By PETER HUSSMANN
The Iowa Court of Appeals today upheld a Jasper County District Court decision that allows the owners of two 24-unit apartment complexes in southwest Newton to have their properties classified as residential rather than commercial because they met the requirements of state code as multiple unit housing cooperatives.
The Jasper County Board of Review appealed District Court Judge Dale Hagen's April ruling allowing the reclassification for tax purposes again arguing the actual use of the property did not meet the spirit of the law pertaining to housing cooperative operations.
In denying the county's appeal, the appeals court found that the property owners Larry and Connie Krupp of Nevada had complied with state laws in regard to the establishment of a multiple housing cooperative. It further noted that entities organized under code chapter "shall be considered residential real estate."
The case arose in June 2008 when the Krupps appealed their property assessments and classifications to the county board of review. The board agreed to lower the values on the two buildings but did not agree to change the classification from commercial to residential as requested by the Krupps, which led to the appeal to the district court.
In February, Judge Hagen sided with the board of review stating there was a lack of proof the cooperatives were actually operating as multiple housing cooperatives instead of standard rental properties. However, two months later he changed his ruling after documentation was produced that showed the Krupps were operating within the parameters of the states cooperatives law.
"We conclude the property owned by the cooperatives in the case before us must be classified as residential property for taxation purposes," the court wrote in its ruling today.
Appeals Court Judge David Danilson dissented saying the Iowa Supreme Court has previously ruled that "transforming a mere tenancy to cooperative ownership may not be sufficient to merit preferential property tax treatment."
He went on to note that in the case at hand, "the tenants lack even a pseudo ownership certificate and only the two members, Larry Krupp and Connie Krupp, manage and own the forty-eight apartment units."
"Under these stipulated facts, no legitimate claim can exist that Krupp Place 1 and Krupp Place 2 are 'cooperatives' and deserve residential property status for tax purposes," Judge Danilson's dissent concludes.
A previous Newton Independent story on the case can be read here.
