Tax Appeal Rulings - Comfort Inn and Baymont InnCity of Dubuque
City Council Meeting
Consent Items # 07.
Copyrighted
June 17, 2024
ITEM TITLE: Tax Appeal Rulings - Comfort Inn and Baymont Inn
SUMMARY: Senior Counsel providing a copy two recent rulings by the Iowa Property
Assessment Appeal Board upholding the City of Dubuque Board of
Review January 1, 2023 assessed values for the Comfort Inn at 4055
McDonald Drive and the Baymont Inn at 4024 McDonald Drive.
SUGGESTED Suggested Disposition: Receive and File
DISPOSITION:
ATTACHMENTS:
Description
Memo
Type
Staff Memo
Dubuque
THE CITY OF
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BARRY A. LINDAH E��
SENIOR COUNSEL
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MEMO
To: Mayor Brad M. Cavanagh and
Members of the City Council
DATE: June 17, 2024
RE: Tax Appeal Rulings
Attached are two recent rulings by the Iowa Property Assessment Appeal Board
upholding the City of Dubuque Board of Review January 1, 2023 assessed values for
two properties.
The two properties are the Comfort Inn at 4055 McDonald Drive and the Baymont Inn at
4025 McDonald Drive.
The owner filed the protests with the Board of Review requesting a reduction in the
assessed values. The Board of Review denied the requests and the owner then
appealed to the Property Assessment Appeal Board.
Working with City Assessor Troy Patzner, we provided evidence to the Property
Assessment Appeal Board that supported the Board's denial of the protests. The
Property Assessment Appeal Board agreed.
BAI_:JLM
Attachments
CC" Michael C. Van Milligen, City Manager
Crenna Brumwell, City Attorney
Troy Patzner, City Assessor
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944
TELEPHONE (563) 583-41131 FAx (563) 583-10401 EMAIL balesq@cityofdubuque.org
Electronically Filed
2024-05-20 09:33:21
PAAB
2023-104-00446C
PROPERTY ASSESSMENT APPEAL BOARD
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
PAAB Docket No. 2023-104-00446C
Parcel No. 1028326004
James Madison Hotels, Inc. (Sonny Patel),
Appellant,
vs.
City of Dubuque Board of Review,
Appellee.
Introduction
The appeal came on for consideration by the Property Assessment Appeal Board
(PAAB) on April 5, 2024. Sonny Patel represented James Madison Hotels, Inc. and
requested the appeal proceed without a hearing. City of Dubuque Senior Counsel Barry
Lindahl represented the Board of Review.
James Madison Hotels, Inc. (James Madison) owns a commercial property
located at 4055 McDonald Drive, Dubuque, Iowa. Its January 1, 2023, assessment was
set at $1,732,600, allocated as $247,100 in land value and $1,485,500 in building value.
(Ex. A).
James Madison petitioned the Board of Review claiming the property's
assessment was not equitable as compared with the assessments of other like property
in the taxing district and that there was an error in the assessment. Iowa Code §
441.37(1)(a)(1)(a & d). (Ex. C). The Board of Review denied the petition. (Ex. B).
James Madison then appealed to PAAB reasserting its inequity claim. It also
checked the box on the appeal form asserting there is an error in the assessment. §
441.37(1)(a)(1)(d). However, it did not clearly articulate an error on its Appeal or any
subsequent filing. PAAB therefore will only consider its inequity claim.
1
General Principles of Assessment Law
PAAB has jurisdiction of this matter under Iowa Code sections 421.1A and
441.37A. PAAB is an agency and the provisions of the Administrative Procedure Act
apply. § 17A.2(1). This appeal is a contested case. § 441.37A(1)(b). PAAB may
consider any grounds under Iowa Code section 441.37(1)(a) properly raised by the
appellant following the provisions of section 441.37A(1)(b) and Iowa Admin. Code R.
701-115.2(2-4). New or additional evidence may be introduced. Id. PAAB considers the
record as a whole and all of the evidence regardless of who introduced it.
