Property Taxes and the Iowa Supreme Court

So I’m catching up on my Iowa Supreme Court cases, today. I just finished Soifer v. Floyd County Board of Review and, have to say, I respectfully disagree with the Court’s decision, and the precedent it followed.

It appears clear to me that the assessed value of a property should be based solely on the property’s inherent value. Sure, you can say this property is set up as a restaurant, so it should have a similar value to other reastaurant properties. In Soifer, though, the Court says that the assessed value of a McDonald’s restaurant is best determined by comparing it to the sales of other fast-food franchise restaurants sold as going concerns, meaning that someone is buying both the real estate and the business.

To me, when you value something based on that much specificity of its use, you begin to add some of the value of the business as a going concern to the value you are taxing. You no longer are taxing just the value of the property, but also the intangible value that a particular business brings to the site.

In my opinion, properties should be valued as if they were empty, without any business to speak of. A restaurant is a restaurant, but you can certainly place a value on the land and the structure without looking at the success of the business that occupies the space.

I think this may be an issue that the legislature should take up, as there is a string of cases that the Court relied on in Soifer, and it doesn’t appear that they are making any plans to right the ship.