                 IN THE SUPREME COURT OF IOWA
                              No. 14–0495

                           Filed May 15, 2015


CITY OF IOWA CITY, IOWA,

      Appellant,

vs.

IOWA CITY BOARD OF REVIEW,

      Appellee,

and PRESTIGE PROPERTIES,

      Intervenor.
_______________________________

CITY OF IOWA CITY, IOWA,

      Appellant,

vs.

IOWA CITY BOARD OF REVIEW,

      Appellee,

and MYRTLE GROVE HOUSING, INC.,

      Intervenor.


      Appeal from the Iowa District Court for Johnson County, Paul D.

Miller, Judge.



      A city appeals a decision of the district court affirming a board of

review’s decision to classify the property owned by eleven multiple

housing cooperatives as residential properties for purposes of property

taxes. AFFIRMED.
                                     2

      Eric R. Goers, Assistant City Attorney, Iowa City, for appellant.



      Charles T. Traw of Leff Law Firm, LLP, Iowa City, for appellee.



      Kirsten H. Frey and Michael W. Kennedy of Kennedy, Cruise,

Frey & Gelner, LLP, Iowa City, for intervenors.
                                      3

WIGGINS, Justice.

      A city’s board of review reclassified eighteen properties held by

eleven multiple housing cooperatives from commercial to residential for

property tax purposes.     The city appealed the board’s decision to the

district court.   The district court affirmed the board’s decision on

summary judgment. On appeal, we find that two Iowa corporations may

organize a multiple housing cooperative under Iowa Code chapter 499A

(2011). 1 We also find the Code does not require a one-apartment-unit-

per-member ownership ratio for a multiple housing cooperative to be

properly organized.     Accordingly, these multiple housing cooperatives

meet the organizational test we announced in Krupp Place 1 Co-op, Inc. v.

Board of Review, 801 N.W.2d 9, 16 (2011).             Therefore, we affirm the

judgment of the district court that affirmed the decision of the board

classifying the cooperatives as residential for property tax purposes.

      I. Background Facts and Proceedings.

      The Iowa Code permits the classification of residential property to

include all land and buildings of multiple housing cooperatives organized

under chapter 499A. Iowa Code § 441.21(11). On May 25, 2012, the

Iowa City Board of Review sent notices to eighteen properties indicating

the   Board   changed    the   classification   for   these   properties   from

commercial to residential for property tax purposes. The properties were

reclassified pursuant to Iowa Code section 441.21(11) because they had

been recently organized as multiple housing cooperatives.          The parties

agree that two Iowa corporations organized each of the multiple housing

cooperatives for the purpose of owning residential property in a



      1All  subsequent references to the Iowa Code are to the 2011 Code unless
otherwise indicated.
                                     4

cooperative.    The corporations who organized the cooperatives are still

involved in the ownership of the cooperatives.

        On June 19, the City of Iowa City filed a notice of appeal with the

district court, objecting to the Board’s reclassification. The City argued

the Board’s reclassification of the properties as residential was improper

because two natural persons, not two corporations, must organize

multiple housing cooperatives under the Code.       They also argued the

Code requires a one-apartment-unit-per-member ownership ratio for a

multiple housing cooperative to be properly organized. The district court

allowed the multiple housing cooperatives to intervene in the action.

        The Board filed a motion for summary judgment.          The Board

argued as a matter of law two corporations can organize a multiple

housing cooperative because section 499A.1(1), which dictates the

requirements for organizing a cooperative, defines a corporation as a

person for purposes of chapter 499A. Iowa Code § 499A.1(1).

        The City filed a response and its own motion for summary

judgment.      The City argued as a matter of law at least two of the

organizers were required to be natural persons for the cooperative to be

properly organized. Additionally, the City argued the organizers did not

properly organize the cooperatives because each cooperative has more

apartment units than members and Iowa Code section 499A.11 requires

a one-to-one ratio.

