              IN THE SUPREME COURT OF IOWA
                           No. 101 / 05-0818

                         Filed October 27, 2006

CITY OF ASBURY, IOWA,

      Appellee,

vs.

THE IOWA CITY DEVELOPMENT
BOARD,

      Appellant.

and

CITY OF DUBUQUE,

      Intervenor-Appellant.

________________________________________________________________________
      Appeal from the Iowa District Court for Dubuque County,

Lawrence H. Fautsch, Judge.



      A city appeals the district court’s decision nullifying the city’s

annexation of adjacent land. REVERSED.


      Thomas J. Miller, Attorney General, and Michael H. Smith,

Assistant Attorney General, for appellant Iowa City Development Board.



      Frank Murray Smith, of Frank Smith Law Office, Des Moines, and

Barry A. Lindahl, Dubuque, for appellant City of Dubuque.



      Thomas Henderson, John F. Fatino, and Karin M. Sinnard of

Whitfield & Eddy, P.L.C., Des Moines, for appellee.
                                          2

STREIT, Justice.

       When does a carrot become a stick?                Competing for common

ground, the City of Asbury objects to the tactics the City of Dubuque

used to voluntarily annex land.            After the City Development Board 1

(CDB) approved Dubuque’s annexation application, Asbury appealed to

the district court arguing Dubuque’s application should have been

dismissed because Dubuque coerced property owners into consenting to

the annexation by offering them tax and other financial benefits

conditioned on each property owner’s consent.              In response, Dubuque

argued the offered benefits merely encouraged property owners to

consent to annexation. The district court agreed with Asbury and found

Dubuque’s annexation process invalid.              Because we find Dubuque’s

tactics were not prohibited by law, we reverse.
       I. Facts and Prior Proceedings

       Asbury is west of Dubuque. An irregular gap exists between the

two cities.    The territory at issue in this case is between the western

boundary of Dubuque and the southern boundary of Asbury.

       Callahan Construction, which owns approximately 114 acres of

unincorporated land in this area, asked Dubuque to annex its land in

order to facilitate the development of a housing subdivision. Dubuque

also received annexation requests from various members of the Bahl

family, who separately own several parcels of land totaling approximately

408 acres, which is most of the remaining unincorporated land between

Dubuque and Asbury. Dubuque could not annex the Bahl and Callahan

properties without also annexing the surrounding parcels of property.


       1“The City Development Board is the administrative board established to
exercise administrative jurisdiction over annexation petitions.” Dunn v. City Dev. Bd.,
623 N.W.2d 820, 821 (Iowa 2001) (citing Iowa Code § 368.9 (1997)).
                                           3

This is because the annexation of the Bahl and Callahan properties alone

would have created “islands” of unincorporated land, which is prohibited

by statute. See Iowa Code § 368.7(3) (Supp. 2003) 2 (“The [CDB] shall not

approve an application which creates an island.”); id. § 368.1(10)

(defining an island as “land which is not part of a city and which is

completely surrounded by the corporate boundaries of one or more

cities”).     As a result, Dubuque pursued the annexation of twenty-nine

parcels of land or approximately 704 acres. Callahan Construction owns

two of these parcels (114 acres) and the Bahl family in total owns seven

(408 acres).        The remaining twenty parcels amount to 168 acres.

Dubuque’s annexation also included fifteen acres of county roads.
       Dubuque sought annexation consents from the owners of the

remaining twenty parcels in the proposed territory.                Dubuque’s city

manager and several Dubuque employees attempted to personally

contact each property owner in the annexation territory in order to

discuss the annexation and the transition benefits Dubuque was

proposing. 3      Additionally, the city manager attended a neighborhood

meeting with about thirty people in attendance.

       In an effort to entice the property owners in the proposed territory

to consent, Dubuque offered the following transition benefits to the

property owners within the territory:          (1) a five-year partial exemption

from city property taxes; (2) a reduced cost to voluntarily connect to

Dubuque sanitary sewer lines; (3) a reduced cost to connect to Dubuque

water lines; (4) consideration by Dubuque to enlarge Middle Road; and

       2All   references to the Iowa Code are to the 2003 Supplement unless otherwise
indicated.
       3
        It is unclear from the record how many individuals were actually contacted.
The city manager told the CDB Dubuque “made a very strong effort” to meet with
individuals face-to-face and answer questions.
                                         4

(5) deferral of any sewer connection costs until the property is sold.

