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Property Assessment Appeal Board Ruling, Dan Nadermann v. City Board of ReviewCity of Dubuque City Council Meeting Consent Items # 11. Copyrighted December 20, 2021 ITEM TITLE: Property Assessment Appeal Board Ruling, Dan Nadermann v. City Board of Review SUMMARY: Senior Counsel transmitting a ruling from the Property Assessment Appeal Board affirming the Board of Reviews January 1, 2021 assessment of the Nadermann property. SUGGESTED Suggested Disposition: Receive and File DISPOSITION: ATTACHMENTS: Description Type Memo Staff Memo Property Assessment Appeal Board Findings of Fact, Supporting Documentation Conclusions of Law, and Order THE CITY OF DUB E Masterpiece on the BARRY A. LINDAI SENIOR COUNSEI MEMO To: Roy D. Buol, Mayor City Council DATE: December 7, 2021 Dubuque AlII-Am iea city nvxrnu,-t�:u i�- I �• r I I 2007-2012.2013 2017*2019 RE: Property Assessment Appeal Board Ruling, Dan Nadermann v. City Board of Review Attached is a ruling from the Property Assessment Appeal Board affirming the Board of Review's January 1, 2021 assessment of the Nadermann property. BAL:JLM Attachments cc: Crenna Brumwell, City Attorney Michael C. Van Milligen, City Manager 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) 583-4113 / FAx (563) 583-1040 / EMAIL balesq@cityofdubuque.org Electronically Filed 2021-12-03 12:27:39 PAAB PROPERTY ASSESSMENT APPEAL BOARD FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER PAAB Docket No. 2021-104-10036R Parcel No. 118353008 Dan Nadermann, Appellant, vs. City of Dubuque Board of Review, Appellee. Introduction The appeal came on for written consideration before the Property Assessment Appeal Board (PAAB) on October 22, 2021. Dan Nadermann is self -represented and asked that the appeal proceed without a hearing. City Attorney Barry Lindahl represents the Board of Review. Nadermann Family Properties LLC owns a property at 929 Garfield Avenue, Dubuque, Iowa. Its January 1, 2021, assessment was set at $110,080, allocated as $17,000 in land value and $93,080 in building value. (Ex. B). Nadermann petitioned the Board of Review asserting the subject property's assessment was not equitable as compared with assessment of other like property and that the property was assessed for more than the value authorized by law. (Attachment to Appeal). Iowa Code § 441.37(1)(a)(1)(a & b) (2021). The Board of Review denied Nadermann's petition "based on the Board of Review's knowledge of the current market conditions and values." (Attachment to Appeal). Nadermann then appealed to PAAB checking the box that the property is assessed for more than authorized by law. Additionally, he wrote "that said assessment is not equitable as compared with assessments of other like property in the taxing 1 district." (Appeal). We will consider both claims to ensure Nadermann's concerns are addressed. Iowa Code § 441.37(1)(a)(1)(a & b). 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. 701-126.2(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, brick duplex built in 1881. It has 3136 square feet of gross living area, a full unfinished basement, and three patios. The property also has a 1080-square-foot-detached brick garage that was built in 1969. The improvements are listed in very -poor condition with a 4+00 grade (average quality). The site is 0.164 acres. (Ex. B). Nadermann purchased the property in December 2019 for $83,000. (Ex. A). The property record card indicates the sale was normal.' In an April 2021 letter to the Board of Review, Nadermann wrote the subject was listed for sale through the multiple listing .' Iowa Dept. of Revenue, Sales Condition Codes, available at https://tax.iowa.gov/sites/default/files/2021-01/NUTCSalesConditionCodes-v5.pdf (stating a NUTC Code of '0' indicates a normal sale). 2 service (MLS) for $85,000. (Attachment to Appeal). He asserts it was available for anyone to buy, but did not submit any evidence showing the listing history or time on market. Nadermann reports he has done some minor updating to the property since his purchase. He installed vinyl flooring on the main level, painted some rooms, installed a new ceiling fan in the living room and a used ceiling light in the dining room, and also installed a used vanity in the bathroom. He states the total expense for these improvements was about $2500. (Appeal). He believes the property's value is approximately $92,000 and that's how it should be assessed. (Appeal). The Board of Review asserts the subject had one damaged unit that was vacant at the time of sale. After the sale the unit was repaired and subsequently rented. Nadermann submitted three properties to support his claims, which are summarized in the following table. (Ex. C). Address Year Built Gross Living Area SF Grade Condition 2021 Assessed Value Sale Date Sale Price Subject 1881 3136 4+00 Very Poor $110,080 Dec-19 $83,000 N1 — 911-13 Garfield Ave 1880 2210 5+10 Normal $58,120 NA NA N2 — 925-27 Garfield Ave 1900 2785 4+00 Very Poor $90,450 NA NA N3 — 923 Garfield Ave 1900 1333 5+10 Poor $60,080 NA NA Nadermann did not submit any information regarding the comparables such as a property record card and there is no evidence that any of the properties have recently sold. PAAB notes the subject is the largest of the properties and the only brick property. Comparables N1 and N3 have inferior quality grades compared to the subject. The Board of Review asserts Comparable N 1 has been vacant for several years and is currently condemned. (Ex. A). The Assessor's Office has applied a 50% reduction to this property's assessment because the interior has been gutted. (Ex. C). Comparable N2 does not have a garage like the subject property and it has vinyl siding. (Exs. A & C). Comparable N3 is a single-family property. (Ex. A). We agree with the Board of Review that this property's comparability to the subject is questionable. 