Mt. Sinai Christian Fellowship Church of God in Christ, Inc. v. Scott County Board of Supervisors ( 2022 )

IN THE COURT OF APPEALS OF IOWA
No. 21-1531
Filed September 21, 2022
MT. SINAI CHRISTIAN FELLOWSHIP CHURCH OF GOD IN CHRIST, INC.,
Plaintiff-Appellant,
vs.
SCOTT COUNTY BOARD OF SUPERVISORS,
Defendant-Appellee,
_________________________________
MT. SINAI CHRISTIAN FELLOWSHIP CHURCH OF GOD IN CHRIST, INC.,
Plaintiff-Appellant,
vs.
SCOTT COUNTY TREASURER,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Scott County, Joel W. Barrows,
Judge.
Mt. Sinai Christian Fellowship Church of God in Christ, Inc. appeals from
the district court’s denial of its petitions for writ of mandamus against the Scott
County Board of Supervisors and the Scott County Treasurer. AFFIRMED.
Aaron M. Miers of Brooks Law Firm, P.C., Rock Island, Illinois, for appellant.
Robert L. Cusack of the Scott County Attorney’s Office, Davenport, for
appellees.
Considered by Bower, C.J., Chicchelly, J., and Scott, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206
(2022).
2
SCOTT, Senior Judge.
Mt. Sinai Christian Fellowship Church of God in Christ, Inc. (Mt. Sinai)
appeals from the district court’s denial of its petitions for writ of mandamus against
the Scott County Board of Supervisors (Board) and the Scott County Treasurer
(Treasurer) (collectively, the County) regarding the County’s failure to abate
property taxes or refund previously paid property taxes.1
A writ of mandamus may issue to “command[] an inferior tribunal, board,
corporation, or person to do or not to do an act, the performance or omission of
which the law enjoins as a duty resulting from an office, trust, or station.” Iowa
Code § 661.1 (2021). Mt. Sinai claims it is entitled to the refund of property taxes
paid on its behalf for tax years 2016 and 2017 and the abatement of property taxes
owing for tax year 2018—all of which it claims are based on a religious
organization’s exemption from property taxes found in Iowa Code section 427.1(8)
and (14).2 The district court granted summary judgment to the County, and Mt.
Sinai appeals. Because we concur with the district court’s statutory interpretation
and conclusions, we affirm the dismissal of Mt. Sinai’s mandamus actions.
I. Background Facts and Proceedings.
The district court provided a straightforward statement of undisputed facts:
1 The two mandamus actions, one against the Board and one against the
Treasurer, were considered together on competing motions for summary
judgment. The district court rejected Mt. Sinai’s claims in a combined ruling.
2 Iowa Code chapter 427 has been amended since Mt. Sinai purchased the
property in 2015. See 2021 Iowa Acts ch. 80, § 267; 2015 Iowa Acts ch. 116, § 24
(amending Iowa Code § 427.1(8)). However, the parties and the district court cite
to the 2021 version of the Code, and the statutory language involved does not
appear to have been substantively amended for purposes of Mt. Sinai’s assertions.
Thus, we will refer to the 2021 version of the Iowa Code throughout.
3
Living Water Family Church, Inc. (Living Water) owned property
located at [XXX] Northwest Boulevard, Davenport, Iowa (the
property). Living Water was a registered religious and charitable
organization incorporated in the State of Iowa. From tax years 2008
through 2015, Living Water used the property primarily as a worship
space for their congregation and office space for their staff. During
this time, the property was exempt from property taxes and no taxes
were assessed.
On July 29, 2015, [Mt. Sinai] purchased the property. Mt.
Sinai is also a registered religious and charitable organization
incorporated in the State of Iowa . . . . Mt. Sinai intended to and did
use the property for the same primary purposes as it was used by
Living Water. On August 5, 2015, the Davenport City Assessor’s
Office sent a courtesy notice to Mt. Sinai informing them of the need
to file a request for tax-exempt status on the property. This notice
was sent to [ZZZ] North Pine Street, Davenport, Iowa, due to an error
in the deed listing the common address of the property as that
address. However, Mt. Sinai also owned [ZZZ] North Pine Street
until 2018.