§ 441.37A(3)(a); see also Hy-Vee, Inc. v. Employment Appeal Bd., 710 N.W.2d 1, 3
(Iowa 2005). There is no presumption the assessed value is correct, but the taxpayer
has the burden of proof. §§ 441.21(3); 441.37A(3)(a). The burden may be shifted; but
even if it is not, the taxpayer may still prevail based on a preponderance of the
evidence. Id.; Compiano v. Bd. of Review of Polk Cnty., 771 N.W.2d 392, 396 (Iowa
2009) (citation omitted).
Findings of Fact
The subject property is a three-story, fifty -two -unit hotel built in 1990 and
operating as a Quality Inn. It has 23,436 square feet of gross building area and 15,800
square feet of concrete paving. The site is 0.675 acres. (Ex. A).
James Madison Hotels purchased the subject property on October 10, 2020 for
$1,750,000. The Board of Review notes the January 1, 2023 assessed value of
$1,732,500 is still below the sale price. (BOR Ex. List/Narrative).
The primary focus of the appeal is the percentage increase of the subject's
assessment. James Madison asserts the subject's assessment increased 43% while the
increase of its two comparable properties was closer to 25%. (Appeal). In contrast, the
Board of Review noted the valuation changes of area hotels from the prior year ranged
from 22.7% to 94.5%. "The range of increases were in part from removing prior Board of
Review adjustments, land values were adjusted based on prior years of sales in the
specific area, and in some circumstances income information was provided." (BOR
Exhibit list narrative).
On the Petition to the Board of Review, Patel identified two comparable
properties: Main Stay Suites and Country Inn & Suites. (Ex. C). According to Patel, their
assessments were $3,033,300 and $3,340,600, respectively. Patel asserts the subject's
assessment is inequitable compared to these properties. He provided no additional
information about the other hotel properties. The subject's current assessment falls well
below these assessments. However, he requests a valuation of the subject at
$1,358,331. (Appeal). We note this value is well below the subject's 2020 purchase
price, and is not supported by any evidence.
The Board of Review submitted a narrative exhibit list which explained the
valuation changes for hotels near the subject property. It also submitted eight
comparable hotel properties and noted, "the hospitality industry uses per hotel room as
a unit of comparison when they are marketed." (Exhibit list and Ex. D). The subject's
value per room is $33,319, which the Board of Review contends is "in line when
compared to other similar class hotels in the area."
The following table summarizes seven properties the Board of Review submitted
that it believes demonstrates the subject is equitably assessed. (Ex. D).
Address
Year
Built
Gross
Building Area
(GBA) (SF)
Room
Count
2023
Assessed
Value (AV)
AV/GBA
AV/Room
Subject — 4055 McDonald Dr (Quality Inn)
1990
23,436
52
$1,732,600
$74
$33,319
A — 1315 Associates Dr (Country Inn)
2000
42,304
69
$3,340,600
$79
$48,414
B - 1275 Associates Dr (Main Stay Inn)
2000
45,375
75
$3,033,300
$67
$40,444
C — 3100 Dodge St (Best Western)
1978
117,755
150
$8,164,900
$69
$54,433
D — 4025 McDonald Dr (Baymont Inn)
1986
36,262
80
$3,097,800
$85
$38,723
E — 2080 Holiday Dr (Holiday Inn Express)
2008
47,682
87
$4,802,400
$101
$55,200
F — 3400 Dodge St (Fairfield Inn)
1992
25,235
56
$2,158,000
$86
$38,536
G — 3434 Dodge St (Hampton Inn)
1975
58,999
97
$5,711,900
$97
$58,886
H— 2730 Dodge St (Super 8)
1986
20,852
61
$1,686,400
$81
$27,646
The subject property has the second lowest total assessment and assessed
value per room.
Comparables A, B, and E sold in 2018, 2017, and 2015 respectively.
Comparable C is the only recent sale, having sold in 2022. Nothing is known about the
sale transactions. There are no time adjustments or any other adjustments to the sales
to account for differences that may exist when compared to the subject.
3
Comparables A and B are those Patel identified on the Board of Review petition.
