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IN THE IOWA SUPREME COURT

KRUPP PLACE 1 CO-OP, INC. and KRUPP PLACE 2 CO-OP, INC.,



Plaintiffs-Appellees,

v.

BOARD OF REVIEW OF JASPER COUNTY, IOWA,

Defendant-Appellant.

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) Supreme Court No. 09-0654 ) Court of Appeals No. 9-938

) Jasper County No. EQCV114993 )

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APPEAL FROM THE IOWA DISTRICT COURT FOR JASPER COUNTY THE HONORABLE DALE HAGEN, JUDGE

FURTHER REVIEW OF DECISION OF THE IOWA COURT OF APPEALS FILED DECEMBER 30, 2009

BRIEF OF AMICUS CURIAE

CITY OF IOWA CITY AND IOWA LEAGUE OF CITIES

Eleanor M. Dilkes, City Attorney

Eric R. Goers, Assistant City Attorney 410 East Washington Street

Iowa City, IA 52240

(319) 356-5030; (319) 356-5008 Fax; icattomey@iowa-city.org ATTORNEY FOR AMICUS CURIAE CITY OF IOWA CITY

Terry Timmins, General Counsel Iowa League of Cities

317 Sixth Avenue, Suite 800 Des Moines, Iowa 50309

ATTORNEY FOR AMICUS CURIAE IOWA LEAGUE OF CITIES

TABLE OF CONTENTS

TABLE OF AUTHORITIES iii

STATEMENT OF ISSUES FOR REVIEW . . . . . . . . . . . . . . . . . . . . .. 1

. STATEMENT OF IDENTITY AND INTEREST 2

STATEMENT OF THE CASE 3

STATEMENT OF THE FACTS 3

THE COURT OF APPEALS ERRED IN DETERMINING

THAT THE PLAINTIFF-APPELLEES WERE ESTABLISHED AS MULTIPLE HOUSING COOPERATIVES IN COMPLIANCE

WITH CHAPTER 499A OF THE IOWA CODE 4

PRE~LE 3

ARGUMENT 4

CONCLUSION '.' 9

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS AND TYPE-STYLE

REQUIREMENTS 10

ATTORNEY'S COST CERTIFICATE 10

CERTIFICATE OF FILING '" 11

CERTIFICATE OF SERVICE 11

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TABLE OF AUTHORITIES

Cases

City of Newton v. Board of Review for Jasper County,

532 N.W.2d 771 (Iowa 1995) .4, 5, 7

Grove v. City of Des Moines,

280 N.W.2d 378 (Iowa 1979) 8

Iowa Ass'n of School Boards v. Iowa Dept. ofEduc.,

739 N.W.2d 303 (Iowa 2007) 6

Statutes

Section 4.1(17), Code ofIowa 8

Section 4.2, Code ofIowa 8 .

Section 229.8(1), Code ofIowa 8

Section 441.21(11), Code oflowa ~ 8

Section 441.21, Code ofIowa 5

Chapter 499A, Code ofIowa passim

Section 499A.3C, Code of Iowa 7

Section 499A.l1, Code of Iowa 5, 6, 7

Section 499A.14, Code ofIowa 7

Section 499A.18, Code ofIowa 8

Other Authorities

Merriam-Webster's Collegiate Dictionary, 11th ed. (2003) : 6

Rules

Rule 6.906(2), Iowa Rules of Appellate Procedure 4

Treatises

15A Am. Jr. 2d Condominiums and Cooperative Apartments §62 (2010) .4, 5

15A Am.Jur.2d Condominiums and Co-Operative Apartments §59 (1976) ~ .4

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STATEMENT OF ISSUES FOR REVIEW

WHETHER THE COURT OF APPEALS ERRED IN DETERMINING THAT THE PLAINTIFF-APPELLEES WERE ESTABLISHED AS MULTIPLE HOUSING COOPERATIVES IN COMPLIANCE WITH CHAPTER 499A OF THE IOWA CODE