During tax years 2016, 2017, and 2018, the property was
assessed taxes in the amounts of $33,096, $34,294, and $34,238,
respectively. Mt. Sinai paid a portion of the first half of the 2016
property taxes, but did not pay the other assessed taxes. Tax
delinquency notices were sent to the [ZZZ] North Pine Street
address, but not to the true address of the property. Mt. Sinai filed
for a tax exemption on the property on May 22, 2018. On May 28,
2018, Mt. Sinai sent [the Board] a written request to abate their taxes
then owing and reimburse the taxes already paid for tax years 2016
through 2018. Mt. Sinai met with Board Chairman Tony Knobbe
regarding this request on May 31, 2018.
On June 18, 2018, [the Treasurer] sold the unpaid taxes from
2016 at tax sale to HI 100, LC. These taxes were redeemed by LBC1
Trust, the lender who financed Mt. Sinai’s purchase of the property.
On November 19, 2018, and May 20, 2019, the 2017 property taxes
were sold in two halves at tax sales to OHP1 LC, also known as Oak
Helm Partners. On August 20, 2019, Mt. Sinai made another request
to the Board to abate the taxes, and Mt. Sinai made another request
to reimburse the taxes already paid on May 29, 2020.
On June 16, 2020, Mt. Sinai asked the Treasurer to abate the
first half of the 2018 property taxes. The Treasurer refused, and Mt.
Sinai made another request to the Board to abate these taxes—and
reimburse those already paid—on July 7, 2020. The Board took no
action on this request, and the first half of the 2018 property taxes
were scheduled to go to tax sale in June, 2021. The Board abated
the second half of the 2018 taxes, citing the timing of Mt. Sinai’s
exemption filing.
4
On October 12, 2020, Mt. Sinai filed the petitions in these two
cases, requesting writs of mandamus to the Board and the Treasurer
instructing them to abate the first half of the 2018 taxes and
reimburse the 2016 and 2017 taxes. Due to these cases being filed,
the unabated 2018 taxes were withdrawn from the anticipated tax
sale. On July 16, 2021, the parties filed all three pending motions for
summary judgment.
In its motion for summary judgment, Mt. Sinai argued the taxes were illegally
or erroneously assessed because the religious use exemption continues with the
property until the use of the property changes—regardless of ownership. Mt. Sinai
argued that upon a change of ownership, Iowa Code section 427.1(14) requires
the county recorder to provide notice to the county assessor, who then evaluates
the use of the property to determine a tax liability. It asserts the provision does not
require the religious entity purchaser from a religious entity seller to file any
exemption form.
The County sought summary judgment, arguing a new exemption filing is
required whenever the property changes ownership and the statutes raised by Mt.
Sinai do not vest them with discretion to reimburse or abate its property taxes.
The district court concluded section 427.1(14) “requires a new exemption
filing whenever property subject to the [religious or] charitable use exemption
changes hands, even if the new owner uses the property in the same manner as
the previous owner.” The district court reasoned:
requiring a new owner of property previously subject to the charitable
use exemption to refile for the exemption is a matter of practical
necessity. . . . [The County] state[s] that the county government
would have no way of knowing whether the exemption is appropriate
without some level of self-reporting by the taxpayer. The court
agrees that this is a legitimate concern which displays the absurd
results which would follow from automatically extending the
exemption to subsequent purchasers.
5
Because the court determined the property taxes were not illegally or
erroneously assessed, the district court also rejected Mt. Sinai’s arguments that
County was required to refund the taxes under Iowa Code section 445.60. Finally,
the court accepted the County’s assertions that it had no discretion to abate and
reimburse the assessed taxes, despite Mt. Sinai’s contrary claims. The district
court granted the County summary judgment. Mt. Sinai appeals.
II. Scope and Standard of Review.
“Mandamus is an equitable action generally reviewed de novo. But our
review of a summary judgment ruling in a case filed in equity is for errors of law.”
Knoer v. Palo Alto Cnty. Bd. of Sup’rs, No. 15-0742, 2016 WL 3556431, at *2 (Iowa
Ct. App. June 29, 2016) (internal citation omitted). Summary judgment is
appropriate when “there is no genuine issue as to any material fact and . . . the
moving party is entitled to a judgment as a matter of law.” Iowa R. Civ. P. 1.981(3).
