Al Brueggeman, Dan Breuker, Tom Bremer, Roger Bosma, Mark Dillehay, Randy Rowe, Allen Rowe, and Jarrod Wallace v. Osceola County, Iowa and the City of Harris, Iowa

IN THE COURT OF APPEALS OF IOWA
No. 16-1552
Filed June 7, 2017
AL BRUEGGEMAN, DAN BREUKER, TOM BREMER, ROGER BOSMA,
MARK DILLEHAY, RANDY ROWE, ALLEN ROWE, and JARROD WALLACE,
Plaintiffs-Appellants,
vs.
OSCEOLA COUNTY, IOWA and THE CITY OF HARRIS, IOWA,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Osceola County, David A. Lester,
Judge.
The plaintiffs appeal from the district court’s ruling granting the
defendants’ motion for summary judgment on the threshold issues of timeliness
and standing and dismissing the plaintiffs’ claims. AFFIRMED IN PART,
REVERSED IN PART, AND REMANDED.
Aaron W. Ahrendsen and John C. Werden Jr. of Eich, Van Dyke, Werden
& Steger, P.C., Carroll, for appellants.
Stephen G. Kersten of Kersten, Brownlee, Hendricks, L.L.P, Fort Dodge,
for appellees.
Heard by Danilson, C.J., and Potterfield and Bower, JJ.
2
POTTERFIELD, Judge.
The plaintiffs are named resident taxpayers of Osceola County and of the
Harris-Lake Park School District. They filed a petition for writ of certiorari and
declaratory judgment challenging a resolution and an effectuating ordinance
passed by or involving the defendants, Osceola County and the City of Harris. In
conjunction, the resolution and ordinance established an urban renewal area and
an urban renewal plan and divided the tax revenue levied on that area as tax
increment financing (TIF) to fund the plan. The plaintiffs challenged the actions
claiming they would be harmed as taxpayers. The defendants filed a motion for
summary judgment, and the district court granted it, finding the plaintiff’s lacked
standing to challenge the resolution and their claims involving the ordinance were
untimely. The plaintiffs’ petition was dismissed. On appeal, the plaintiffs
challenge the district court’s ruling and maintain the merits of their motion for
summary judgment should have been granted instead.
I. Background Facts and Proceedings.
In general terms, this case is about the actions taken by Osceola County
and the City of Harris to fund improvements to Harris’s lagoon project, pursuant
to Iowa Code chapter 403 (2015).1 The following facts are undisputed:
1
In a recent case, our supreme court provided a detailed explanation of chapter 403:
Iowa Code chapter 403 covers urban renewal in Iowa. Under that
chapter, the governing body of the municipality must first determine by
resolution that an area is “a slum area, blighted area, economic
development area or a combination of those areas.” Iowa Code
§§ 403.5(1), .17(23) (2013). This area, having been designated as
appropriate for a renewal project, is known as an urban renewal area
(URA). Id. The municipality also must prepare or cause to be prepared
an urban renewal plan that lays out proposed projects for “the
development, redevelopment, improvement, or rehabilitation” of the
designated URA. Id. §§ 403.5(2)(a), .17(24).
3
In March 2015, Harris was under an administrative order from the Iowa
Department of Natural Resources to update its lagoon, but the city did not have
the debt capacity to take on the improvements. As a result, on March 10, the city
sent a letter to the Osceola County Board of Supervisors “asking for help with
possibly doing a TIF on the windmills for infrastructure within the City.” Within a
couple of weeks, at a meeting of the board, the Harris mayor “asked that the
supervisor consider establishing an urban renewal area including the turbines
and city of Harris to help fund needed projects.”
In August 2015, an attorney hired by the county sent a letter to the county
auditor, indicating, “It is our understanding that the initial focus of our
representation will be on establishing an urban renewal area and TIF district and
The governing body submits the urban renewal plan to the
municipality’s planning commission for review and recommendation as to
whether it complies with the general plan of development for the
municipality. Id. § 403.5(2)(a). The governing body then holds a public
hearing on the plan. Id. § 403.5(3). After the hearing, the governing body
may approve the plan. Id. § 403.5(4). . . .