        The intervenors filed a resistance and their own motion for

summary judgment. The intervenors argued as a matter of law chapter

499A specifically permits two corporations to come together to form a

cooperative, not just natural persons.       The intervenors also argued

chapter 499A does not limit membership to one member per apartment

unit.
                                          5

       The district court granted summary judgment in favor of the Board

and the intervenors.       The district court held section 499A.1(1) defines

persons to include corporations, and therefore, the general assembly

intended corporations to be able to act as organizers of a multiple

housing cooperative.       The district court further concluded nothing in

section 499A.11 was relevant to the determination of whether the

cooperative was properly organized. The City appeals.

       II. Issues.

       The first issue in this case is whether the Board correctly classified

the cooperatives as residential properties when two Iowa corporations

organized the cooperatives under chapter 499A.                The second issue is

whether the Code requires a one-apartment-unit-per-member ownership

ratio for a multiple housing cooperative to be properly organized.

       III. Scope of Review.

       Ordinarily, if an appeal is from a decision of the local board of

review, the district court hears the appeal in equity. Iowa Code § 441.39.

However, because the district court adjudicated the issue on appeal by

summary judgment, our review is for correction of errors at law.                  Am.

Legion, Hanford Post 5 v. Cedar Rapids Bd. of Review, 646 N.W.2d 433,

437 (Iowa 2002). Summary judgment is proper if there is no genuine

issue as to any material fact in dispute and the moving party is entitled

to a judgment as a matter of law. Iowa R. Civ. P. 1.981(3). 2

       IV. The Organizational Test.

       Our most recent case interpreting chapter 499A is Krupp, wherein

we held the proper test for determining if a property could be classified

       2Here, the standard of review elaborates upon, but is consistent with Krupp. See

801 N.W.2d at 13. In Krupp, we interpreted the statute and applied the standard of
review for correction of errors at law. Id. at 13, 14–16. As stated here, this standard
generally applies in reviewing rulings on motions for summary judgment.
                                    6

as residential pursuant to Iowa Code section 441.21(11), is whether the

multiple housing cooperative was properly organized, not the actual use

of the property. See 801 N.W.2d at 16 (“We therefore conclude section

441.21(11) requires property owned by residential cooperatives, properly

organized under chapter 499A, to be classified as residential and taxed

at residential property rates.”). Thus, our task is to determine whether

the issues the City raised on appeal lead to the conclusion that the

multiple housing cooperatives were not properly organized.

     V. Whether the Board Correctly Classified the Cooperatives as
Residential Properties When Two Iowa Corporations Organized the
Cooperatives Under Chapter 499A.

      Organization of a multiple housing cooperative is set forth in Iowa

Code section 499A.1(1). In relevant part, it provides:

      Any two or more persons of full age, a majority of whom are
      citizens of the state, may organize themselves for the
      following or similar purposes: Ownership of residential,
      business property on a cooperative basis. A corporation is a
      person within the meaning of this chapter.

Iowa Code § 499A.1(1) (emphasis added).

      The City claims this section requires the organizers of a multiple

housing cooperative to have at least two natural persons.      Under its

interpretation of section 499A.1(1), in order for a corporation to be an

organizer of a multiple housing cooperative, it must join at least two

natural persons as an additional organizer.         The Board and the

intervenors take the position that two corporations can organize a

multiple housing cooperative without natural persons.

      To determine the answer to this issue, we must construe section

499A.1(1). When confronted with the task of statutory construction, we

try to determine legislative intent from the words used by the general

assembly, not from what the general assembly should or might have
                                    7

said. Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 590 (Iowa 2004).

We “may not extend, enlarge or otherwise change the meaning of a

statute” under the guise of construction. Id. When construing a statute,

we are required to assess a “statute in its entirety, not just isolated

words or phrases.”     Schadendorf v. Snap–On Tools Corp., 757 N.W.2d

330, 337 (Iowa 2008).       When construing a statute, we avoid a

construction that makes part of a statute redundant or irrelevant. Id.

We try to give a statute a reasonable construction “that best achieves the

statute’s purpose and avoids absurd results.” Id. at 338.