These benefits were explained in an agreement entitled “Agreement

between and among the City of Dubuque, Iowa and Certain Property

Owners in Dubuque County, Iowa” (“Agreement”). The Agreement was

sent to each property owner along with a letter from Dubuque’s city

manager dated August 8, 2003. 4              In his letter, the city manager

explained “only those property owners who choose to sign this Agreement

[i.e. consent to Dubuque’s annexation] will be entitled to the benefits of

this Agreement.” The Agreement gave the property owners until August

14, 2003 to respond.         In the accompanying letter, the city manager

stated “[h]opefully, all of the property owners will sign this Agreement

and return it to my office not later than 5:00 p.m. on August 13, 2003 so

that it may be placed on the Agenda for the Dubuque City Council

meeting of August 18, 2003.”
       In the end, twenty-one of the twenty-nine property owners

(representing 643 acres) signed the Agreement and consented to

Dubuque’s annexation. The owners of the non-consenting parcels asked

Asbury to annex their land. Asbury agreed and on December 16, 2003,

Asbury filed an application for voluntary annexation with the CDB. On

January 9, 2004, Dubuque filed its voluntary annexation application

with the CDB for approximately 704 acres which included the land in

Asbury’s application. The CDB directed the two cities to meet and try to

resolve their competing annexation proposals. After the two cities were




       4
        It is also unclear how much time spanned between the initial contacts and the
August 8 letter. One property owner, Francis McDonald, told the CDB Dubuque “gave
us about three weeks to make up our mind if we wanted to join the City of Dubuque
voluntarily [inaudible].”
                                              5

unable to reach a compromise, the CDB dismissed Asbury’s application

because it would have created a proscribed island.

       The CDB proceeded with Dubuque’s application and conducted a

public hearing in Dubuque on April 1, 2004. In its presentation to the

CDB, Dubuque explained the necessity of the annexation as well as the

services Dubuque would provide to the territory.

       At the CDB hearing, Asbury objected to Dubuque’s annexation

application.     Asbury accused Dubuque of “bad faith” in obtaining the

consents of property owners in the proposed territory. Asbury claimed

Dubuque did not give the property owners adequate time to consider the

proposal.       Asbury’s biggest concern, however, was that Dubuque

conditioned the receipt of transition benefits on each property owner’s

consent.      Asbury argued this amounted to “undue pressure” and

questioned the voluntariness of the property owners’ consents.
       Additionally, several property owners within the proposed territory

spoke at the hearing. Members of the Bahl family spoke in favor of the

annexation. Other property owners spoke against the annexation. For

example, Joe and Mary Behnke through their attorney said they felt

“pressured and coerced by the representatives of [Dubuque]” to annex

their land.     Francis McDonald told the CDB he signed the Agreement

“under duress” in order to get the tax benefits. 5 Another property owner,
Pete Henkels, compared the conditioning of benefits on a property

owner’s consent to “bribery or extortion.” Douglas Fritch also spoke out

       5Mr.  McDonald used more force in his letter to the CDB. There, he claimed the
Dubuque employees told differing stories to the various property owners in the territory.
He stated “[t]his whole land grab is money driven by owners of four farms who want to
develop their land. When [Dubuque’s city manager] states 93% of the land and owners
are signed up this is a ‘Trojan horse.’ If it weren’t for the City’s all out campaign for this
program, the City of Dubuque would have only six property owners out of 26 who are
affected. We believe this is taking a very undemocratic approach to this situation.”
                                      6

against the “unethical treatment” of him and his neighbors by Dubuque.

According to Mr. Fritch, Dubuque estimated it would cost him about

$10,000 for “mandatory sewer hookup.” He signed the Agreement only

to defer that “huge cost” until he sold his property. Mr. Fritch also said

that he wanted to include a notation on the Agreement that he was

reluctantly signing but Dubuque would not let him.           In response to a

question by one of the CDB members, Dubuque reiterated its intention to

give the tax abatement only to the property owners in the territory who

consented to annexation.
        Shortly after the public hearing, Dubuque’s City Council passed

Resolution No. 174-04 which extended the transition benefits to those

property owners in the territory who had not consented to annexation.

