Bontrager Auto Service, Inc. v. Iowa City Board of Adjustment

The appellant, Iowa City Board of Adjustment, approved the application of appellant, Shelter House Community Shelter and Transition Services, for a special exception to a local zoning regulation to allow Shelter House to construct transient housing in a commercial district. The appel-lees, opponents of Shelter House’s application, successfully challenged the board’s decision in district court. Although the district court rejected the objectors’ contention the board had failed to make the necessary factual findings, the court ruled there was not substantial evidence to support the board’s finding that the proposed transient housing would not substantially *485 diminish or impair property values in the neighborhood. The court also determined the board had improperly interpreted and applied the parking-space requirements governing transient housing.

The board and Shelter House appeal the district court’s reversal of the board’s approval of Shelter House’s application. We agree with the district court that the board made sufficient factual findings, but conclude error was not preserved on the adequacy of the parking spaces. Because we think there was substantial evidence to support the board’s finding that property values would not be adversely affected, we reverse the judgment of the district court and remand this case for entry of a judgment affirming the board’s decision.

I. Background Facts and Proceedings.

Shelter House is a nonprofit corporation that has operated transient housing on North Gilbert Street in Iowa City for approximately twenty years. The facility on Gilbert Street is approved for housing twenty-nine transient persons at one time. It was undisputed the shelter has to turn homeless persons away due to a lack of space.

In 2004 Shelter House sought to build a new two-story facility at 429 Southgate Avenue that would provide transitional housing for up to seventy people. This site is zoned intensive commercial, which permits transient housing by special exception. In order to approve a special exception, the board must find the applicant meets the standards set forth for the specific proposed exception, as well as seven general standards to the extent they are applicable.

The Iowa City Department of Planning and Community Development reviewed Shelter House’s application and recommended approval. Subsequently, the board held a well-attended meeting at which approximately thirty-seven persons spoke. The main concern of objectors was the possibility of increased criminal activity in the neighborhood, a concern the proponents of the special exception attempted to refute. There was also some evidence elicited relating to property values, with the witnesses for and against the application disagreeing on whether property values would decrease due to the construction of transient housing in the affected neighborhood. Following public comments, the board approved the special exception on a vote of three to one. A written decision granting the application was filed several days later.

Thereafter, neighboring landowners filed petitions for writ of certiorari in the district court, which were consolidated. 1 They claimed the board acted illegally for several reasons, three of which are pertinent to this appeal:

a. The Board of Adjustment acted arbitrarily and capriciously when it granted the application even though the evidence before the Board was that the requested special use would substantially diminish or impair the property values in the neighborhood of the requested special exception and that the proposed special exception would be injurious to the use and enjoyment of other property in the area. Under these circumstances the actions of the Board are a violation of Iowa City Ordinance 14-6W-2(B)(2)(b).

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f. The property which is the subject of the special exception does not comply with various provisions of Iowa City zoning law ...:

*486 a) There is insufficient parking under Ordinance 14-6N-1....

g. The Board has made inadequate findings of fact and conclusions of law, contrary to Ordinance 14-6W-3(D).

The last allegation of illegality — that the board’s findings of fact were inadequate— was based on the board’s alleged failure to specifically find in its written decision that the proposed exception would not substantially diminish or impair property values in the neighborhood.

In response to the petitions, the board submitted its records to the court, including the application for special exception, the staff report recommending approval of the special exception, written materials and comments received by the board, a transcript of the public hearing, the board’s minutes, and the board’s written decision. In addition, at the trial on the objectors’ petitions, the district court heard further testimony from Robert Mik-lo, city planner for the City of Iowa City. Miklo testified with respect to the staff report and the board’s findings of fact. No other evidence outside the board’s records was offered or received.

The court subsequently issued a ruling reversing the board’s decision. Although the court decided the board had sufficiently complied with the requirement for written findings of fact, it concluded Shelter House had failed to present substantial evidence the proposed special exception would not substantially diminish or impair property values in the neighborhood. The court also held the board had not correctly interpreted the parking-space requirements of its ordinance. 2 The board had approved the special exception on the basis that eighteen parking spaces would be sufficient; whereas, under the district court’s interpretation, the ordinance would require twenty-two parking spaces.

The board and Shelter House filed timely appeals from the district court’s decision. For convenience, any references in this opinion to the board include Shelter House unless the context indicates otherwise.

II. Issues on Appeal.

On appeal, the board contends there was substantial evidence to support its determination that property values would not be substantially diminished or impaired by the location of transient housing at the proposed site. With respect to the court’s ruling on the required parking spaces, the board asserts that it correctly interpreted the parking-space requirements of its ordinance.

