Wellmark, Inc. v. Polk County Board of Review
2016 Iowa Sup. LEXIS 16
| Iowa | 2016Background
- Wellmark completed a 600,000‑sq ft, LEED‑Platinum corporate headquarters in downtown Des Moines in 2010; construction cost exceeded $150 million and the building provides class‑A, single‑tenant office space.
- Polk County Assessor set the January 1, 2011 assessed value at $99 million; Wellmark protested claiming $72 million. The Polk County Board of Review denied the protest.
- At bench trial four appraisers testified using comparable‑sales, income, and cost approaches; Wellmark’s experts valued the property as a multitenant office building given the limited local market for single‑tenant headquarters, while the Board’s experts valued it as a single‑tenant owner‑occupied headquarters relying more on national owner‑occupied comparables and cost.
- The district court concluded market comparables were not reliable and set value at $78 million; the court of appeals affirmed. The Iowa Supreme Court granted further review.
- The Supreme Court held market value could not be readily established by comparable sales but nevertheless concluded the property should be valued based on its current single‑tenant use and that the $99 million assessment was supported, reversing the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper basis for valuation: current single‑tenant use vs. multitenant market use | Wellmark: Local market would not support sale to a single‑tenant headquarters buyer; value should be measured as multitenant/investor property (market conversion) | Polk County/Board: Value should reflect current use as single‑tenant owner‑occupied headquarters; national single‑tenant comparables and cost approach are appropriate | Court: Market comparables were unreliable but current use is relevant; presumed hypothetical buyer for current use exists — value on current use and cost approach supports $99M |
| Whether market value could be "readily established" by comparable sales | Wellmark: Comparable sales do not reflect Des Moines market; thus market value not readily established and other‑factors may be used | Board: Comparable sales and national owner‑occupied transactions support assessment; market value can be established | Court: Agreed comparable‑sales were not readily conclusive, permitting use of other factors; nevertheless valuation should reflect current use |
| Use of cost approach vs. income/market approaches when comparables lacking | Wellmark: Cost approach would overstate value given limited demand; income/multitenant approach better reflects realistic sale prospects | Board: Cost approach appropriate for a distinctive, owner‑occupied headquarters with limited depreciation since new | Held: Cost approach is the best mechanism here and does not overstate value given facts; supports $99M assessment |
| Consideration of "special value" or intangibles tied to current owner | Wellmark: The building’s special design and owner‑specific features reduce market value if forced into multitenant market | Board: Features are valuable to other potential corporate buyers and not mere owner‑specific intangibles | Court: Narrow statutory exception — only owner‑exclusive special value excluded; many improvements would have value to other enterprises, so they may be included in valuation |
Key Cases Cited
- Seagram v. Tax Comm’n, 200 N.E.2d 447 (N.Y. 1964) (recognizing cost and value‑in‑use considerations for unique headquarters)
- Wisconsin ex rel. Northwestern Mut. Life Ins. Co. v. Weiher, 188 N.W. 598 (Wis. 1922) (market value measured by likely sale uses rather than present owner’s special use)
- Pacific Mut. Life Ins. Co. v. County of Orange, 232 Cal. Rptr. 233 (Ct. App. 1985) (valuing distinctive HQ by likely multitenant market when local comparables control)
- CPC Int’l v. Borough of Englewood Cliffs, 473 A.2d 548 (N.J. Super. Ct. App. Div. 1984) (accepting hypothetical buyer continuing current use where market for similar buyers can be presumed)
- Nestle USA, Inc. v. Wisconsin Dep’t of Revenue, 795 N.W.2d 46 (Wis. 2011) (rejecting taxpayer’s claim that absence of comparable sales proves no market for current specialized use)
- Bankers Life Co. v. Zirbel, 31 N.W.2d 368 (Iowa 1948) (Iowa precedent recognizing cost and other factors where market data lacking)
- Maytag Co. v. Partridge, 210 N.W.2d 584 (Iowa 1973) (applying other‑factors approach for specialized manufacturing property when comparables unavailable)
- Soifer v. Floyd County Bd. of Review, 759 N.W.2d 775 (Iowa 2009) (narrow construction of statutory exclusion for owner‑specific special value)