Chapter 499A, Code of Iowa

15A Am.Jur.2d Condominiums and Co-Operative Apartments §59 (1976) 15A Am.Jur.2d Condominiums and Cooperative Apartments §62 (2010)

City of Newton v. Board of Review for Jasper County, 532 N.W.2d 771 (Iowa 1995)

Section, 441.21, Code of Iowa

Section 499A.11, Code of Iowa

Iowa Ass'n of School Boards v. Iowa Dept. ofEduc., 739 N.W.2d 303 (Iowa 207)

Merriam-Webster's Collegiate Dictionary, 11th ed. (2003)

Section 499A.14, Code of Iowa

Section 441.21 (11), Code of Iowa

Section 4.1(17), Code of Iowa

Grove v. City of Des Moines, 280 N.W.2d 378 (Iowa 1979)

Section 4.2, Code of Iowa

Section 229.8(1), Code of Iowa

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STATEMENT OF IDENTITY AND INTEREST

The City of Iowa City (City) is a municipal corporation within the State of Iowa. The City has a direct interest, as a taxing body, in several other cases currently being litigated by the Iowa City Board of Review in Johnson County District Court that may be materially affected by the outcome of this case. Based on January 1, 2007 property valuations, the City has $387,311,760 worth of apartments classified as commercial property. Based on those 2007 values, and the latest levy and rollback figures, if these commercial apartments were all reclassified as residential property for taxation purposes, the City would stand to lose $3,670,966 annually.

The Iowa League of Cities (League) is an association of more than eight hundred seventy (870) of the nine hundred forty-seven (947) cities in the State of Iowa, whose purpose is to provide a supporting role to those cities in interpreting statutes and in determining legal issues which affect cities. The League has researched and advised cities on property tax issues, which serve as the primary funding source for most cities. The potential conversion of all commercial apartments to residential classification through the formation of "cooperatives" would impose severe limitations on the ability of cities to provide their citizens with services. Based on the most recent tax levies and rollback figures, conversion of all commercial apartments to

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STATEMENT OF THE CASE

residential classification, based on 2007 values, would result in the statewide loss to cities of tens of millions of dollars annually.

The City and the League adopt the Statement of the Case set out in Defendant-Appellee's brief to the Court of Appeals, filed with the Clerk of the Supreme Court on September 24,2009.

STATEMENT OF THE FACTS

. The City and the League adopt the Statement of the Facts set out in Defendant-Appellee's brief to the Court of Appeals, filed with the Clerk of the Supreme Court on September 24, 2009.

PREAMBLE

Neither the City nor the League took part in the trial of this case, nor did either take part in the briefing of the case before the District Court or Court of Appeals. The City reviewed the decision of the Court of Appeals and determined the holding would have significant impact on the City. The League reviewed the decision of the Court of Appeals and determined that the issue in this matter is of statewide interest to all cities and to the League itself. This Brief Amicus Curiae is submitted conditionally, in accordance with Iowa

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R. App. P. 6.906(2), subject to the Supreme Court's approval of either or both

of the City's and League's application for leave to file thebrief

ARGUMENT

THE COURT OF APPEALS ERRED IN DETERMINING THAT THE PLAINTIFF-APPELLEES WERE ESTABLISHED AS MULTIPLE HOUSING COOPERATIVES IN COMPLIANCE WITH CHAPTER 499A OF THE IOWA CODE.

"A 'cooperative' is generally defined as a multiunit dwelling in which

~ach resident has (1) an interest in the entity owning the building, and (2) a

lease entitling the member to occupy a particular apartment within the

building." City of Newton v. Board of Review for Jasper County, 532 N.W.2d

1995, a cooperative "is a vehicle for the common ownership of property, a

771, 774 (Iowa 1995) (quoting 15A Am.Jur.2d Condominiums and Co-

Operative Apartments §59 (1976)); see also 15A AmJur.2d Condominiums

and Cooperative Apartments §62 (2010). The Multiple Housing statute, Iowa

Code chapter 499A, dates back to 1947. As the Supreme Court recognized in

means of enabling the occupants - as members of the cooperative - to own,

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manage, and operate the apartment without anyone profiting therefrom." City

of Newton, 532 N.W. 2d at 774.