Thereafter, Dubuque presented the CDB with a copy of the Resolution.

        The CDB met in Des Moines to deliberate and determine

Dubuque’s annexation request. At least four-fifths of the CDB members

voted    to   approve    the   annexation   as   required    by   Iowa   Code

section 368.7(1)(f).    The CDB filed its written decision concerning the

matter on July 7, 2004.

        Asbury filed a petition for judicial review in the district court for

Dubuque County. Based on the record, the district court reversed the

CDB’s decision approving Dubuque’s annexation.              The district court

found the annexation process invalid because Dubuque “unfairly

induced the property owners to the extent it placed the property owners

in a position of either agreeing to the annexation and receiving financial

benefits, or being denied financial benefits for refusing to agree to the

annexation.” Dubuque and the CDB appealed.
                                        7

      II. Standard and Scope of Review

      Iowa’s city development statute specifically limits judicial review of

a CDB decision. It states:

      The judicial review provisions of this section and chapter
      17A shall be the exclusive means by which a person or party
      who is aggrieved or adversely affected by agency action may
      seek judicial review of that agency action. The court's review
      on appeal of a decision is limited to questions relating to
      jurisdiction, regularity of proceedings, and whether the
      decision appealed from is arbitrary, unreasonable, or
      without substantial supporting evidence. The court may
      reverse and remand a decision of the board or a committee,
      with appropriate directions.

Iowa Code § 368.22 (2003). “On appeal, we decide whether the district

court correctly applied the law.”           Pruss v. Cedar Rapids/Hiawatha

Annexation Special Local Comm., 687 N.W.2d 275, 279 (Iowa 2004). If we

reach the same conclusions as the district court, we affirm; if not,

reversal may be required. Id.

      “The law of annexation is purely statutory.”          Id.   Nevertheless,

substantial compliance with our annexation statutes is sufficient. City of

Des Moines v. City Dev. Bd., 473 N.W.2d 197, 200 (Iowa 1991).               We

liberally   construe   “legislation   establishing   the   method   by   which

municipal corporate boundaries may be extended . . . in favor of the

public.” Id.
      III. Merits

      The question presented in this case is whether a city may offer tax

and other financial benefits to property owners on the condition they

consent to their properties’ inclusion in an 80/20 annexation.             The

district court answered this question in the negative. The district court

found Dubuque’s annexation was “irregular” for three reasons. First, it

held section 368.7(3), which explicitly allows city councils to offer
                                     8

property owners in a proposed territory a partial tax exemption, only

applies to 100% voluntary annexations. The district court reasoned that

even if section 368.7(3) does apply to 80/20 annexations, it does not

allow a city to discriminate between consenting and non-consenting

property owners. Second, the district court held Dubuque did not have

the authority under chapter 368 of the Code to offer other financial

benefits, such as a reduction in sewer and water hook-up costs and the

deferral of sewer hook-up costs until the property is sold. Finally, the

district court held Dubuque’s annexation was not in fact voluntary due

to “coercive and unfair practices” by the city. The court stated:

      Since the City of Dubuque unfairly induced the property
      owners to the extent that it placed the property owners in a
      position of either agreeing to the annexation and receiving
      financial benefits, or being denied financial benefits for
      refusing to agree to the annexation, it must be concluded
      that the annexation process was invalid.        The City of
      Dubuque placed the property owners in a position in which
      the refusal to sign the annexation petition would make them
      unequal to their neighbors. Under these facts it cannot be
      said that the annexation proceedings were “voluntary” under
      Iowa Code Section 368.7.

On appeal, Dubuque and the CDB argue the district court erred in all
three holdings. We address each holding in turn.

      At the outset, we note our ruling is largely confined to this case

because during the pendency of this appeal, the legislature amended

several relevant provisions of the Iowa Code. We discuss the legislative

changes below.