According to the Board of Review's exhibit, they are similar in quality (grade) to the
subject but their condition is unknown. Their assessments in total and per room are
higher than the subject. Only Comparable H has a lower assessment than the subject.
Three of these properties are newer than the subject. The subject has the fewest rooms
and the second smallest gross building area.
Comparable C is the only property that sold in 2022 for $12,036,000. While it is
larger, older, and better quality than the subject, its assessed -value -to -sale -price ratio is
0.68, which suggests it is assessed for less than market value. However, again the
record contains no information about the sale. Without information about whether the
sale was an arm's-length transaction or contained personal property, we cannot rely on
it for an indication of the subject's market value. This property's assessment also
increased by 94.5% after its sale.
Considering the record as a whole, and the lack of other information, the data the
Board of Review presented indicates the subject's assessment is in line with other
similar hotel properties, whether based on the total assessment or per room valuation.
Analysis & Conclusions of Law
In Iowa, property is to be valued at its actual value. Iowa Code § 441.21(1)(a).
Actual value is the property's fair and reasonable market value. § 441.21(1)(b). Market
value essentially is defined as the value established in an arm's-length sale of the
property. Id. Sale prices of the property or comparable property in normal transactions
reflecting market value, and the probable availability or unavailability of persons
interested in purchasing the property, shall be taken into consideration in arriving at its
market value. Id. If sales are not available to determine market value then "other
factors," such as income and/or cost, may be considered. § 441.21(2).
There is no presumption the assessed value is correct, but the taxpayer has the
burden of proof. §§ 441.21(3); 441.37A(3)(a). The burden may be shifted; but even if it
is not, the taxpayer may still prevail based on a preponderance of the evidence. Id.;
Compiano v. Bd. of Review of Polk Cnty., 771 N.W.2d 392, 396 (Iowa 2009) (citation
12
omitted). When the taxpayer "offers competent evidence that the market value of the
property is different than the market value determined by the assessor, the burden of
proof thereafter shall be upon the officials or persons seeking to uphold such valuation."
Iowa Code § 441.21(3). To be competent evidence, it must "comply with the statutory
scheme for property valuation for tax assessment purposes." Soifer v. Floyd Cnty. Bd.
of Review, 759 N.W.2d 775, 782 (Iowa 2009) (citations omitted).
James Madison Hotels claims the subject property's assessment was not
equitable as compared with the assessments of other like property in the taxing district.
§ 441.37(1)(a)(1)(a). To prove inequity, a taxpayer may show an assessor did not apply
an assessing method uniformly to similarly situated or comparable properties. Eagle
Food Centers v. Bd. of Review of the City of Davenport, 497 N.W.2d 860, 865 (Iowa
1993).
Alternatively, a taxpayer may show the property is assessed higher
proportionately than other like properties using criteria set forth in Maxwell v. Shivers,
133 N.W.2d 709, 711 (Iowa 1965). The Maxwell test provides inequity exists when, after
considering the actual and assessed values of similar properties, the subject property is
assessed at a higher proportion of its actual value. Id. This is commonly done through
an assessment/sales ratio analysis comparing prior year sales (2022) and current year
assessments (2023) of the subject property and comparable properties.
James Madison Hotel's primary contention is that the subject's assessed value
increased at a higher rate than properties it identified as comparable. It is insufficient to
simply compare the subject property's assessed value to the assessments of other
properties or the rate of change of property assessments to demonstrate inequity. Even
if it were, the record shows the subject's assessment increase was within the range of
increases of other area hotels. Further, as previously noted, variation in sizes — whether
gross building area or room counts — explains much of the difference in the per unit
assessed values and does not demonstrate inequity. Considering the only evidence in
the record, the subject property's assessment falls in the low end of the range of other
hotels in the area.
5
In the present case, James Madison Hotels provided no evidence that different
methods were applied to similarly situated properties. Nor did it provide any recent sales
of comparable properties or demonstrate the subject's actual fair market value, which
are necessary to calculate an assessment -to -sales -price ratio as provided in Maxwell.