Logically, property owned by a residential cooperative is given the

benefit of a residential tax classification, and thus the residential rollback,

pursuant to Iowa" Code section 441.21. Both this Court and legal treatises have made liberal reference to the cooperative "resident" in describing the members of the cooperatives. See 15A AmJur.2d Condominiums and Cooperative Apartments §62-87 (2010); City of Newton, 532 N.W. 2d at 774. The whole point of cooperatives is to benefit the residents, who are the members or owners of the cooperative, not the" absentee landlord who owns and profits from all of the units.

In the proceedings below, the parties and the courts presumed that the Krupp cooperatives were established in compliance with chapter 499A. It is the contention of the amicus curiae that a close reading of the statute reveals quite clearly that the Krupp cooperatives are not in compliance with chapter 499A. The Krupps have not only circumvented the intent of the law, as the dissent in the Court of Appeals lamented, but have also circumvented the letter of the law. "

The Krupps argued in the Court of Appeals that they have complied with Iowa Code section 499A.ll because the cooperatives have entered "into proprietary leases with the members, Larry and Connie Krupp, granting the members an exclusive possessory interest in the units each of them leases under such proprietary lease with the cooperative." Final Brief of PlaintijfAppellees at p. 20.

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However, Iowa Code section 499A.II states, in part:

The certificate of membership is coupled with a possessory interest in the real and personal property of the cooperative, entitling each member to a proprietary lease with the cooperative under which each member has an exclusive possessory interest in an apartment unit and a possessory interest in common with all other members ... " (emphasis added.)

The term "an" is not defined in Iowa Code chapter 499A. Consequently,

the Court must engage in statutory interpretation. "The goal of statutory

interpreta~ion is to ascertain legislative intent, and that intent is determined by

"the words chosen by the legislature." Iowa Ass'n of School Boards v. Iowa

Dept. of Educ., 739 N.W.2d 303, 309 (Iowa 2007). (internal citations

common usage." Id. In addition, the Court "consider[s] the context of the

omitted). When terms are not defined in the statute, the Court looks to "prior

dec~sions of this court and others, similar statutes, dictionary defmitions, and

provision[s] at issue and interpret[s] the provision[s] consistent with the entire

statute of which [they are] a part." Id.

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"An" is commonly used to refer to "one." The definition of "an" IS

"one." Merriam-Webster's Collegiate Dictionary, 11th ed. (2003). Thus,

Section 499A.Il allows each member to have a lease to one apartment unit,

not multiple apartment units. This interpretation is entirely consistent with

the legislative intent of chapter 499A. Each member has a lease to one unit.

If there are 12 units, there are 12 members; each member has one vote pursuant to section 499A.3C and the purpose of the statute, as recognized by this Court in City of Newton, is fulfilled. In other words, the cooperative has "enabl[ ed] the occupants - as members of the cooperative - to own, manage, and operate the apartment without anyone profiting therefrom." City of Newton at 774. This interpretation also is consistent with the provisions of the statute which, as argued by the Krupps below, contemplate a member not occupying a unit or subleasing a unit. See, ~ section 499A.14 ("each member occupying an apartment as a residence shall receive that member's proportionate homestead tax credit"). Thus, while each member may control possession to only one unit, a member, as any other homeowner, may choose to sublet the unit or leave the unit vacant.

In this case, Larry and Connie Krupp each have a proprietary lease with the cooperative and a possessory interest in not one, but twelve apartment units. The entities created by the Krupps do not comply with the requirements of section 499A.11 which allows each member "an apartment unit". This deficiency is not a trivial one, but rather, one that allows the

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Krupps to circumvent the purpose of the statute in a blatant attempt to obtain

a tax classification to which they are not entitled. 1

residential classification.

Th~t section states, in relevant part, that

The Krupps may not rely on Iowa Code section 441.21 (11) to gain

" ... 'residential property' includes all land and buildings of multiple housing

cooperatives organized under chapter 499A .... " Because the Krupp

cooperatives do not comply with the organizational requirements of Iowa

Code chapter 499 A, they are not entitled to the benefits of 441.21 (11 ).