The objectors disagree, of course, with the arguments asserted by the board on appeal. In addition, they claim that, even if the district court’s decision on these issues was incorrect, its ruling can nonetheless be upheld on the basis that the board did not make an adequate factual finding on the property-values issue.

In our review of the record, we have discovered a preliminary issue that must be addressed: whether any error with respect to the board’s determination of the required number of parking spaces was preserved by the objectors. See Top of Iowa Coop. v. Sime Farms, Inc., 608 N.W.2d 454, 470 (Iowa 2000) (stating “this court will consider on appeal whether error was preserved despite the opposing party’s omission in not raising this issue at *487 trial or on appeal”). We will address that issue first.

III. Error Preservation on Parking-Spaces Objection.

The objectors argued in the district court and again on appeal that the board failed to properly interpret the parking-spaces requirement of the applicable city ordinance and, consequently, acted illegally in approving a special exception that did not propose an adequate number of parking spaces. In reviewing the record certified by the board to the district court, we are unable to find any discussion of this issue before the board. The application for special exception stated that the plot plan “shows 18 spaces.” The staff report also reflected this fact and stated, “Eighteen parking spaces are required.... ” The petitions signed by the opponents to the special exception did not raise any concerns with respect to the parking requirements. At the board’s meeting, city staff presented its report and again specifically informed the board and those present that the property would be required to have eighteen parking spaces. No one at the meeting challenged the legality of the proposed exception on the basis that it did not comply with the applicable standard for parking spaces.

“In most jurisdictions a reviewing court will not decide an issue which was not raised in the forum from which the appeal was taken.... A reviewing court will not entertain a new theory or a different claim not asserted on the board level.” 4 Kenneth H. Young, Anderson’s American Law of Zoning § 27:37, at 633-34 (4th ed. 1996); accord 83 Am.Jur.2d Zoning & Planning § 957, at 791 (2006) (“It has been held that a reviewing court will not decide an issue that was not raised in the zoning board from which an appeal has been taken.”). Our court has similarly held that “issues must first be presented to the agency in order to be preserved for appellate review.” State ex rel. Miller v. DeCoster, 608 N.W.2d 785, 789 (Iowa 2000); accord Licari v. Bd. of Educ., 280 A.D.2d 673, 721 N.Y.S.2d 372, 373 (2001); Iwan v. Zoning Bd. of Appeals, 252 A.D.2d 913, 677 N.Y.S.2d 190, 191 (1998); Leoni v. Whitpain Twp. Zoning Hearing Bd., 709 A.2d 999, 1002 (Pa.Commw.Ct.1998). Based upon this principle and the record before us, we conclude the issue concerning the alleged inadequacy of the proposed parking spaces, which was not raised at the hearing before the board of adjustment, has not been preserved for this court’s review.

IV. Sufficiency of Board’s Factual Finding Regarding Impact on Property Values.

The Iowa City Code requires the Iowa City Board of Adjustment to render its decision in writing, “including findings of fact and conclusions of law.” Iowa City Code § 14-6W-3(D). It is undisputed the board failed to make a specific finding or conclusion in its written decision regarding the effect of the proposed special exception on property values. This issue was of critical importance because, before the board may approve an application for a special exception, the board must find the applicant has met several general standards. One of those standards states: “The specific proposed exception will not be injurious to the use and enjoyment of other property in the immediate vicinity and will not substantially diminish or impair property values in the neighborhood.” Id. § 14-6W-2(B)(2)(b).

Notwithstanding the board’s failure to specifically address this standard in its decision, the district court concluded the board had substantially complied with the requirement of written findings of fact and conclusions of law. The board urges this *488 court to reach the same conclusion with respect to the adequacy of its written decision.

The Iowa City ordinance codifies the rule adopted by our court “that boards of adjustment shall make written findings of fact on all issues presented in any adjudicatory proceeding.” Citizens Against the Lewis & Clark (Mowery) Landfill v. Pottawattamie County Bd. of Adjustment, 277 N.W.2d 921, 925 (Iowa 1979). We agree with the district court that substantial — as opposed to literal — compliance with the written-findings requirement is sufficient.