Viewing the record as a whole, we find James Madison Hotels has failed to prove
the subject property is inequitably assessed.
Order
PAAB HEREBY AFFIRMS the City of Dubuque Board of Review's action. This
Order shall be considered final agency action for the purposes of Iowa Code Chapter
17A.
Any application for reconsideration or rehearing shall be filed with PAAB within
20 days of the date of this Order and comply with the requirements of PAAB
administrative rules. Such application will stay the period for filing a judicial review
action.
Any judicial action challenging this Order shall be filed in the district court where the
property is located within 30 days of the date of this Order and comply with the
requirements of Iowa Code section 441.37B and Chapter 17A.
Elizabeth Goodman, Board Member
Dennis Loll, Board Member
AA, a-t-k__
Karen Oberman, Board Member
Copies to:
Sonny Patel by eFile
City of Dubuque Board of Review by eFile
A
Electronically Filed
2024-02-23 11:53:50
PAAB
2023-104-00447C
PROPERTY ASSESSMENT APPEAL BOARD
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
PAAB Docket No. 2023-104-00447C
AM Hotels Inc. (Sonny Patel),
Appellant,
vs.
Parcel No. 1028326005
City of Dubuque Board of Review,
Appellee.
Introduction
The appeal came on for consideration by the Property Assessment Appeal Board
(PAAB) on December 1, 2023. Sonny Patel represented AM Hotels Inc. and requested
the appeal proceed without a hearing. City of Dubuque Senior Counsel Barry Lindahl
represented the Board of Review.
AM Hotels Inc. owns a commercial property located at 4025 McDonald Drive,
Dubuque, Iowa. Its January 1, 2023, assessment was set at $3,097,800, allocated as
$753,000 in land value and $2,344,800 in building value. (Ex. A).
AM Hotels petitioned the Board of Review claiming the property's assessment
was not equitable as compared with the assessments of other like property in the taxing
district. Iowa Code § 441.37(1)(a)(1)(a). (Ex. C). The Board of Review denied the
petition. (Ex. B).
AM Hotels Inc. then appealed to PAAB reasserting its inequity claim. It also
checked the box on the appeal form asserting there is an error in the assessment. §
441.37(1)(a)(1)(d). However, it did not clearly articulate an error on its Appeal or any
subsequent filing. PAAB therefore will only consider its inequity claim.
1
General Principles of Assessment Law
PAAB has jurisdiction of this matter under Iowa Code sections 421.1A and
441.37A. PAAB is an agency and the provisions of the Administrative Procedure Act
apply. § 17A.2(1). This appeal is a contested case. § 441.37A(1)(b). PAAB may
consider any grounds under Iowa Code section 441.37(1)(a) properly raised by the
appellant following the provisions of section 441.37A(1)(b) and Iowa Admin. Code R.
701-115.2(2-4). New or additional evidence may be introduced. Id. PAAB considers the
record as a whole and all of the evidence regardless of who introduced it.
§ 441.37A(3)(a); see also Hy-Vee, Inc. v. Employment Appeal Bd., 710 N.W.2d 1, 3
(Iowa 2005). There is no presumption the assessed value is correct, but the taxpayer
has the burden of proof. §§ 441.21(3); 441.37A(3)(a). The burden may be shifted; but
even if it is not, the taxpayer may still prevail based on a preponderance of the
evidence. Id.; Compiano v. Bd. of Review of Polk Cnty., 771 N.W.2d 392, 396 (Iowa
2009) (citation omitted).
Findings of Fact
The subject property is a two-story, eighty -unit hotel built in 1986 and operating
as a Baymont Inn and Suites. It has 36,262 square feet of gross building area,
comprised of two buildings, an enclosed pool, and 36,200 square feet of concrete
paving. The improvements are listed in normal condition with a 4-00 grade (average
quality). The improvements have 45% physical depreciation applied to the assessed
value. The site is 2.20 acres. (Ex. A).
Notes on the property record card indicate multiple permits for interior and
exterior remodels between 2012 and 2022 and a new roof in 2023. (Ex. A, p.14).