I The City and League anticipate an argument by the Krupps that use of the term "an apartment unit" includes the plural because of section 4.1(17) of the Iowa Code. This Court has explained that the principle of section 4.1(17) is "incorporated into the interpretive section of the Code to avoid the necessity of using both singular and plural words throughout the Code [and] the rule does not apply where, for example, other sections or the framework of the statute demonstrates that the singular was intended." Grove v. City of Des Moines, 280 N.W.2d 378, 384 (Iowa 1979). The interpretive sections also require that the provisions of the Code be "liberally construed with a view to promote its objects". Iowa Code section 4.2 (2009). Finally, there are many provisions of the Code where "a" or "an" means "one" and an interpretation of the word as plural would lead to absurd results. See, e.g. Iowa Code section 499A.18 ("[ e ]ach individual apartment constitutes ~homestead and is exempt for execution ... " (emphasis added); Iowa Code section 229.8(1) ("The court ... shall assign to the respondent, an attorney") (emphasis added).

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CONCLUSION

Because the Krupps have failed to comply with either the letter or the

spirit of Iowa Code chapter 499A, the City and League ask that the Court

reverse the Court of Appeals, and hold that the Plaintiffs-Appellees are not

entitled to a residential tax classification.

CITY OF IOWA CITY

Eleanor M. Dilkes City Attorney

BY:,---~---= __ " _

Eric R. Goers AT0002835

Assistant City Attorney

410 East Washington Street Iowa City, IA 52240

·Tel: (319) 356-5030

Fax: (319) 356-5008 icattorney@iowa-city.org ATTORNEYS FOR AMICUS CURIAE CITY OF IOWA CITY

AT0002217

IOWA LEAGUE OF CITIES

By: --C~-r;ffLMIM~~2~

Terry T mins PKOO 005624

General Counsel

Iowa League of Cities

317 Sixth Avenue, Suite 800 Des Moines, IA 50309

ATTORNEY FOR AMICUS CURIAE IOWA LEAGUE OF CITIES

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CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS AND TYPE-STYLE REQUIREMENTS

This brief contains 1,619 words, excluding the parts of the brief exempted by Iowa R. App. P. 6.903(1)(g)(1) .

1. This brief complies with the type-volume limitation of Iowa R. App. P.

6.903(1)(g)(1) or (2) because:

. 2. This brief complies with the typeface requirements of Iowa R. App. P.

6.903(1)(e) and the type-style requirements of Iowa R. App. P. 6.903(1)(f) because:

This brief has been prepared in a proportionally spaced typeface using Microsoft Word 2003 in 14 pt. Times New Roman.

Eric R. Goers

ATTORNEY'S COST CERTIFICATE

I hereby certify that the actual cost of reproducing the necessary copies of the preceding City of Iowa City's and Iowa League of Cities' Brief Amicus Curiae was $52~5~

Eric R. Goers

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CERTIFICATE OF FILING

I hereby certify that on April 30, 2010, I filed the Brief Amicus Curiae of the City of Iowa City and the Iowa League of Cities with the Clerk of the Iowa Supreme Court by mailing eighteen (18) copies thereof in the United States Mail with sufficient postage thereon to: Clerk of the Supreme Court of Iowa, Iowa Judicial Branch Building, 1111 East Court Avenue, Des Moines, Iowa 50319.

Eric R. Goers

CERTIFICATE OF SERVICE

I hereby certify that on April 30, 2010, I served two (2) copies of the City of Iowa City's and Iowa League of Cities' Brief Amicus Curiae by depositing the same in the regular mail with sufficient postage thereon and addressed to the following counsel:

Michael Jacobsen Jasper County Attorney

114 West Third Street North Newton, IA 50208

James Nervig Brick Gentry, P.C.

6701 WestownParkway # 1 00 West Des Moines, IA 50266

Craig Hastings

Hastings & Gartin, L.L.P. 409 Duff

Ames, IA 50010

Eric R. Goers

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