3 Considering the attributes of these properties as pointed out by the Board of Review, we question the comparability of all of them to the subject property. The Board of Review submitted four equity comparables which are summarized in the following table. (Ex. D). Address Year Built Gross Living Area (SF) Grade Condition 2021 Assessed Value Sale Date Sale Price Subject 1881 3136 4+00 Very Poor $110,080 Dec-19 $83,000 E1 — 1891 Garfield Ave 1875 2576 4+00 Poor $100,240 NA NA E2 — 1027 Rhomberg Ave 1896 2400 4+00 Very Poor $80,410 NA NA E3 — 1100 Lincoln Ave 1898 2400 4+00 Normal $138,780 NA NA E4 — 1600 Rhomberg Ave 1908 2484 5+00 Poor $93,930 NA NA These properties are all two-story, brick duplex properties like the subject. (Exs. D & G). They have less gross living area compared to the subject and all lack a garage. E1's lot size is most similar to the subject, whereas E2 and E4 are roughly half the size and E3 is twice as large. Comparable E4 has an inferior quality compared to the subject and Comparables E1, E3, and E4 have superior condition ratings. Comparable E1 is the only equity comparable known to have recently sold and is also included in the Board of Review's comparable sales. The Board of Review also submitted five 2020-2021 sale comparables adjusted for differences compared to the subject. These sale comparables are summarized in the following table. (Exs. E, F & G). Address Year Built Gross Living Area SF Condition 2021 Assessed Value Sale Date Sale Price Adjusted Sale Price Assessment/ Sales Ratio Subject 1881 3136 Very Poor $110,080 12/2019 $83,000 NA -- S1 — 1891 Garfield Ave 1875 2576 Poor $100,240 10/2020 $119,000 $128,842 0.84 S2 — 30 E 15th St 1911 2919 Very Poor $72,070 2/2020 $74,168 $112,187 0.97 S3 — 2417 Windsor Ave 1880 2544 Below Normal $132,730 2/2021 $137,000 $114,359 0.97 S4 — 2411 Queen St 1900 2550 Poor $94,410 1/2021 $98,000 $113,673 0.96 S5 — 1428 Washington St 1890 2240 Poor $80,250 1/2020 $98,000 $127,835 0.82 The comparables had sale prices ranging from $74,168 to $137,000; and an adjusted sale price range from $112,187 to $128,842. The Board of Review believes the adjusted sale prices support the assessed value. 12 The 2020 sales indicate assessment -to -sales -price ratios of 0.84, 0.97, and 0.82. Ratios less than 1.00 suggest a property is assessed for less than its actual market value. Here, the three 2020 sales indicate assessments are between 3% to 18% under market value. The two 2021 sales indicate ratios of 0.96 and 0.97. We note the median and mean adjusted sales prices are $114,359 and $119,379, respectively. If these values were used as indications of market value for the subject property, its assessment -to -sales price ratio would be or 0.96 or 0.92, respectively, and within the median range of ratios established by these comparables. Analysis & Conclusions of Law Nadermann believes his assessment was not equitable as compared with the assessments of other like property in the taxing district and that the subject is assessed for more than authorized by law. § 441.37(1)(a)(1)(a & b). Under section 441.37(1)(a)(1)(a), a taxpayer may claim that their "assessment is not equitable as compared with assessments of other like property in the taxing district." 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). Nadermann failed to show any improper variation in assessment methodology among comparable properties. 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 (2020) and assessed (2021) 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 (2020) and current year assessments (2021) of the subject property and comparable properties. 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 Nadermann submitted three properties for comparison to his, but none are known to have recently sold. Therefore, assessment ratios for these properties cannot be calculated. The Board of Review submitted five recent sales. The three 2020 sales indicate assessments are currently less than actual market value. Because Nadermann's other claim also requires a showing of actual value, we examine that claim as well. In an appeal alleging the property is assessed for more than the value authorized by law, the taxpayer must show: 1) the assessment is excessive and 2) the subject property's correct value. Soifer v. Floyd Cnty. Bd. of Review, 759 N.W.2d 775, 780 (Iowa 2009) (citation omitted). Nadermann's support for this claim was based on the December 2019 purchase price. The sale is reported to be a normal sale by the assessor's office and Nadermann asserts the assessed value should be based on the sale price adjusted for market conditions and minor updates completed since the sale. The Board of Review asserts one of the units was damaged and vacant at the time of sale, which was repaired and rented after the sale. Additionally, while the subject may have been listed for sale on the MLS, its listing history and length of time on the market is not in evidence. Further, while Nadermann may have spent a minimal amount on repairs, cost often does not equal market value. The Board of Review asserts damage to the subject was repaired and one unit was able to be rented. Additionally, the record suggests newer sales of similar properties exist in the jurisdiction. Therefore, we decline to solely rely on Nadermann's calculations. Nadermann has not submitted any other evidence of the subject property's fair market value as of January 1, 2021 such as an appraisal or any recent comparable sales adjusted for differences to support the subject's market value as of January 1, 2021. Conversely, the Board of Review did submit adjusted sales to indicate a range in value for the subject property from $112,187 to $128,842. Even though these adjustments were based on cost, it is the only other evidence of market value in the record. We agree with the Board of Review in that the adjusted sales tend to support the assessment. It would appear Nadermann's property is thus not assessed for more X than its market value. Additionally, an assessment -to -sales -price ratio calculated using the median and mean of these sales also suggests that Nadermann's property is equitably assessed. For these reasons, Nadermann has failed to show the subject property is inequitably assessed or assessed for more than authorized by law. Order PAAB HEREBY AFFIRMS the City of Dubuque Board of Review's assessment. This Order shall be considered final agency action for the purposes of Iowa Code Chapter 17A (2021). 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. Dennis Loll, Board Member Karen Oberman, Board Member Elizabeth Goodman, Board Member 7 Copies to: Dan Nadermann 10655 Timber Ridge Dubuque, Iowa 52001 City of Dubuque Board of Review by eFile