Nonetheless, Patel writes on his appeal form "this is not a new building nor has it been
remodeled or updated in the past 10 years." (Appeal). The primary focus of the appeal
is the percentage increase of the subject's assessment — AM Hotels asserts the subject
increased 45% while comparable property assessment increases were closer to 25%.
On the Petition to the Board of Review, Patel identified two comparable
properties: Main Stay Suites and Country Inn & Suites. (Ex. C). According to Patel, their
assessments were $3,033,300 and $3,340,600, respectively. He states these properties
are newer than the subject, in better condition, and have had recent remodels, yet their
assessments only increased by 25% and 27% in 2023. Patel asserts the subject's
assessment is not correct relative to these properties. Patel provided no additional
information about the other hotel properties. respectively. The subject's current
assessment falls between these assessments. However, he requests a valuation of the
subject at $2,125,220. We note this value is the subject's assessed value set in 2019,
which remained the value through 2022. (Ex. A, p.12).
The Board of Review submitted a narrative exhibit list which explained the
valuation changes for hotels near the subject property. It also submitted eight
comparable hotel properties and noted, "the hospitality industry uses per hotel room as
a unit of comparison when they are marketed." (Exhibit list and Ex. D). The subject's
value per room is $38,723, which the Board of Review contends is "in line when
compared to other similar class hotels in the area."
The following table summarizes eight properties the Board of Review submitted
that it believes demonstrates the subject is equitably assessed. (Ex. D).
Address
Year
Built
Gross
Building Area
(GBA) (SF
Room
Count
2023
Assessed
Value AV
AV/GBA
AV/Room
Subject — 4025 McDonald Dr (Baymont
Inn)
1986
36,262
80
$3,097,800
$85
$38,723
A — 1315 Associates Dr(Country Inn
2000
42,304
69
$3,340,600
$79
$48,414
B - 1275 Associates Dr Main Stay Inn
2000
45,375
75
$3,033,300
$67
$40,444
C — 3100 Dodge St Best Western
1978
117,755
150
$8,164,900
$69
$54,433
D — 4055 McDonald Dr(Quality Inn
1990
23,436
52
$1,732,600
$74
$33,319
E — 2080 Holiday Dr(Holiday Inn Express
2008
47,682
87
$4,802,400
$101
$55,200
F — 3400 Dodge St Fairfield Inn
1992
25,235
56
$2,158,000
$86
$38,538
G — 3434 Dodge St Hampton Inn
1975
58,999
97
$5,711,900
$97
$58,886
H — 2730 Dodge St Super 8
1986
20,852
61
$1,686,400
$81
$27,646
The subject property is at the lower end of the range in gross building area. As a
general rule, all else being equal, a smaller property will have higher per unit values
than larger properties.
3
We also note that although most of the sales are dated (between 2015 and
2022), there are no time adjustments, or any other adjustments to the sales to account
for differences that may exist when compared to the subject. Comparables A and B are
those Patel identified on AM Hotels' petition. Their assessments per room are higher,
although their total assessment are similar. These properties are newer, have larger
gross building area, but fewer rooms. According to the Board of Review's exhibit, they
are similar in quality (grade) to the subject but their condition is unknown. Comparable A
sold in 2018 for $2,715,000 and Comparable B sold in 2017 for $1,880,000. Nothing is
known about the sale transactions.
Comparable C is the only property that sold in 2022 for $12,036,000. While it is
larger, older, and better quality than the subject, its assessed -value -to -sale -price ratio is
0.68, which suggests it is assessed for less than market value. However, again the
record contains no information about the sale, and without information about whether
the sale was an arm's-length transaction or contained personal property, we cannot rely
on it for an indication of the subject's market value. This property's assessment also
increased by 94.5% after its sale.
Considering the record as a whole, and the lack of other information, the data
presented by the Board of Review indicates is that the subject's assessment is in line
with other similar hotel properties, whether based on the total assessment or per room
valuation.
Analysis & Conclusions of Law
AM Hotels claims the subject property's assessment was not equitable as
compared with the assessments of other like property in the taxing district. §
441.37(1)(a)(1)(a).