“In considering a motion for summary judgment that requires an interpretation of a
statute, our review is for correction of legal error.” Dolphin Residential Coop., Inc.
v. Iowa City Bd. of Rev., 863 N.W.2d 644, 647 (Iowa 2015).
III. Discussion.
Our task is to determine what the Code requires when a new owner
purchases a property previously granted an exemption. Section 427.1 states, “The
following classes of property shall not be taxed.” Subsection 8 is applicable to
“Property of religious, literary, and charitable societies,” and provides:
(a) All grounds and buildings used or under construction by
literary, scientific, charitable, benevolent, agricultural, and religious
institutions and societies solely for their appropriate objects, not
exceeding three hundred twenty acres in extent and not leased or
otherwise used or under construction with a view to pecuniary
6
profit. . . . For assessment years beginning on or after January 1,
2016, the exemption granted by this subsection shall also apply to
grounds owned by a religious institution or society, not exceeding a
total of fifty acres, if all monetary and in-kind profits of the religious
institution or society resulting from use or lease of the grounds are
used exclusively by the religious institution or society for the
appropriate objects of the institution or society.
(b) All deeds or leases by which such property is held shall be
filed for record before the property herein described shall be omitted
from the assessment. All such property shall be listed upon the tax
rolls of the district or districts in which it is located and shall have
ascribed to it an actual fair market value and an assessed or taxable
value, as contemplated by section 441.21,[3] whether such property
be subject to a levy or be exempted as herein provided and such
information shall be open to public inspection.
Iowa Code § 427.1(8) (emphasis added).
The premise for Mt. Sinai’s assertion of automatic exemption lies with this
language from subsection 14—an exemption is “allowed on the property for
successive years without further filing as long as the property is used for the
purposes specified in the original claim for exemption.” Mt. Sinai asserts the
statutory language is plain and supports its contention that “once a property has a
religious exemption status by virtue of an exempt use, that property remains
exempt so long as the use remains the same, even with the transfer of title. No
filing or refiling of the exemption application is needed.” The district court
concluded a new exemption filing was required as a practical matter to avoid
absurd results. But Mt. Sinai is unswayed by possible absurd results, contending,
3 Iowa Code section 441.21(1)(a) states:
All property subject to taxation shall be valued at its actual value
which shall be entered opposite each item, and, except as otherwise
provided in this section, shall be assessed at one hundred percent of its
actual value, and the value so assessed shall be taken and considered as
the assessed value and taxable value of the property upon which the levy
shall be made.
7
“Absurd or not, the plain language of the Code does place the burden on the county
assessor to determine whether the exemption is appropriate to continue.” We
cannot agree.
In Carreras v. Iowa Department of Transportation, Motor Vehicle Division,
977 N.W.2d 438, 446 (Iowa 2022), our supreme court explained:
The first step in our statutory interpretation analysis is to
determine whether the statute is ambiguous. Our inquiry ends with
the plain language if the statute is unambiguous. A statute is
ambiguous if reasonable minds could differ or be uncertain as to the
meaning of the statute based on the context of the statute. If a
statute is ambiguous, we rely on principles of statutory construction
to resolve the ambiguity.
(Internal quotation marks and citations omitted.) The differing interpretations here
show reasonable minds disagree as to the interpretation of section 427.1(14). See
Carreras, 977 N.W.2d at 446. “It is universally accepted that where statutory terms
are ambiguous, courts should interpret the statute in a reasonable fashion to avoid
absurd results.” Brakke v. Iowa Dep’t of Nat. Res., 897 N.W.2d 522, 534 (Iowa
2017).
“[T]axation is the rule, exemption is the exception.”4 Lowe’s Home Ctrs.,
LLC v. Iowa Dep’t of Revenue, 921 N.W.2d 38, 46 (Iowa 2018). Mt. Sinai, “as the
taxpayer seeking the exemption, has the burden of proving its entitlement to tax
exempt status.” Sioux Ctr. Cmty. Hosp. & Health Ctr. v. Bd. of Rev., No. 05-1278,
2006 WL 1230012, at *1 (Iowa Ct. App. Apr. 26, 2006). We strictly construe
statutes that exempt property from taxation, and we resolve any doubts in favor of
taxation. Lowe’s, 921 N.W.2d at 46.