      At first glance, it appears the phrases “persons of full age, a

majority of whom are citizens of the state” and “[a] corporation is a

person within the meaning of this chapter” are inconsistent with each

other. Iowa Code § 499A.1(1). After all, how could a corporation be of

full age? Nevertheless, we must determine whether the two phrases are

actually inconsistent with each other.

      When the general assembly first enacted section 499A.1(1), it

contained the same phrases that are the subject of this litigation.

Compare 1947 Iowa Acts ch. 250, § 1 (codified at Iowa Code § 499A.1

(1950)), with Iowa Code § 499A.1(1). A search of the 1946 Code shows

the general assembly used language similar to section 499A.1(1) in other

sections of the Code.    See, e.g., Iowa Code § 504.1 (1946) (requiring

incorporators of nonprofit corporations to be “persons of full age, a

majority of whom shall be citizens of the state”), repealed by 1990 Iowa

Acts ch. 1164, § 27.

      The use of the phrase “persons of full age” denotes that the person

performing the organizing has reached the age of majority and is capable

of executing a contract. See Martin v. Stewart Motor Sales, 247 Iowa 204,

207–08, 73 N.W.2d 1, 3–4 (1955) (holding an individual not of full age
                                     8

who misrepresents his or her age cannot invoke the defense of infancy to

void a contract); cf. Black’s Law Dictionary 78 (3d ed. 1933) (“In the old

books, ‘age’ is commonly used to signify ‘full age;’ that is, the age of

twenty-one years.”); Black’s Law Dictionary at 827 (defining “full age” as

“the age of legal majority”).     Even before 1947, when the general

assembly enacted section 499A.1(1), duly organized corporations had the

authority to “make contracts, acquire and transfer property,—possessing

the same powers in such respects as natural persons.”            Iowa Code

§ 491.3(6) (1946) (amended 1970, 1983, 1990, 2002); see also 1947 Iowa

Acts ch. 250, § 1.

      The phrase “whom are citizens of the state” denotes a person who

has his or her home and domicile in the state, with the intention of

remaining in the state, and who has no home, domicile, or right of

citizenship in another state. Cf. Fuller v. McDonnell, 75 Iowa 220, 221,

39 N.W. 277, 278 (1888) (defining “ ‘citizen of the county’ ” as having “his

present home and domicile in any county, although it may be for a

temporary purpose, provided he has a fixed intention of remaining there

for an indefinite period of time, and has no home, domicile, or right of

citizenship elsewhere”).   Further, the Code predating the enactment of

section 499A.1(1) acknowledged both domestic corporations and foreign

corporations.   Compare Iowa Code ch. 491 (1946) (regulating Iowa

corporations), with id. ch. 494 (regulating foreign corporations).

      We believe the legislative intent with the enactment of chapter

499A was to allow two corporations to organize a multiple housing

cooperative. We also believe the intent of the general assembly at the

time it enacted section 499A.1 was to put the same restrictions on

corporate organizers as it did on persons who organized multiple housing

cooperatives—the corporate organizers must have the authority to
                                    9

organize a multiple housing cooperative and a majority of the corporate

organizers must be Iowa corporations.

      Had the general assembly intended to adopt the City’s position—a

corporation cannot organize a multiple housing cooperative without

having two natural persons—the statute would have read differently.

The general assembly would have said a corporation could organize a

multiple housing cooperative only with two or more natural persons.

Rather, the general assembly equated a corporation to a person by the

language used.     See id. § 499A.1(1) (1950).   Thus, we find the City’s

arguments unconvincing as to the general assembly’s intent.

      The City makes no claim that the organizers of these multiple

housing cooperatives were not duly organized Iowa corporations with the

legal capacity to enter into a contract to organize a multiple housing

cooperative. Consequently, the district court was correct in finding as a

matter of law that the Board was correct in holding two corporations can

organize a multiple housing cooperative.

     VI. Whether the Code Requires a One-Apartment-Unit-Per-
Member Ownership Ratio for a Multiple Housing Cooperative to Be
Properly Organized.