Chapter 403 also authorizes a unique form of financing for urban
renewal projects. This is known as tax increment financing (TIF). Id.
§ 403.19. TIF works on the theory that any projects completed in the
URA will increase the taxable value of the properties included within the
area. Upon approval of a TIF district, the assessed value of the
properties within the district is frozen for purposes of normal tax
assessment by the municipality. Id. § 403.19(1)(a). Then, the tax
collected for any enhanced value above this base is allocated to a
separate fund designated to pay for any indebtedness incurred to
complete the improvements. Id. Presumably, that is because the
improvements bring about the increased property value. “In theory, the
process is a closed circuit: the incremental revenues pay for the public
expenditures, which induce the private investment, which generates the
incremental revenues, which pay for the public expenditures.” Richard
Briffault, The Most Popular Tool: Tax Increment Financing and the
Political Economy of Local Government, 77 U. Chi. L. Rev. 65, 68 (2010).
...
Concerned Citizens of Se. Polk Sch. Dist. v. City of Pleasant Hill, 878 N.W.2d 252, 254
(Iowa 2016).
4
adopting an urban renewal plan (the “Plan”) to facilitate the use of tax increment
financing.”
At the October 20 board meeting, the board conducted a public hearing on
and ultimately adopted Resolution 10-15/16. It stated, in part:
Resolution to declare necessity and establish an urban
renewal area pursuant to section 403.4 of the Code of Iowa and
approve urban renewal plan and project for Osceola County Urban
Renewal Area 7.
....
WHEREAS, a portion of the Property lies within the
corporate boundaries of the City of Harris (the “City”), and a joint
agreement (the “Joint Agreement”) has been executed and
delivered by the City in satisfaction of the consent requirement of
section 403.17 of the Code of Iowa.
....
WHEREAS, the proposed Plan will authorize initial projects
to be undertaken in the Urban Renewal Area entailing the use of
tax increment financing to support the undertaking of the economic
development and blight alleviation initiatives in the City . . . .
The adoption of the resolution established the urban renewal area and the urban
renewal plan.
At the same meeting, the board also introduced Ordinance No. 47 for “its
initial consideration.”2 The ordinance stated, in part:
An Ordinance Providing for the Division of Taxes Levied on
Certain Taxable Property in the Osceola County Urban Renewal
Area 7, Pursuant to Section 403.19 of the Code of Iowa.
....
Section 8. Purpose. The purpose of this ordinance is to
provide for the division of taxes levied on certain taxable property in
Osceola County Urban Renewal Area 7, each year by and for the
benefit of the state, city, county, school districts or other taxing
districts after the effective date of this ordinance in order to create a
special fund to pay the principle of and interest on loans, moneys
2
Pursuant to Iowa Code section 331.302(6)(a), the ordinance was considered and voted
on, but it could not be passed until it was “considered and voted on for passage at two
meetings of the board prior to the meeting at which it [was] to be finally passed.”
5
advanced to or indebtedness, including bonds proposed to be
issued by Osceola County to finance projects in such area.
....
“TIF district” shall mean the following taxable real property
situation in Osceola County Urban Renewal Area 7 . . . .
The ordinance, once adopted, would establish the TIF district—freezing the value
of the properties in Urban Renewal Area 7 for purposes of normal tax
assessments by the municipality and then allocating the tax collected for the
enhanced value above that base to the separate TIF fund to finance the
improvements named in the urban renewal plan.
On October 27, at another meeting of the board of supervisors, Ordinance
No. 47 was “given its second consideration.”
On November 3, the plaintiffs filed their petition for writ of certiorari and
declaratory judgment. In it, the plaintiffs claimed the defendants had “adopted a
Resolution that created an urban renewal area that includes the City of Harris
and wind energy conversion property, as defined in Iowa Code [section] 427B.26,
located outside the City of Harris” and the “Resolution is unlawful because it
violates Iowa Code Chapter 403 and the Iowa Constitution.”