In Iowa, property is to be valued at its actual value. § 441.21(1)(a). Actual value
is the property's fair and reasonable market value. § 441.21(1)(b). Market value
essentially is defined as the value established in an arm's-length sale of the property. Id.
Sale prices of the property or comparable property in normal transactions reflecting
market value, and the probable availability or unavailability of persons interested in
12
purchasing the property, shall be taken into consideration in arriving at its market
value. Id. If sales are not available to determine market value then "other factors," such
as income and/or cost, may be considered. § 441.21(2).
There is no presumption the assessed value is correct, but the taxpayer has the
burden of proof. §§ 441.21(3); 441.37A(3)(a). The burden may be shifted; but even if it
is not, the taxpayer may still prevail based on a preponderance of the evidence. Id.;
Compiano v. Bd. of Review of Polk Cnty., 771 N.W.2d 392, 396 (Iowa 2009) (citation
omitted). When the taxpayer "offers competent evidence that the market value of the
property is different than the market value determined by the assessor, the burden of
proof thereafter shall be upon the officials or persons seeking to uphold such valuation."
Iowa Code § 441.21(3). To be competent evidence, it must "comply with the statutory
scheme for property valuation for tax assessment purposes." Soifer v. Floyd Cnty. Bd.
of Review, 759 N.W.2d 775, 782 (Iowa 2009) (citations omitted). In this case, AM Hotels
retains the burden of proof.
To prove inequity, a taxpayer may show an assessor did not apply an assessing
method uniformly to similarly situated or comparable properties. Eagle Food Centers v.
Bd. of Review of the City of Davenport, 497 N.W.2d 860, 865 (Iowa 1993).
Alternatively, a taxpayer may show the property is assessed higher proportionately than
other like properties using criteria set forth in Maxwell v. Shivers, 133 N.W.2d 709, 711
(Iowa 1965). The Maxwell test provides inequity exists when, after considering the
actual and assessed values of similar properties, the subject property is assessed at a
higher proportion of its actual value. Id. This is commonly done through an
assessment/sales ratio analysis comparing prior year sales (2022) and current year
assessments (2023) of the subject property and comparable properties. However, to
succeed in an equity claim, more than one property must be analyzed. Miller v. Property
Assessment Appeal Bd., 2019 WL 3714977 (Iowa Ct. App. Aug. 7, 2019).
AM Hotel's primary contention is that the subject's assessed value increased at a
higher rate than comparable properties. We have long noted however, it is insufficient to
simply compare the subject property's assessed value to the assessments of other
properties or the rate of change of property assessments to demonstrate inequity.
5
Further, as previously noted, variation in sizes — whether gross building area or room
counts — explains much of the difference in the per unit assessed values and does not
demonstrate inequity. In the present case, AM Hotels provided no evidence that
different methods were applied to similarly situated properties. Nor did it provide any
recent sales, which are necessary to calculate an assessment -to -sales -price ratio as
provided in Maxwell. The Board of Review's evidence included only one sale from 2022;
however, we lack information to determine whether this was arm's-length and moreover,
more than one comparable is necessary for an equity claim. Considering the only
evidence in the record, the subject property's assessment falls within the range of other
hotels in the area.
Viewing the record as a whole, we find AM Hotels has failed to prove the subject
property is inequitably assessed.
Order
PAAB HEREBY AFFIRMS the City of Dubuque Board of Review's action. This
Order shall be considered final agency action for the purposes of Iowa Code Chapter
17A.
Any application for reconsideration or rehearing shall be filed with PAAB within
20 days of the date of this Order and comply with the requirements of PAAB
administrative rules. Such application will stay the period for filing a judicial review
action.
A
Any judicial action challenging this Order shall be filed in the district court where
the property is located within 30 days of the date of this Order and comply with the
requirements of Iowa Code section 441.37B and Chapter 17A.
Elizabeth Goodman, Board Member
Karen Oberman, Board Member
Dennis Loll, Board Member
Copies to:
Sonny Patel by eFile
City of Dubuque Board of Review by eFile
7