4“Exempt” means “[f]ree or released from a duty or liability to which others are
held.” Exempt, Black’s Law Dictionary (11th ed. 2019).
8
In support of its claim that the exemption runs with the property, Mt. Sinai
quotes, “It is the character of the use, rather than the identity of the owner, which
determines whether an organization’s property is exempt from taxation.” Holy
Spirit Ret. Home, Inc. v. Bd. of Rev., 543 N.W.2d 907, 910 (Iowa 1995). It argues
that because the purchased property has been used as a place of worship since
2008 and the use did not change with the change of the ownership of the property
in 2015, taxes were assessed in error or illegally.
Section 427.1(14) provides:
A society or organization claiming an exemption under
subsection . . . 8 . . . shall file with the assessor not later than
February 1 a statement upon forms to be prescribed by the director
of revenue, describing the nature of the property upon which the
exemption is claimed and setting out in detail any uses and income
from the property derived from the rentals, leases, or other uses of
the property not solely for the appropriate objects of the society or
organization. Upon the filing and allowance of the claim, the claim
shall be allowed on the property for successive years without further
filing as long as the property is used for the purposes specified in the
original claim for exemption. When the property is sold or
transferred, the county recorder shall provide notice of the transfer
to the assessor. The notice shall describe the property transferred
and the name of the person to whom title to the property is
transferred.
(a) The assessor, in arriving at the valuation of any property
of the society or organization, shall take into consideration any uses
of the property not for the appropriate objects of the organization and
shall assess in the same manner as other property, all or any portion
of the property involved which is leased or rented and is used
regularly for commercial purposes for a profit to a party or individual.
If a portion of the property is used regularly for commercial purposes,
an exemption shall not be allowed upon property so used and the
exemption granted shall be in the proportion of the value of the
property used solely for the appropriate objects of the organization,
to the entire value of the property. . . .
(b) . . . A claimant of an exemption shall, under oath, declare
that no violations of law will be knowingly permitted or have been
permitted on or after January 1 of the year in which a tax exemption
is requested. Claims for exemption shall be verified under oath by
the president or other responsible head of the organization. A
9
society or organization which ceases to use the property for the
purposes stated in the claim shall provide written notice to the
assessor of the change in use.
(Emphases added.)
Reading the provision in its entirety, the statute makes clear that it is the
taxpayer that obtains an exemption: “A society or organization claiming an
exemption . . . .” Iowa Code § 427.1(14); see Iowa Methodist Hosp., v. Bd. of Rev.,
252 N.W.2d 390, 392 (“Under our decisions a charitable organization may be
entitled to exemption on some of its property and be subject to taxation on others.
It is not the identity of the owner but the character of the use which controls.”
(emphasis added) (internal citation omitted)).
The language anticipates action must be taken by the taxpayer to claim an
exemption; the taxpayer
society or organization claiming an exemption . . . shall file with the
assessor not later than February 1 a statement upon forms to be
prescribed by the director of revenue, describing the nature of the
property upon which the exemption is claimed and setting out in
detail any uses . . . . Upon the filing and allowance of the claim . . . .
Iowa Code § 427.1(14) (emphases added).
We conclude the district court correctly interpreted section 427.1(14) to
“require[] a new exemption filing whenever property subject to the charitable use
exemption changes hands, even if the new owner uses the property in the same
manner as the previous owner.” Absent a request for an exemption by the property
owner, the property is subject to taxation.
Taxes paid in error or illegally. Mt. Sinai argues the taxes paid on behalf of
Mt. Sinai were erroneously or illegally paid and, pursuant to Iowa Code section
10
445.60, must be refunded.5 “[A] tax is erroneous or illegal so a refund may be
enforced when it is levied (1) without statutory authority or (2) upon property not
subject to taxation or (3) by some officer or officers having no authority to levy the
same, or (4) in some other similar illegal respect.” Isbell v. Bd. of Sup’rs, 54
N.W.2d 508, 511 (Iowa 1952).
Mt. Sinai contends the property is not subject to taxation; “[t]he simple,
straight-forward mistake of including the wrong address to the deed and transfer
documents demonstrates the error required of Iowa Code section 445.60. The
subsequent levying the tax on a religious organization, indisputably exempt from
taxation, demonstrates the taxes paid were illegal.”
