation of five
percent or more exists between the actual values of similar,
closely adjacent property in adjoining assessing jurisdictions
in Iowa, the assessors thereof shall determine whether
adequate reasons exist for such variation. If no such
reasons exist, the assessors shall make adjustments in such
actual values to reduce the variation to five percent or less.
e. The actual value of agricultural property shall be
determined on the basis of productivity and net earning
capacity of the property determined on the basis of its use
for agricultural purposes capitalized at a rate of seven
percent and applied uniformly among counties and among
classes of property. Any formula or method employed to

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determine productivity and net earning capacity of property
shall be adopted in full by rule.
f. In counties or townships in which field work on a
modern soil survey has been completed since January 1,
1949, the assessor shall place emphasis upon the results of
the survey in spreading the valuation among individual
parcels of such agricultural property.
g. Notwithstanding any other provision of this section,
the actual value of any property shall not exceed its fair and
reasonable market value, except agricultural property which
shall be valued exclusively as provided in paragraph ―e‖ of
this subsection.
Iowa Code § 441.21(1).
Naumann asserts that because the plain language of section
441.21(1)(d) applies the five percent variance limitation to ―property‖
without excluding agricultural property, the valuation of his agricultural
property in Adair County must be adjusted so it does not exceed by more
than five percent the valuation of his adjacent property in Madison
County. Because he claims the variance between the Adair and Madison
County valuations is thirty-six percent, he seeks to have the actual value
of his property in Adair County reduced.1
The IPAAB contends the five percent variance limitation in
paragraph (d) is inapplicable to agricultural land valuations. This
contention relies on paragraph (g) providing agricultural property shall
be valued ―exclusively as provided in‖ paragraph (e) on the basis of
productivity and net-earning capacity.
A statute is ambiguous when reasonable persons could disagree as
to its meaning. IBP, Inc. v. Harker, 633 N.W.2d 322, 325 (Iowa 2001).
1Naumann‘s computation of the variance in assessed valuations is based upon
his own calculations of the value of his property. The appellants dispute Naumann‘s
methods for calculating the variance. However, because we conclude section
441.21(1)(d) does not apply to agricultural land, we need not determine whether
Naumann‘s methods accurately establish a thirty-six percent variance in values, as he
claims.

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―Ambiguity may arise from specific language used in a statute or when
the provision at issue is considered in the context of the entire statute or
related statutes.‖ Midwest Auto. III, LLC v. Iowa Dep’t of Transp., 646
N.W.2d 417, 425 (Iowa 2002). ―Ambiguity arises in two ways—either
from the meaning of specific words or ‗from the general scope and
meaning of the statute when all of its provisions are examined.‘ ‖ State v.
McCullah, 787 N.W.2d 90, 94 (Iowa 2010) (quoting Carolan v. Hill, 553
N.W.2d 882, 887 (Iowa 1996)). ―Even when a statute appears
unambiguous on its face it can be rendered ambiguous by its interaction
with and its relation to other statutes.‖ 2A Norman J. Singer & J.D.
Shambie Singer, Statutes and Statutory Construction § 46:4, at 188–89
(7th ed. 2007).
We conclude section 441.21(1) is ambiguous. Reasonable minds
could disagree as to whether section 441.21(1)(d) applies to all land,
including agricultural land, or whether section 441.21(1)(e), (f), and (g)
together preclude the application of section 441.21(1)(d) to agricultural
land. Because the statute is ambiguous, we will apply our rules of
statutory construction to ascertain the intent of the legislature. Am.
Home Prods. Corp. v. Iowa State Bd. of Tax Review, 302 N.W.2d 140, 142
(Iowa 1981). We will avoid ―strained, impractical or absurd results.‖ Id.
We will generally give the language its usual and ordinary meaning, but
―the manifest intent of the legislature will prevail over the literal import of
the words used.‖ Id. at 142–43. We consider the object to be
accomplished by the statute as well as the evils to be remedied in
reaching a ―reasonable or liberal construction which will best effect its
purpose rather than one which will defeat it,‖ considering all parts of the
statute together without giving undue importance to any single or

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isolated portion. Id. at 143. Finally, when construing tax statutes, we
will resolve doubt in favor of the taxpayer. Id.
Reviewing the statute with these considerations in mind, we
conclude section 441.21(1)(d) does not apply to agricultural property.
Paragraph (a) provides that all property shall be assessed at its actual
value. While property‘s actual value is generally its fair and reasonable
market value as determined in paragraph (b), agricultural land is valued
differently. The actual value of agricultural land is determined ―on the
basis of productivity and net earning capacity‖ capitalized at seven
percent and applied uniformly among counties and classes of property.
Iowa Code § 441.21(1)(e). Paragraph (g) provides that agricultural
property shall only be valued as provided in paragraph (e). Id.
§ 441.21(1)(g).
The IPAAB contends, and we agree, the harm intended to be
addressed by section 441.21(1)(d) is the potential that two similar non-
agricultural properties lying on different sides of a jurisdictional
boundary will be valued substantially differently. This is likely to happen
when the properties are being valued based on fair and reasonable
market value. The determination by a county assessor of a property‘s
fair and reasonable market value is ―far from being an exact science. . . .
[V]aluation, for assessment purposes, is in the realm of opinion and
there is no absolute standard.‖ Bankers Life Co. v. Zirbel, 239 Iowa 275,
287, 31 N.W.2d 368, 374–75 (1948). The methods, such as market
comparables, used by assessors to determine the fair and reasonable
market value necessarily involve some degree of subjectivity. In theory,
similar adjacent properties should not have widely varying valuations
merely because they are valued by different assessors on opposite sides
of a jurisdictional boundary. Thus, it makes sense to provide a method