On November 10, the board of supervisors approved the final
consideration of Ordinance No. 47 and adopted it.
At the November 30 special session meeting of the board, the board
entered “into a written agreement with Osceola County confirming prior verbal
agreement and understanding.” The agreement in question is the “urban
renewal joint agreement” that was referenced in Resolution 10-15/16 as the “joint
agreement [that] has been executed and delivered by the City in satisfaction of
the consent requirement.” The written Urban Renewal Joint Agreement states
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the city and county has entered into the agreement verbally in August 2015 and,
at the request of the city, the county had “approved this written contract to
memorialize the Joint Agreement.” Additionally, the written agreement was
“intended to memorialize the prior verbal agreement between the parties and to
meet the statutory requirements of paragraph 4 of section 403.17 of the Code of
Iowa and shall be effective upon execution as of the date first listed above.” The
agreement was backdated to October 20, 2015—the date Resolution 10-15/16
was passed by the board.
In February 2016, the plaintiffs filed a motion for summary judgment.
They maintained Osceola County had acted illegally when the board established
Urban Renewal Area 7, part of which lies within the City of Harris, without first
entering into the written Urban Renewal Joint Agreement with Harris.
Additionally, the plaintiffs asserted that Urban Renewal Area 7 was not an “area”
because it is not connected and the inclusion of wind energy conversion property
violated the spirit of chapter 403. The defendants resisted the motion, and after
a hearing on it, the district court overruled it, finding there was a material factual
dispute about the timeliness of plaintiffs’ challenge to the ordinance—namely,
whether Ordinance No. 47 was adopted on October 20 or November 10.
Shortly thereafter, the plaintiffs filed a motion for leave to amend their
petition. The plaintiffs asked “the Court for leave to amend their petition to
include challenging the October 27, 2015 consideration of Ordinance No. 47 and
the November 10, 2015 consideration of Ordinance 47” and “to have the
amended Petition for Writ of Certiorari considered filed after the November 10,
2015 reading and adoption [of Ordinance 47].”
7
The defendants resisted the plaintiffs’ motion to amend their petition, and
they filed their own motion for summary judgment. In the defendants’ motion for
summary judgment, they asserted that insofar as the plaintiffs challenged
Ordinance No. 47, their petition was untimely. Additionally, the defendants
claimed the plaintiffs did not have standing to challenge Resolution 10-15/16
because the plaintiffs were not parties to the agreement and had not claimed
they were “injured in a special manner, different from that of the public generally”
by the creation of the Urban Renewal Area 7 and the urban renewal plan. The
city and county also maintained the plaintiffs’ claims could be dismissed by
summary judgment on the merits because the defendants had satisfied the
statutory requirements regarding the joint agreement and the “area” in Urban
Renewal Area 7 was “consistent with the purposes of the urban renewal statute
[section] 403 and is neither arbitrary or capricious.”
On September 2, the district court granted in part the plaintiffs’ motion to
amend their petition. The court allowed the plaintiffs to amend their petition “to
include claims challenging Defendant[s’] consideration of Ordinance No. 47 on
October 27, 2015 and November 10, 2015, with that amended petition being
deemed filed and served in the form attached to Plaintiff[s’] motion.” However,
the court denied the plaintiffs’ request that it “enter an order deeming that
amended petition as having been filed on November 10, 2015.” Rather, the court
ruled the plaintiffs’ amended petition “shall be deemed as relating back to the
filing date of their original petition, which was November 3, 2015.” The plaintiffs’
amended petition included the claim that “Defendants . . . purportedly adopted an
Ordinance. Meetings in an attempt to adopt the Ordinance were held on October
8
20, 2015; October 27, 2015; and November 10, 2015”: and the “Resolution and
Ordinance [are] unlawful.”