      Iowa Code section 499A.1(1) sets forth the legal requirements

established by the general assembly to organize a multiple housing

cooperative. The organizers are required to

      adopt, and sign and acknowledge the articles of
      incorporation, stating the name by which the cooperative
      shall be known, the location of its principal place of
      business, its business or objects, the number of directors to
      conduct the cooperative’s business or objects, the names of
      the directors for the first year, the time of the cooperative’s
      annual meeting, the time of the annual meeting of its
      directors, and the manner in which the articles may be
      amended.

Id. § 499A.1(1).
                                     10

      Once the articles are adopted, signed, and acknowledged,

      [t]he articles of incorporation shall be filed with the secretary
      of state who shall, if the secretary approves the articles,
      endorse the secretary of state’s approval on the articles,
      record the articles, and forward the articles to the county
      recorder of the county where the principal place of business
      is to be located, and there the articles shall be recorded, and
      upon recording be returned to the cooperative. The articles
      shall not be filed by the secretary of state until a filing fee of
      five dollars together with a recording fee of fifty cents per
      page is paid . . . .

Id.

      The general assembly did not require the organizers of a multiple

housing cooperative to be members of the cooperative or own any

property at the time of organization.      See id.    The general assembly

recognized that a properly organized multiple housing cooperative had

the power to build, purchase, receive by gift, or lease apartments. Id.

§ 499A.2(3)–(4). Thus, to be properly organized it is not necessary for a

one-apartment-unit-per-member ownership ratio.

      The City argues section 499A.11 requires a one-apartment-unit-

per-member ownership ratio to be properly organized. Section 499A.11

provides:

             The cooperative has the right to purchase real estate
      for the purpose of erecting, owning, and operating apartment
      houses or apartment buildings.         The interest of each
      individual member in the cooperative shall be evidenced by
      the issuance of a certificate of membership. 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 in that portion of the cooperative’s real
      and personal property not constituting apartment units, and
      which creates a legal relationship of landlord and tenant
      between the cooperative and member. The certificate of
      membership shall be executed by the president of the
      cooperative and attested by its secretary in the name and in
      the behalf of the cooperative.
                                     11

Id. § 499A.11 (emphasis added).

      First, section 499A.11 is not an organizational statute.          Under

chapter 499A, once the articles of incorporation are filed with the

secretary of state by persons who satisfy the organizer requirements of

Iowa Code section 499A.1, the cooperative becomes a body corporate and

is then empowered with all of the powers enunciated in Iowa Code

sections 499A.2(1)–(10). Accordingly, at least for purposes of meeting the

organizational test for a cooperative, section 499A.11 is irrelevant.

      Additionally, we do not read section 499A.11 to impose the

requirement of one-apartment-unit-per-member ownership ratio, as

asserted by the City. Rather, Iowa Code section 499A.11 only requires a

coupling of ownership and membership interests.            Put another way,

while section 499A.11 certainly requires that each apartment be linked

with a corresponding membership interest, there is nothing in section

499A.11    prohibiting   one   person     from   holding    ownership    and

corresponding membership interest in more than one apartment unit.

Further, this construction comports with the statute as read in its

entirety and the process of forming multiple housing cooperatives as

contemplated by chapter 499A.

      Under chapter 499A, a multiple housing cooperative may acquire

and change its bylaws before the housing cooperative ascertains all of its

members. See id. § 499A.2(4) (permitting the board to “purchase, take,

receive, lease as lessee . . . and otherwise deal in and with any real or

personal property” upon filing the articles of organization). Additionally,

a multiple housing cooperative may acquire and change its bylaws before

it issues membership certificates. Id. § 499A.2A (“Prior to the admission

of members to the cooperative, the power to alter, amend, or repeal the

bylaws or adopt new bylaws is vested in the board of directors.”).
                                     12

      In larger housing cooperatives, the process of preparing apartment

units for habitation, ascertaining members, leasing or selling units, and

issuing membership certificates may take significant time and proceed

on a rolling basis.   During this period, the concentration of leasehold,

ownership, and membership interests in one individual may be

necessary to facilitate development and ascertain future members.