      A. Background on Voluntary Annexations

      It may be helpful if we first discuss voluntary annexation in

general before addressing the district court’s ruling. Section 368.7 of the

Iowa Code governs voluntary annexations of territory.       There are two
                                     9

types    of   voluntary   annexations—100%     annexations     and   80/20

annexations. In a 100% voluntary annexation, all of the property owners

in the territory request the adjoining city to annex their land. Iowa Code

§ 368.7(1)(a).   In contrast, an 80/20 annexation includes some land

whose owner did not request or consent to annexation. The annexation

is still “voluntary” if the owners of at least 80% of the property in the

proposed territory consent to annexation and the inclusion of the non-

consenting property is necessary to “avoid creating an island or to create

more uniform boundaries.” Id.
        All voluntary annexations require approval by the annexing city via

a resolution by the city council. See id. § 368.7(1)(d), (2), (3). Approval

by the City Development Board (“CDB”) may also be required depending

on the type of voluntary annexation.      The CDB must approve a city’s

annexation if the proposed territory is within the urbanized area of

another city. Id. § 368.7(3); see id. § 368.1(16) (defining “urbanized area”

as “any area of land within two miles of the boundaries of a city”).

Additionally, any 80/20 annexation, irrespective of whether it is within

the urbanized area of another city, requires approval by four-fifths of the

members of the CDB after a public hearing. Id. § 368.7(1)(f). The CDB

may only approve an application that substantially complies with the

statutory requirements for annexations. City of Waukee v. City Dev. Bd.,

590 N.W.2d 712, 716-17 (Iowa 1999) (quoting Gorman v. City Dev. Bd.,

565 N.W.2d 607, 609 (Iowa 1997)).

        From a city’s perspective, a voluntary annexation is preferable to

an involuntary annexation for at least two reasons.             First, only

involuntary annexations require an election. See Iowa Code §§ 368.11-
                                           10

.20 (2003). 6 Second, applications for voluntary annexation are expressly

afforded a presumption of validity. Id. § 368.6. Thus, it is not surprising

Dubuque made every effort to get the owners of at least 80% of the land

in the proposed territory to consent to annexation.                  We now consider

whether Dubuque’s efforts were proper.

       B. Section 368.7(3) and 80/20 Voluntary Annexations

       Section 368.7 governs voluntary annexations of territory. At the

time of Dubuque’s annexation proceedings, section 368.7 had four

subsections. 7      The parties disagree on whether subsection 3, which

allows a city to offer a partial tax exemption to property owners, applies

to an 80/20 annexation. The district court held subsection 1 exclusively

governs 80/20 annexations. Because subsection 1 does not mention the

availability of a tax incentive, the court reasoned Dubuque was not

entitled to offer a partial exemption from city property taxes to the

property owners in the proposed territory.                According to the district

court, subsection 3, which explicitly grants city councils the right to offer

such a benefit, only applies to 100% annexations. A careful reading of

the statute does not support this conclusion.




       6
         When an election to approve an involuntary annexation proposal is held,
“registered voters of the [annexation] territory and of the city may vote, and the proposal
is authorized if a majority of the total number of persons voting approves it.” Iowa Code
§ 368.19 (2003).

       Section 368.7 has since been amended to include a fifth subsection. See Iowa
       7

Code § 368.7(5) (Supp. 2005). The legislature removed the provision for tax exemptions
from subsections 2 and 3 and created subsection 5, which solely addresses tax
exemptions.
                                         11

       1. Section 368.7(3) Applies to 80/20 Annexations

       On its face, subsection 1 appears to be primarily concerned with

80/20 annexations. 8 But aside from the definitions of 80/20 and 100%

voluntary annexations found in subsection 1, section 368.7 makes no

express distinction between the two types of voluntary annexations. We

must determine whether the remaining subsections apply to 80/20

annexations.

       Subsection 2 governs an annexation of territory not within an

urbanized area of another city. Subsection 3 governs an annexation of

territory that is within an urbanized area of another city. A territory is

“within an urbanized area” if it is within two miles of the boundaries of a

city. Id. § 368.1(16) (Supp. 2003). Both subsection 2 and subsection 3

give a city council the discretion to include a property tax incentive in its

resolution approving the annexation.           Subsection 1, which defines an

80/20 annexation, contains no such provision. There is no indication

subsections 2 and 3 only apply to 100% annexations and we do not read

the statute so narrowly. Instead, we believe subsections 2 and 3 apply to

both types of voluntary annexations—80/20 and 100% annexations. We

read subsection 1 to simply provide additional requirements for an

80/20 annexation. 9 Thus, a city is entitled to offer a partial exemption
from city property taxes with either type of voluntary annexation.