On September 16, the district court ruled on the defendants’ motion for
summary judgment. The court concluded the plaintiffs’ petition—which was filed
on November 3, 2015—was timely to challenge the passing of Resolution 10-
15/16 (which occurred on October 20) but was filed early and untimely as to the
final approval and adoption of the Ordinance No. 47 (which took place on
November 10). The court determined the untimely filing deprived it of jurisdiction
to decide the plaintiffs’ claims about the ordinance, leaving only the plaintiffs’
claims regarding the legality of the board’s actions in passing the resolution.
In deciding whether the plaintiffs lacked standing to challenge the
resolution, the district court distinguished between the result of the adoption of
Resolution 10-15/16 and Ordinance No. 47. The court found the resolution had
merely created Urban Renewal Area 7, which the plaintiffs had not shown had
harmed them in any way, while “the passage of the Ordinance . . . provided for
the TIF district which, in turn, could possibly affect property taxation by freezing
the tax receipts going to basic services so that more money can go to pay for
rehabilitation in Area 7.” The court concluded the plaintiffs could not show
Resolution 10-15/16 had harmed them in some special manner, so they lacked
standing to challenge it. The court did not reach the merits of plaintiffs’ claims
and dismissed the plaintiffs’ petition; they appeal.
II. Standard of Review.
“We review a grant of a motion for summary judgment for correction of
errors at law.” Concerned Citizens, 878 N.W.2d at 258. “Issues of statutory
9
construction are legal questions and ‘are properly resolvable by summary
judgment.’” Id. “Our task on appeal is to determine only whether a genuine
issue of material fact exists and whether the law was correctly applied.” Rants v.
Vilsack, 684 N.W.2d 193, 199 (Iowa 2004).
III. Discussion.
A. Timeliness and Jurisdiction.
The plaintiffs maintain the district court erred in finding its petition was
untimely as to the ordinance; they assert the board acted illegally on each of the
three occasions it considered Ordinance No. 47 (October 20 and 27, and
November 10) and claim “each individual action that the county took is
challengeable by certiorari.” We disagree.
Pursuant to Iowa Rule of Civil Procedure 1.1402(3), petitions for writ of
certiorari “must be filed within 30 days from the time the tribunal, board or officer
exceeded its jurisdiction or otherwise acted illegally.” Our case law provides that
“the time at which a tribunal acted illegally occurs when the underlying
proceeding becomes final.” Sergeant Bluff-Luton Sch. Dist. v. City Council of
Sioux City, 605 N.W.2d 294, 297 (Iowa 2000) (emphasis added) (citing Iowa
Rule of Civil Procedure 307(c), now renumbered as rule 1.1402(3)). The
adoption of Ordinance No. 47 was not final until November 10. See Iowa Code
§ 331.302(6)(b) (“A proposed ordinance . . . shall be considered and voted on for
passage at two meetings of the board prior to the meeting at which it is finally
passed.”). The plaintiffs attempt to muddy the waters by claiming it is unclear
what constitutes a “final action” in adopting an ordinance, but section
10
331.302(6)(b) explicitly states that it is a meeting after an ordinance is twice
considered and voted on “at which it is finally passed.” (Emphasis added.)
Because the final action in the adoption of the ordinance took place on
November 10, the plaintiff’s November 3 petition challenging the ordinance 3 was
untimely. See Iowa R. Civ. P. 1.1402(3). “An untimely petition for writ of
certiorari deprives the court of subject matter jurisdiction.” Sergeant Bluff, 605
N.W.2d at 297. Thus, the district court did not err in dismissing the plaintiff’s
claims insofar as they challenged Ordinance No. 47. See Lloyd v. State, 251
N.W.2d 551, 558 (Iowa 1977) (“If the court has no subject matter jurisdiction it
has no power to enter a judgment on the merits and must dismiss the action.”).
B. Standing.
Here, the district court found that the plaintiffs had not been injuriously
affected by the creation of Urban Renewal Area 7 and the corresponding urban
renewal plan, and thus they lacked standing to challenge the board’s decision to
adopt the resolution.