Nothing in chapter 499A precludes a cooperative from obtaining

advantageous tax treatment during this interim period or suggests a

cooperative is not properly organized until all the units have been leased

or sold to different members.

      The City also argues the 1991 amendments to chapter 499A

indicate legislative intent to prevent members from owning more than

one apartment.     Prior to the amendments, chapter 499A included a

provision that stated in relevant part,

      If one member owns more than one apartment that member
      may nevertheless have but one vote at such election. If any
      apartment or room is owned by more than one member they
      may, nevertheless, have but one vote at such election.

Iowa Code § 499A.19 (1991).      At that time, section 499A.11 provided,

“The interest of each individual member shall be evidenced by the
issuance of a certificate of ownership or deed to a particular apartment

or room therein.” Id. § 499A.11.

      The general assembly amended sections 499A.19 and 499A.11,

striking the language from section 499A.19 regarding voting rights of

members, and altering part of the language in 499A.11 to read:

      The interest of each individual member in the cooperative
      shall be evidenced by the issuance of a certificate of
      ownership or deed to a particular apartment or room therein.
      Such membership. 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
                                     13
        lease with the cooperative under which each member has an
        exclusive possessory interest in an apartment unit . . . , and
        which creates a legal relationship of landlord and tenant
        between the cooperative and member.

1991 Iowa Acts ch. 30, §§ 5, 14 (codified at Iowa Code §§ 499A.11, .19

(1993)).

        The City argues that by deleting the language “[i]f one member

owns more than one apartment” from section 499A.19 and adding the

language “each member has an exclusive possessory interest in an

apartment unit” to section 499A.11, the general assembly clearly

manifested its intent to limit a member’s ability to own more than one

unit.      However, we think these amendments lead to a different

conclusion.

        Before the amendments, section 499A.19 governed only the

election of directors.    See Iowa Code § 499A.19 (1991).      The general

assembly then expanded the scope of the section by creating a section

governing all matters submitted to a vote of the members. 1991 Iowa

Acts ch. 30, § 10 (now codified at Iowa Code § 499A.3C). The section as

amended reads, “Each member is entitled to one vote on each matter

submitted to a vote of the members.         A membership interest in the

cooperative jointly owned by two or more persons is nevertheless entitled

to one vote.”    Iowa Code § 499A.3C. Before the amendments, section

499A.19 made it clear that, despite the use of these arguably restrictive

terms, chapter 499A authorized individuals to own multiple units. Id.

§ 499A.19 (1991).

        The language regarding joint ownership in a unit remained in the

statute after the amendment, while that authorizing multiple-unit

ownership did not.       See 1991 Iowa Acts ch. 30, § 10.     However, the

general assembly added nothing to the Code to specifically prohibit
                                       14

multiple-unit ownership, and it could have made that change at the

same time it was making these amendments if it had so desired.

      The City argues interpreting the statute in this manner leads to

absurd     results   because     an   owner’s     financial   share    would   be

underrepresented in his or her vote.            However, it is recognized that

membership      voting   in    cooperatives     may    have   a   disproportional

distribution of ownership to influence.               See U.S. Small Business

Administration, Choose Your Business Structure: Cooperative, available at

www.sba.gov/content/cooperative (last visited Apr. 28, 2015) (“While the

‘one member-one vote’ philosophy is appealing to small investors, larger

investors may choose to invest their money elsewhere because a larger

share investment in the cooperative does not translate to greater

decision-making power.”). In addition, at any given time, units may be

unoccupied.      Thus, the cooperative would not issue membership

certificates for those units and the ownership of those units would

remain in the cooperative corporation, rather than an individual

member, until the cooperative issued the certificates pursuant to section

499A.11.