       8
        For example, paragraph (c) requires a copy of the annexation application to be
mailed to the “nonconsenting owner.” Iowa Code § 368.7(1)(c). Paragraph (d) requires
the annexation city to provide for a public hearing and give notice to “each owner of
property located within the territory to be annexed who is not a party to the
application”—i.e. to those who did not consent. Paragraph (e) allows a property owner
who consented to annexation to withdraw his consent within three days after the public
hearing with some exceptions. Paragraph (f) requires 4/5 of the CDB’s members to
approve an 80/20 annexation.

      We have previously held subsections 1 and 2 must be read together. In City of
       9

Waukee v. City Development Board, 590 N.W.2d 712 (Iowa 1999), we stated: “Although
                                          12

       Our interpretation of section 368.7 is consistent with the

legislature’s policy of promoting voluntary annexations.               Gorman, 565

N.W.2d at 609 (“The purpose of section 368.7 is to avoid the costly and

involved procedures governing involuntary annexations.”). When a city

begins the annexation process, it does not know whether all of the

property owners will consent.           Allowing a city to offer a partial tax

exemption is a means to encourage property owners to consent to

annexation. It is illogical to interpret the statute to require a city to first

obtain the consents of all of the property owners in a territory before

offering them a tax benefit. If one property owner refused to consent,

then no property owner could receive a partial tax exemption. Such an

outcome would frustrate the legislature’s desire to help cities obtain

consents by using property tax incentives as an inducement.
       A recent amendment to section 368.7 supports the conclusion that

a city can offer a partial exemption from city property taxes in both

80/20 and 100% annexations. Section 368.7 was amended in 2005 by

Senate File 78. 10 2005 Iowa Acts ch. 111, § 3. The legislature deleted

the language pertaining to the transition of city property taxes from

subsections 2 and 3 and created a fifth subsection.                    Subsection 5

provides:

      In the discretion of a city council, the resolution provided for
      in subsection 1, paragraph “d”, or subsection 2 or 3, may
      include a provision for a transition for the imposition of city
________________________
section 368.7(1) does not expressly mention that parcels within the annexation territory
be contiguous to one another, we think subsection 2 of section 368.7 imposes such a
requirement. Subsection 2 prohibits approval of any annexation application ‘which
would create an island.’ ” City of Waukee, 590 N.W.2d at 717 (quoting Iowa Code
§ 368.7(2) (1995)).

       10The  amendment took affect May 5, 2005 and applies to an annexation
application submitted to a city council on or after that date. 2005 Iowa Acts ch. 111,
§ 5.
                                    13
      taxes against property within the annexation area as
      provided in section 368.11, subsection 3, paragraph “m.”

Iowa Code § 368.7(5) (Supp. 2005). The introduced version of Senate File

78 included an explanation for the amendment. It states “[t]he bill also

clarifies that a city may include a provision for transition for imposition

of city taxes in a resolution approving any voluntary annexation.”

(Emphasis added.) The word “any” as well as the reference to subsection

1 in the new subsection 5 makes clear the legislature intends the partial

tax exemption to be available for both 100% and 80/20 voluntary

annexations.    More importantly, the explanation of the amendment

indicates this was the legislature’s intention prior to the amendment.

When the legislature amends a statute, we generally presume it intended

to change the statute’s meaning. Martin v. Waterloo Cmty. Sch. Dist., 518

N.W.2d 381, 383 (Iowa 1994).         However, this presumption can be

overcome by legislative history or by an explanation accompanying the

amendment. Id.; see Tiano v. Palmer, 621 N.W.2d 420, 423 (Iowa 2001)

(“Although ordinarily any material change in the language of a statute is

presumed to alter the law, the time and circumstances of an amendment

may indicate that the legislature merely intended to clarify the intent of

the original enactment.”); State v. Schuder, 578 N.W.2d 685, 687 (Iowa

1998) (“An amendment may be enacted so a statute corresponds ‘to what

had previously been supposed was the law rather than to effect a change

therein.’” (quotation omitted)).