In Thorson v. Board of Supervisors, 249 Iowa 1088, 90 N.W.2d 730 (1958), we held a board’s substantial compliance with a statutory requirement was satisfactory, noting “the requirements imposed by statute upon an inferior tribunal should not be too technically construed, lest its efficiency be wholly paralyzed.” 249 Iowa at 1097, 90 N.W.2d at 735; accord Johnson v. Bd. of Adjustment, 239 N.W.2d 873, 887 (Iowa 1976) (“ ‘[OJnly where it clearly appears there was a failure to substantially comply with the statutory requirements will there be found jurisdiction violations.’ ” (quoting Bd. of Educ. v. Iowa State Bd. of Pub. Instruction, 261 Iowa 1203, 1210, 157 N.W.2d 919, 923 (1968))). More recently, in Obrecht v. Cerro Gordo County Zoning Board of Adjustment, 494 N.W.2d 701 (Iowa 1993), we held substantial compliance with a zoning ordinance was sufficient. In that case, the county zoning ordinance required that an application for special use be signed by the landowner. Obrecht, 494 N.W.2d at 703. The application at issue had been signed by the lessee of the land, not the owner. Id. at 702. The owner had, however, appeared at and participated in the hearing on the application and had voiced no opposition. Id. at 703. We held the owner’s presence at the hearing was substantial compliance with the ordinance requiring the owner’s signature on the application because “the owner was available to verify his support of the application and to answer any questions.” Id. Therefore, “[t]he objectives of the owner filing requirement were more than satisfied.” Id.

As implied by this statement from Obrecht, “substantial compliance” means the statute or rule “ ‘has been followed sufficiently so as to carry out the intent for which it was adopted.’ ” Brown v. John Deere Waterloo Tractor Works, 423 N.W.2d 193, 194 (Iowa 1988) (quoting Smith v. State, 364 So.2d 1, 9 (Ala.Crim. App.1978)). Thus, the reviewing court must determine based on the facts of the particular case whether the actual compliance has accomplished the purpose of the statute or rule. Id. Consequently, we begin with an examination of the purpose of the requirement at issue.

This court was persuaded to adopt a rule requiring written findings by the following “compelling considerations”: “‘facilitating judicial review, avoiding judicial usurpation of administrative functions, assuring more careful administrative consideration, helping parties plan their cases for rehearings and judicial review, and keeping agencies within their jurisdiction.’ ” Citizens, 277 N.W.2d at 925 (quoting K. Davis, Administrative Law Treatise § 16.05 (2d ed. 1978)). Consistent with these considerations, we noted in Citizens that a board’s findings “must be sufficient to enable a reviewing court to determine with reasonable certainty the factual basis and legal principles upon which the board acted.” Id.; accord Bd. of Dirs. v. Justmann, 476 N.W.2d 335, 340 (Iowa 1991). Here, the objectors appear to claim that, because there is no mention of the property-values issue in the board’s written decision, the board failed to make a decision on *489 this issue, thereby rendering its action granting the special exception illegal.

Our review of the record convinces us that neither the objectors nor the district court had to guess whether the board considered and resolved the property-values issue. The board was clearly aware of the requirement that the special exception could not be approved if it substantially impaired neighboring property values. Shelter House addressed this standard in its application, and later, at the meeting scheduled to consider the application, city planner Robert Miklo told the board it must consider, among other items, the requirement that “the proposed special exception ... will not substantially dimmish or impair property values in the neighborhood.” In addition, several of the numerous persons who spoke at the hearing addressed the issue of property values.

After the public comment portion of the meeting concluded, the board members expressed their views. Board member Mauer was the first to speak, and he expressly focused his remarks on “the general standards.” Mauer commented on several of these standards, including the matter of property values. He stated the impact on property values was “a big issue” that could not be determined for sure until someone decides to sell property in the area after Shelter House is there. Mauer was most concerned, however, regarding the impact of the facility on the comfort, safety, and health of neighboring residents (another general standard). At this point in the proceedings, board counsel Holecek reminded the board that the board had to “conclude each of these standards has been met.” Board member Mauer then voted “no,” immediately followed by board member Wright, who discussed the general standards without any specific mention of property values, and then voted “yes.” Board member Leigh then commented on the impact of the current transient house on North Gilbert on the surrounding neighborhood and concluded by saying the proposal “has met the standards as were previously mentioned and I will vote in favor of this.” Board member Alexander then stated, “For the reasons already mentioned, I too am going to vote in favor.” A roll call vote was then taken, resulting in approval of the application for a special exception on a vote of three to one.

The board later filed a written decision on the Shelter House application that contained findings of fact, conclusions of law, and a disposition. In its conclusions of law, the board concluded “that developing the Shelter House at [the proposed] location will not be detrimental overall to the public health, safety, comfort or general welfare,” as required by section 14-6W-2(B)(2), but did not make specific reference to the other portion of section 14-6W-2(B)(2) dealing with property values.