Real property of a religious or charitable society is subject to taxation unless
“exempted as herein provided.” Iowa Code § 427.1(8). As already addressed, a
religious society must file for an exemption. We agree with the district court that
concluding a taxpayer’s error in failing to request an exemption makes the
assessment of taxes erroneous or illegal “would go much too far to constitute a
reasonable interpretation of section 445.60.”
5 Section 445.60 provides:
The board of supervisors shall direct the county treasurer to
refund to the taxpayer any tax or portion of a tax found to have been
erroneously or illegally paid, with all interest, fees, and costs actually
paid. A refund shall not be ordered or made unless a claim for refund
is presented to the board within two years of the date the tax was
due, or if appealed to the board of review, the property assessment
appeal board, the state board of tax review, or district court, within
two years of the final decision.
11
Discretionary abatement. Mt. Sinai next asserts the Board had discretion
to abate the 2018 taxes. Iowa Code section 427.3 allows a board of supervisors
to abate taxes
levied against property acquired by . . . purchase by a person or
entity if the property acquired by . . . purchase was transferred to the
person or entity after the deadline for filing for property tax exemption
in the year in which the property was transferred and the property
acquired by . . . purchase would have been exempt under section
427.1, subsection 7, 8, or 9, if the person or entity had been able to
file for exemption in a timely manner.
(Emphasis added.)
The district court found the provision inapplicable to Mt. Sinai’s request for
abatement of the 2018 taxes because it “overlooks the limiting condition in the
statute. The Board only has this authority ‘if the property . . . was transferred to
the person or entity after the deadline for filing for property tax exemption in the
year in which the property was transferred.’” (Alteration in original.) (Quoting Iowa
Code § 427.3.) We conclude this interpretation is sound, and the Board had no
discretion in this instance to abate the 2018 taxes.6
Section 445.16(3) abatement when “impractical to pursue collection” of
taxes. Section 445.16 states:
(1) If the county holds the tax sale certificate of purchase, the
county, through the board of supervisors, may compromise by written
agreement, or abate by resolution, the tax, interest, fees, or costs. In
the event of a compromise, the board of supervisors may enter into
a written agreement with the owner of the legal title or with any
lienholder for the payment of a stipulated sum in full satisfaction of
all amounts included in that agreement. In addition, if a parcel is
offered at regular tax sale and is not sold, the county, prior to public
6 The Board did abate the second half of the 2018 taxes based on the filing of Mt.
Sinai’s claim of exemption, which it probably did not have discretion to do under
this statutory provision. No party challenged that abatement, so we do not
consider the legality of it.
12
bidder sale to the county under section 446.19, may compromise by
written agreement, or abate by resolution, the tax, interest, fees, or
costs, as provided in this section.
(2) A copy of the agreement or resolution shall be filed with
the county treasurer.
(3) If the treasurer determines that it is impractical to pursue
collection of the total amount due through the tax sale and the
personal judgment remedies, the treasurer shall make a written
recommendation to the board of supervisors to abate the amount
due. The board of supervisors shall abate, by resolution, the amount
due and direct the treasurer to strike the amount due from the county
system.
Mt. Sinai asserts summary judgment was improperly granted. Focusing
only on subsection 3, Mt. Sinai argues that the Treasurer did not adequately
support his motion for summary judgment by an affidavit or other admissible
evidence to show he made his decision not to recommend abatement based on
substantial evidence and rationality.
But the County argues section 445.16 is not applicable: “It was not
‘impractical to pursue collection of the total amount due through the tax sale’
because a tax sale was actually held and the tax certificates were sold to Oak Helm
Partners.” The district court reiterated it had already concluded the County had no
discretion to abate. We conclude that because the Treasurer did not have to
determine whether it was impractical to pursue collection, a writ of mandamus is
not available.
Disparate treatment. Finally, Mt. Sinai notes another religious entity was
granted an abatement several years earlier and claims its own circumstances are
similar enough that it should not be treated differently. The district court found the
circumstances under which the prior abatement was granted were not statutorily
based and “an aberration—a mistake on the part of the Treasurer and the Board.”
13
Moreover, the court stated, “It is not clear that failure to exercise statutory
discretion displays non-compliance with an enforceable duty” such that mandamus
would be available. We find no error.
AFFIRMED.