      In the present case, the owners of more than 80% of the property

in the proposed territory consented to Dubuque’s annexation.            The

parties agree the proposed territory is within two miles of Asbury. Thus,

section 368.7(3) applies to Dubuque’s annexation. Subsection 3 allows a

city council to transition the imposition of city property taxes as provided
                                           14

in section 368.11(3)(m) for the property owners in the proposed territory.

Iowa    Code    §    368.7      (referencing    section   368.11(3)(m)).        Section

368.11(3)(m) states:

       In the discretion of a city council, [it may provide] a provision
       for the imposition of city taxes against property within an
       annexation area. The provision shall not allow a greater
       exemption from taxation than the tax exemption formula
       schedule provided under section 427B.3, subsections 1
       through 5, and shall be applied in the levy and collection of
       taxes.

The amount of exemption from city property taxes allowed under section

427B.3 (2003) is as follows:

       1.      For   the   first year, seventy-five percent.
       2.      For   the   second year, sixty percent.
       3.      For   the   third year, forty-five percent.
       4.      For   the   fourth year, thirty percent.
       5.      For   the   fifth year, fifteen percent. 11

Dubuque’s offer to the property owners follows this schedule exactly.

Therefore, we hold Dubuque’s offer to transition the imposition of city

property taxes was proper in this case.

     2. Dubuque may Distinguish between Consenting and Non-
consenting Property Owners
       The district court held that even if section 368.7(3) applies to

80/20 annexations, “the Code language does not provide that a city may

discriminate between consenting and non-consenting landowners.” The

language of the Code does not support this interpretation.

       Iowa Code section 368.11(3)(m) begins with the following phrase:

“In the discretion of a city council, a provision for a transition for the

imposition of city taxes against property within an annexation area.” The

district court’s interpretation requires the addition of the word “all”—i.e.

        11Cities may now transition property taxes over a period of ten years rather than

five years. See Iowa Code § 368.11(3)(m) (Supp. 2005).
                                             15

“In the discretion of a city council, a provision for a transition for the

imposition of city taxes against [all] property within an annexation area.”

This we cannot do. We may not, under the guise of judicial construction,

add modifying words to a statute or change its terms absent “inadvertent

clerical errors or omissions which frustrate obvious legislative intent.”

Schultze v. Landmark Hotel Corp., 463 N.W.2d 47, 49 (Iowa 1990). In

this case, we find no such justification to alter the plain language of

section 368.11(3)(m). Instead, this is a matter for the legislature. In fact,

the legislature recently amended section 368.11(3)(m). 2006 Iowa Legis.

Serv. 5 (West).            The following sentence was added to the end of

paragraph (m): “If the city council provides for a transition for the

imposition of city taxes against a property in an annexation area, all

property owners included in the annexation area must receive the

transition upon completion of the annexation.” 12 (Emphasis added.) In
contrast to the amendment to section 368.7 just discussed, there is no

indication by the legislature that it merely intended to clarify the statute

as it existed at the time of the amendment. We presume the legislature

meant to change section 368.11(3)(m). Davis v. State, 682 N.W.2d 58, 61

(Iowa 2004) (When interpreting an amendment, we presume “the

amendment sought to accomplish some purpose and was not a futile

exercise.”). Therefore, pursuant to the versions of sections 368.7(3) and

368.11(3)(m) in effect at the time of this annexation, Dubuque was

permitted to stipulate only consenting property owners would be eligible

for a partial exemption from city property taxes.

          “As an alternative basis to affirm the district court,” Asbury claims

Dubuque’s “disparate treatment of non-consenting landowners violates

          12This   amendment became effective on July 1, 2006. 2006 Iowa Legis. Serv. 42
(West).
                                      16

the due process and equal protection clauses of the United States and

Iowa Constitutions.” However, Asbury failed to articulate this claim in its

brief and failed to address any specific application of due process and

equal protection to this case.        Accordingly, Asbury has waived this

argument and we do not address it further.           See Iowa R. App. P.