      Before the 1991 amendments, section 499A.11 used the terms

“individual” and “a particular apartment” in describing the interests of a

cooperative’s members.         Iowa Code § 499A.11 (1991).            The general

assembly then amended this section, and in so doing continued to use

the term “individual” in section 499A.11 and substituted “an apartment

unit” for what had previously read “a particular apartment.” 1991 Iowa

Acts ch. 30, § 5. This use of these similar terms suggests the general

assembly did not intend to alter the meaning of the provision governing

issuance of membership certificates, and the absence of any restrictions
                                     15

requiring a different member for each apartment unit are more telling

than the change to these five words.

      Finally, we note that the position taken by the City, in essence,

would require that we revive the “actual use” test we explicitly rejected in

Krupp.   See 801 N.W.2d at 16 (“By enacting the amendment with an

organizational test, the legislature avoided a fact intensive ‘actual use’

test . . . .”). The organizational process necessarily takes place before the

cooperative issues membership certificates and before the cooperative

identifies all of its members.    See Iowa Code § 499A.2A(1).       Looking

beyond what is required to properly organize the cooperative to how the

membership certificates are held meanders into the actual use of the

property—how many apartments each member holds relates to the use of

the property. This inquiry is not permitted under our decision in Krupp,

801 N.W.2d at 16.

      Accordingly, the district court was correct in finding as a matter of

law the Board did not err in holding the Code does not require a one-

apartment-unit-per-member ownership ratio for a multiple housing

cooperative to be properly organized.

      VII. Disposition.

      The Board and the district court were correct in finding as a matter

of law the organizers properly organized the eleven multiple housing

cooperatives under Iowa law. Therefore, we affirm the judgment of the

district court affirming the decision of the Board classifying the property

held by the cooperatives as residential for purposes of property taxes.

      AFFIRMED.

      All justices concur except Mansfield, J., who concurs specially.
                                       16

                     #14–0495, City of Iowa City v. Iowa City Bd. of Review

MANSFIELD, Justice (concurring specially).

      I concur in result only.      As I explain in my special concurrence

today in Dolphin Residential Cooperative, Inc. v. Iowa City Board of

Review, ___ N.W.2d ___ (Iowa 2015), I believe Krupp Place 1 Co-op, Inc. v.

Board of Review, 801 N.W.2d 9 (Iowa 2011), was wrongly decided and

should be overruled. In my view, Iowa law does not extend residential

property tax benefits to a commercial landlord simply because the

landlord has performed a paper reorganization into a cooperative. When

the new entity lacks members that are independent from each other and

remains in reality the same unitary commercial enterprise as before, the

economic substance test has not been met and the entity should not be

recognized as a cooperative for property tax purposes.

      In this case, our record is limited, and the arguments raised are

equally limited.    The record does show that all of the properties were
previously commercial rental properties in Iowa City and were taxed as

such. In late December 2011, following the Krupp decision, cooperatives

were formed that apparently took over ownership of these properties.

Each cooperative had two “incorporators” 3—either PP One, Inc. and PP

Two, Inc., or Myrtle Grove, Inc. and Myrtle Grove 2, Inc. Michael Oliveira

was the president/secretary of both PP entities, and Michael Hodge was

the president/secretary of both Myrtle Grove entities. Also, Mr. Oliveira

was named the initial director of the entities with PP organizers, and Mr.

Hodge was the initial director of the entities with Myrtle Grove

organizers. In May 2012, the Iowa City Board of Review reclassified all

the properties from commercial to residential.

      3The    articles of incorporation use the term “incorporators,” but I assume
“organizers” is meant. See Iowa Code § 499A.1(1) (2011).
                                   17

      That’s all we know. For example, we do not know who the present

members of the purported cooperatives are. Are they the same as the

organizers? Are Mr. Oliveira and Mr. Hodge still calling the shots? The

record does not provide answers to these questions.         While I suspect

these cooperatives are as ephemeral as the purported cooperative in

Dolphin, the present record is too sparse to allow me to reach that

conclusion.

      Also, the arguments raised by the City are rather narrow. The City

argues only (1) corporations cannot be organizers and (2) Iowa Code

section 499A.11 requires that each member have an interest in only one

apartment.    I generally agree with the majority’s resolution of these

points.

      Accordingly, I concur in the judgment in this case.