In order to have standing to sue, “a party must have ‘sufficient stake in an
otherwise justiciable controversy to obtain judicial resolution of that controversy.’”
Alons v. Iowa Dist. Ct., 698 N.W.2d 858, 863 (Iowa 2005) (citations omitted). “As
far as Iowa law is concerned, this means ‘that a complaining party must (1) have
a specific or personal legal interest in the litigation and (2) be injuriously
affected.’” Id. at 864 (citation omitted). “Only a likelihood or possibility of injury
need be shown. A party need not demonstrate injury will accrue with certainty, or
3
As noted above, the plaintiffs’ original petition did not challenge the ordinance, but the
district court allowed the plaintiffs to amend their petition and ruled the amended petition
would be considered as filed on the same date as the original.
11
already has accrued.” Iowa Bankers Ass’n v. Iowa Credit Union Dep’t, 335
N.W.2d 439, 445 (Iowa 1983).
Certiorari, which is an extraordinary remedy, is available to
all persons who show a substantial interest in the activity
challenged. Generally, only a party to an action may obtain the
writ. An exception exists, however, when the public is concerned
with the subject matter of the action, in which case anyone
interested may petition. In order for persons who are not parties to
assert a claim, they must prove that they have been injured in a
special manner, different from that of the public generally.
State v. West, 320 N.W.2d 570, 573 (Iowa 1982) (citations omitted).
In other words, because the plaintiffs were not parties to the resolution,
they must satisfy the public interest exception in order to have standing. See
Alons, 698 N.W.2d at 864. “It is clear that mere citizenship confers no right to
maintain the action.” Polk Cty v. Dist. Ct., 110 N.W. 1054, 1054 (Iowa 1907). “A
general interest shared by all citizens in making sure government acts legally is
normally insufficient to support standing . . . .” Godfrey v. State, 752 N.W.2d 413,
423–24 (Iowa 2008). However, a taxpayer can acquire “standing by showing
some link between higher taxes and the government action being challenged.”
Id. at 424.
The defendants maintain the plaintiffs have failed to allege any damages
or injuries. We disagree. In their petition, the plaintiffs contend they are
“residents and taxpayers of Osceola County” and “[t]hey reside and pay taxes in
Osceola County.” This assertion is supported by the individual plaintiffs’
response to interrogatories. And as our supreme court has recognized, “By its
nature, TIF diverts property tax revenue that would otherwise be available to the
regular taxing districts.” Concerned Citizens, 878 N.W.2d at 254. “[A] taxpayer
12
may maintain an action in his own name to prevent unlawful acts by public
officers which would ‘increase the amount of taxes he is required to pay, or
diminish a fund to which he has contributed.’” Polk Cty, 110 N.W. at 1055. In
their resistance to the defendants’ motion for summary judgment, the plaintiffs
echoed these sentiments, claiming:
The money captured in tax increment comes from wind energy
conversion property in Osceola County. Diverting this money into
the tax increment removes the money from the county’s tax rolls
and limits the general funds available for county projects and
expenses. All Plaintiffs, as taxpayers, contribute to the county’s tax
revenue. . . . The litigants are facing higher taxes as the result of
illegal action by Defendant. A successful challenge to the
governmental action at issue in this case will result in theoretically
lower taxes.
Additionally, the district court’s ruling granting the defendants’ motion for
summary judgment based its decision on the plaintiffs being taxpayers, noting
that to have standing, the plaintiffs had to “show their property taxes will be
increased.” While the defendants question whether the plaintiffs have alleged an
injury, we believe the issue turns on whether that injury is “purely hypothetical”—
as the district court found—or “sufficiently likely,” so to confer standing.