6.14(1)(c) (“Failure in the brief to state, to argue or to cite authority in

support of an issue may be deemed waiver of that issue.”).

      C. Availability of Other Financial Incentives
      The district court also held Dubuque did “not have the authority

under Chapter 368 of the Code of Iowa to offer the other financial

benefits . . . .” The court stated:

      Nowhere does the statute provide that the City of Dubuque
      may offer consenting landowners deferral of payment for
      expenses for city services such as sewer or water hookup
      fees, or exemption from the costs of installation of city sewer
      or water lines.

Dubuque and the CDB argue this holding ignores Dubuque’s home rule

power. We agree.

      In 1968, Iowa amended its constitution to give municipalities home

rule authority.   See Iowa Const. art. III, § 38A.    Under the home rule
amendment, a city has the “power and authority, not inconsistent with

the laws of the General Assembly, to determine their local affairs and

government, except that they shall not have power to levy and tax unless

expressly authorized by the General Assembly.” Id. Similarly, the Iowa

Code provides:

      A city may, except as expressly limited by the Constitution of
      the State of Iowa, and if not inconsistent with the laws of the
      general assembly, exercise any power and perform any
      function it deems appropriate to protect and preserve the
      rights, privileges, and property of the city or of its residents,
                                        17
      and to preserve and improve the peace, safety, health,
      welfare, comfort, and convenience of its residents.
Iowa Code § 364.1 (2003).
      Home rule power was intended to renounce the common law

“Dillon rule.” City of Des Moines v. Master Builders of Iowa, 498 N.W.2d

702, 703 (Iowa 1993) (referring to Merriam v. Moody’s Ex’rs, 25 Iowa 163,

170 (1868), an opinion authored by Chief Justice John F. Dillon). Under

the Dillon rule, cities were powerless to act in the absence of an express

legislative grant of authority.   Id.    Home rule authority reversed this

presumption by giving cities broad police powers, except they cannot

impose taxes without the express authorization of the legislature. Home

Builders Ass’n of Greater Des Moines v. City of West Des Moines, 644

N.W.2d 339, 345–46 (Iowa 2002).
      As we have discussed, section 368.7 gives cities the discretion to

provide a partial exemption from city property taxes to property owners

in an annexed territory. The statute does not contemplate the offering of

any other benefits. The district court in turn reasoned the city property

tax incentive was the only benefit a city may offer property owners. But

in its analysis, the district court asked the wrong question. The question
is not whether a statute gives a city authority. Instead, the question is

whether a statute forbids it. Nothing in chapter 368 forbids a city such

as Dubuque from offering additional benefits. Without such a limitation,

a city has the authority to offer other benefits, unless they are related to

taxation, which does require an express authorization from the

legislature. See Iowa Code § 364.3(4) (2003) (“A city may not levy a tax

unless specifically authorized by a state law.”).

      We have previously defined a tax as “‘a charge to pay the cost of

government without regard to special benefits conferred,’ meaning its
                                      18

primary purpose is to raise revenue.” Kragnes v. City of Des Moines, 714

N.W.2d 632, 639 (Iowa 2006) (quoting Home Builders Ass’n of Greater

Des Moines, 644 N.W.2d at 346). In exercising its police power, a city

may charge a citizen when it provides a service to that citizen. Home

Builders Ass’n of Greater Des Moines, 644 N.W.2d at 347.              The fee

associated with that service is not a tax so long as it is the fair and

reasonable cost of providing that service. Newman v. City of Indianola,

232 N.W.2d 568, 573–74 (Iowa 1975) (holding a city may charge a

property   owner   the   reasonable    cost    of   extending   an   electrical

transmission line to owner’s property).       In the present case, Dubuque

offered to reduce the costs associated with extending water and sewer

lines to the properties in the proposed territory. These are costs related

to the conferral of “special benefits.” Asbury never alleged these costs

are more than the reasonable costs for such services.           Consequently,

these additional benefits are not tax-related. Thus, Dubuque does not

need a special authorization by the legislature to offer these benefits. We

therefore conclude all of Dubuque’s proposed benefits were proper.
      D. Voluntariness of Consents

      Finally, the district court held the property owners’ consents were

not voluntary because “Dubuque unfairly induced the property owners to

the extent that it placed the property owners in a position of either

agreeing to the annexation and receiving financial benefits, or being

denied financial benefits for refusing to agree to the annexation . . . .”