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of adjusting the values of adjacent, similar properties on different sides of
a jurisdictional boundary if they vary significantly without good reason,
as paragraph (d) provides.
The IPAAB asserts the risk of unfair subjective valuations does not
exist when agricultural property is valued based on the objective factors
required by section 441.21(1)(e)—productivity and net-earning capacity.
These objective criteria for assessing the value of agricultural property
are mandated by section 441.21(1)(e) and implemented by Iowa
Administrative Code rule 701—71.12(1),2 and they leave no room for
subjective assessment of a property‘s value. Instead, the actual value of
agricultural property is determined by using an average of five years of
actual county productivity data for various crops to determine an
aggregate land value for each assessing jurisdiction. Iowa Admin. Code
r. 701—71.12(1)(a). This aggregate land value is spread among
individual parcels in a jurisdiction utilizing corn suitability ratings
(CSRs) derived from the modern soil survey,3 as required by section
441.21(1)(f). Id. The use of this agricultural property valuation formula
which takes into account the property‘s specific CSR removes the need
for subjective determinations by the assessor.4 We conclude the purpose
2We previously approved this formula as a ―reasonable application of the
productivity, net-earning capacity, and seven-percent capitalization criteria established
by section 441.21(1)(e).‖ H & R P’ship v. Davis County Bd. of Review, 654 N.W.2d 521,
526 (Iowa 2002).
3The modern soil survey provides detailed mapping and soil identification for
each parcel of property within a county and identifies all soil types and terrain
contained in a parcel. Each individual parcel within an assessing jurisdiction has a
CSR assigned to it by a modern soil survey map, and this number remains constant
from year to year. The CSR is the measure of the potential bushel per acre of corn that
can be grown on that acre.
4Naumann does not contend that the county assessors did not follow
established rules for the assessment of agricultural property. And aside from the
failure to take into account paragraph (d), Naumann does not contend the current
methods of assessing agricultural property are unlawful.

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of paragraph (d)—to make adjustments where the inherently subjective
fair market analysis results in substantial valuation disparities between
adjacent non-agricultural properties in different counties—is not served
by applying it to agricultural land which is valued according to a formula
based on objective criteria.
Our conclusion that the legislature did not intend section
441.21(1)(d) to apply in the valuation of agricultural property is
strengthened by the paragraph‘s incompatibility with the section
441.21(1)(g) directive that agricultural property be valued exclusively on
the basis of its productivity and net-earning capacity. The current
formula for calculating the value of individual parcels of agricultural
property begins with a determination by the department of revenue of the
total aggregate value of all agricultural property in each county.5
Because this aggregate valuation is not subject to change by county
assessors, any downward adjustment of the value of Naumann‘s
agricultural property in Adair County by the assessors of Adair and
Madison Counties under section 441.21(1)(d) would necessarily result in
an increase in the value of other agricultural property in Adair County.
Both the decrease in value of Naumann‘s land and the resulting increase
in the value of the other property in Adair County, if section 441.21(1)(d)
were to apply, would not be driven by the productivity and net-earning
capacity of Naumann‘s property in Adair County, as required by section
441.21(1)(e) and (g), but rather by a comparison with the valuation
assigned to adjacent property in a different county. The inconsistency
between the effect of section 441.21(1)(d) and the objective formula for
5The formula for calculating the value of agricultural property, in its simplest
form (and not taking into account buildings on the property) is the aggregate land value
of the county divided by the total CSRs for the county times the CSR attributable to
each parcel.

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determining the value of specific agricultural land leads us to conclude
section 441.21(1)(d) has no application in the valuation of agricultural
land. Accordingly, we affirm the decision of the IPAAB.
Naumann also argues the district court erred in refusing an offer of
new evidence. In particular, he contends a journal article addressing the
role of CSRs in agricultural land valuation was admissible under section
441.38 in the judicial review proceeding to prove his entitlement to a
downward adjustment of the valuation of the Adair County property
under section 441.21(1)(d).6 Because we have concluded section
441.21(1)(d) has no application in this case, and Naumann makes no
argument that the new evidence was probative on any issue other than
whether the valuation of his Adair County property exceeded by more
than five percent the valuation of his adjacent property in Madison
County, the district court‘s evidentiary ruling resulted in no prejudice
requiring reversal. See State v. Sullivan, 679 N.W.2d 19, 29 (Iowa 2004)
(noting that error may not be predicated on a ruling admitting or
excluding evidence unless a substantial right of the party is affected).
IV. Conclusion.
Iowa Code section 441.21(1)(d) does not apply to agricultural
property. We affirm the decision of the Iowa Property Assessment Appeal
Board concluding Naumann‘s agricultural property in Adair county was
valued correctly. Because we find no reversible error in the district
court‘s evidentiary ruling, that ruling does not provide a basis for
reversal.
AFFIRMED.
6The version of section 441.38 in effect at the time of the district court‘s ruling
authorized the introduction of new evidence in the district court on judicial review of
IPAAB decisions. Iowa Code § 441.38(1) (2007). However, the statute has since been
amended to provide ―no new evidence . . . may be introduced in an appeal from the
[IPAAB] to the district court.‖ Id. § 441.38(1) (2009).

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