According to case law, plaintiffs who want to challenge the inclusion of
certain land in an urban renewal plan and TIF district must file their challenge
within thirty days of the board’s decision to include that land in the project rather
than waiting until the resulting taxes are levied. See Sergeant Bluff, 605 N.W.2d
at 295 (“Had the city not designated [the land] as urban renewal property, the
school district could not have been affected by the TIF tax plan levied
therefrom. . . . Stated another way, the legality of the tax levy is dependent upon
the legality of the classification of the property from which the levy flows.”). Here,
13
the plaintiffs did so; they filed their petition for writ of certiorari within thirty days of
the land being placed in the urban renewal area and the adoption of the urban
renewal plan.4
We do not believe establishing an urban renewal area is always sufficient
to confer standing on individuals. However, under these undisputed facts, the
adoption of the resolution creating the urban renewal area was part of an overall
plan to create a TIF district, which was imminent, or at least likely, at the time the
plaintiffs’ filed their petition. Cf. Iowa Bankers, 335 N.W.2d at 445 (“A party need
not demonstrate injury will accrue with certainty, or already has accrued.”); see
Godfrey v. State, 752 N.W.2d 413, 421–22 (Iowa 2008) (“[T]he plaintiff must
establish ‘a causal connection between the injury and the conduct complained of’
and that the injury is ‘likely, as opposed to merely speculative’ ‘to be redressed
by a favorable decision.’” (citations omitted)). In other words, we believe there is
a link between the passing of Resolution 10-15/16 and the intended (and partially
completed) goal of passing Ordinance No. 47, and we believe the passing of
Ordinance No. 47 was “likely, as opposed to merely speculative.” 5 Godfrey, 752
N.W.2d at 421–22.
4
If Sergeant Bluffs stands for the proposition that the plaintiffs must challenge the
legality of the urban renewal area and plan, but the district court is right that the “specific
injury” which gives the parties standing comes from the adoption of the TIF district,
future plaintiffs could be prevented from ever being able to challenge a board’s decision;
county boards could simply choose to pass resolutions creating the urban renewal area
and plan and then wait more than thirty days to pass the ordinance adopting the TIF
district.
5
The district court disagreed, finding “[a] challeng[e] only to the legality of the Resolution
and corresponding creation of Area 7 is a purely hypothetical risk contingent on the
passage of the Ordinance establishing the TIF district.” In doing so, the district court
seems to ignore all the facts, as they existed at the time the plaintiff’s filed their petition,
surrounding the ordinance. We agree that the plaintiffs’ motion was untimely as to the
consideration of whether the ordinance was legal, but we do not believe that requires us
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The county had to pass the resolution creating the urban renewal area in
order to pass Ordinance No. 47 creating the TIF district. See Iowa Code
§ 403.19 (“A municipality may provide by ordinance that taxes levied on taxable
property in an urban renewal area each year by or for the benefit of the state,
city, county, school district, or other taxing district, shall be divided as
follows . . . .” (emphasis added)). Additionally, we know that the resolution was
passed in anticipation of establishing the TIF district. The city’s first letter on the
subject, in March of 2015, asked the county to create a TIF district; the attorney
hired by the county had written a letter in August 2015 expressing his
understanding that he was being hired to create a TIF district; and the ordinance
that would actually create the TIF district and cause the specific harm was two-
thirds of the way to being adopted when the plaintiffs filed their petition.
Because the defendants had to first pass Resolution 10-15/16 in order to
create the TIF district, and it was likely Ordinance No. 47 would pass and the
resulting specific harm would occur, the plaintiffs have standing to bring their
challenge to the resolution.
IV. Conclusion.
We agree with the district court that the plaintiffs’ petition for writ of
certiorari and declaratory judgment was untimely to challenge Ordinance No. 47,
and we affirm the district court’s grant of defendants’ motion for summary
judgment on that ground and dismissal of the corresponding claim. However,
because we find the plaintiffs have standing to bring their challenge to Resolution
to ignore facts surrounding the county board’s actions as they pertain to whether the
ordinance was likely to be passed.
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10-15/16, we reverse and remand for further proceedings. On remand, the
plaintiffs may refile their motion for summary judgment or the claims regarding
Resolution 10-15/16 may be set for trial.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.