The court relied on Hoepker v. City of Madison Plan Commission, 563

N.W.2d 145 (Wis. 1997), a Wisconsin case, for this proposition.            See

Hoepker, 563 N.W.2d at 150 (“Municipalities cannot coerce or unfairly

induce an elector and/or property owner into agreeing to annexation.”).
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Besides the differences in Wisconsin’s and Iowa’s annexation laws, there

is one most obvious distinction between Hoepker and this case.           In

Hoepker, the property owners themselves alleged they had been coerced

by the City of Madison into annexing their land. In the present case, the

property owners are not seeking relief.    Instead, Asbury, a competing

city, is challenging Dubuque’s annexation and relies on statements the

property owners made to the CDB. This is not how one raises coercion

or duress in Iowa. But see Town of Fond du Lac v. City of Fond du Lac,

126 N.W.2d 201 (Wis. 1964) (one municipality successfully arguing

another municipality coerced residents into consenting to annexation).
      The Agreement at issue is a contract.      Dubuque offered several

incentives to the property owners in the proposed territory in return for

their consent to annexation. Based on the CDB’s record, some property

owners only grudgingly consented to annexation. Nevertheless, Dubuque

rightly points out that none of the property owners rescinded their

consent.   Section 368.7(1)(f) allows a property owner to withdraw his

consent within three business days after the public hearing “unless the

property owner has entered into a written agreement for extension of city

services or unless the right to withdraw consent was specifically

identified and waived by the landowner.” The Agreement states “[e]ach

Property Owner agrees not to withdraw the application or any part

thereof after its filing with the City Council.” We need not decide whether

the Agreement effectively waived the property owners’ right to withdraw

their consents under section 368.7(1)(f) because none of the property

owners attempted to withdraw their consents within the nearly seven

month time frame between executing the Agreement and the public

hearing.
                                     20

         Essentially, Asbury is arguing the Agreement is voidable by reason

of economic duress.       In Iowa, a party claiming economic duress must

prove the following elements: (1) a party involuntarily accepted the terms

made by another party, (2) circumstances permitted no other alternative,

and (3) such circumstances were the result of coercive acts of the other

party.    Fees v. Mut. Fire & Auto. Ins., 490 N.W.2d 55, 59 (Iowa 1992)

(citing Turner v. Low Rent Hous. Agency, 387 N.W.2d 596, 598–99 (Iowa

1986)).     Assuming arguendo duress can be proven, Asbury is not in

position to make that argument.           We follow the Restatement’s rule

concerning the effect of duress on the enforceability of a contract: “If a

party’s manifestation of assent is induced by an improper threat by the

other party that leaves the victim no reasonable alternative, the contract

is voidable by the victim.”        Turner, 387 N.W.2d at 598 (quoting
Restatement (Second) of Contracts § 175(1), at 475 (1981)) (emphasis

added).     Asbury cannot be the victim because it is not a party to the

Agreement. The property owners who are parties to the Agreement have

neither joined this lawsuit nor withdrawn their consents. As it stands,

Asbury may not allege coercion on behalf of the property owners.

Consequently, it was error to conclude Dubuque coerced the property

owners into consenting to annexation.

         IV. Conclusion

         In sum, we find Dubuque substantially complied with Iowa law in

its annexation of the land in question. We reverse the district court and

affirm the CDB’s decision. Section 368.7(3) allows Dubuque to offer a

partial exemption from city property taxes in an 80/20 annexation. At

the time of the annexation, Iowa law did not require Dubuque to give all

property owners in the proposed territory the property tax incentive.
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Consequently, Dubuque was permitted to condition the partial tax

exemption on consent to annexation.      Pursuant to home rule power,

Dubuque properly offered additional incentives, such as reduced cost for

sewer hook-up, to the property owners. Finally, Asbury may not allege

on behalf of property owners in the proposed territory that the property

owners’ consents to annexation are voidable due to economic duress.

      REVERSED.

      All justices concur except Hecht, J., who takes no part.