These facts show that with respect to the property-values aspect of general standard section 14-6W-2(B)(2), the board did not literally comply with the rule that findings of fact and conclusions of law be in writing. We think, however, that there was substantial compliance. Considering the board’s written decision in the context of the meeting at which the vote memorialized in the decision occurred, we are able “to determine with reasonable certainty the factual basis and legal principles upon which the board acted.” Citizens, 277 N.W.2d at 925. We think it is sufficiently clear that the board considered the general standards, including whether the proposed special exception would “substantially diminish or impair property values in the neighborhood,” and concluded by a majority vote that these standards were met. The board’s failure to reference the entirety of the general standard appearing *490 in section 14-6W-2(B)(2) in its written conclusions of law is not a fatal flaw that warrants reversal.

Y. Scope and Standard of Review of Property-Values Issue.

Our standard of review of the district court’s ruling on the property-values issue is dependent upon resolution of a disagreement between the parties with respect to the proper role of the district court in its review of the board’s decision. Shelter House maintains that the district court must conduct a substantial-evidence review of the board’s findings. See generally Grant v. Fritz, 201 N.W.2d 188, 195 (Iowa 1972) (“The ‘substantial evidence rule’ is utilized in judicial checking of findings of fact_”). Under that standard of review, the board’s findings are binding if supported by substantial evidence. In contrast, the opponents claim the district court is entitled to find the facts anew and on appeal to this court, the district court’s findings are binding if supported by substantial evidence. 3

Unlike the typical certiorari case, in which the standard of review is well established, the review of decisions of boards of adjustment has always been somewhat problematic. Iowa Code chapter 414 (2003) provides the procedure for review of a decision of a city board of adjustment. 4 A person aggrieved by a board decision may file a petition for writ of certiorari in the district court, identifying the claimed illegality of the board’s action. Iowa Code § 414.15 (stating petition must “specify! ] the grounds of the illegality” of the board’s decision). Upon the filing of a petition, the board of adjustment must make a return to the writ, which includes the “papers acted upon by it” and “other facts as may be pertinent and material to show the grounds of the decision appealed from.” Id. § 414.17.

At this point, the review process reveals its unique characteristics. Section 414.18 states:

If upon the hearing which shall be tried de novo it shall appear to the court that testimony is necessary for the proper disposition of the matter, it may take evidence or appoint a referee to take such evidence as it may direct and report the same to the court with the referee’s findings of fact and conclusions of law, which shall constitute a part of the proceedings upon which the determination of the court shall be made. The *491 court may reverse or affirm, wholly or partly, or may modify the decision brought up for review.

Id. § 414.18 (emphasis added). This court has attempted over the years to interpret what the legislature intended when it provided for a trial de novo and for the taking of additional necessary evidence by the district court.

In our first case to interpret section 414.18, 5 Anderson v. Jester, 206 Iowa 452, 221 N.W. 354 (1928), we considered “what questions may be raised on certiorari.” 206 Iowa at 462, 221 N.W. at 359. Relying on section 414.15, we held only issues of illegality are a permissible basis for relief. Id. at 463, 221 N.W. at 359. We observed that “arbitrary and unreasonable action or proceedings” that are not authorized, are contrary to the statute defining the powers of the board, or are unsupported by facts upon which the board’s power to act depends are illegal. Id. These grounds of illegality track those that are raised in certiorari actions generally. See Nash Finch Co. v. City Council, 672 N.W.2d 822, 825 (Iowa 2003) (‘“An illegality is established if the board has not acted in accordance with a statute; if its decision was not supported by substantial evidence; or if its actions were unreasonable, arbitrary, or capricious.’ ” (quoting Perkins v. Bd. of Supervisors, 636 N.W.2d 58, 64 (Iowa 2001))). See generally 3 Arden H. Rathkopf et al., Rathkopfs The Law of Zoning & Planning § 62:32, at 62-66 (2001) (noting same grounds) [hereinafter Rathkopfs Law of Zoning].

We also considered in Anderson “the method and scope of review by the trial court permitted by [this] legislative enactment.” Anderson, 206 Iowa at 454, 221 N.W. at 355. Noting that the board of adjustment is not required “to return findings of fact,” this court explained the purpose of the district court’s power to take additional evidence as follows:

If all the material facts appear in the record, or are not disputed, or only questions arising upon the record are presented, the taking of evidence is not necessary. Questions likely to arise in such cases are of such great importance that the Legislature appears to have had in mind that the parties should, on the question of the legality of the board’s action, be entitled to a full and complete hearing before a proper court of record and according to accepted judicial method of ascertaining facts.

Id. at 461-62, 221 N.W. at 359 (emphasis added). Thus, when the record is inadequate to determine the legality of the board’s action, additional evidence is necessary and may properly be taken by the district court.

Our discussion in Anderson of the district court’s scope of review was not as clear. We said:

The parties are not, on certiorari, bound by the finding or opinion of the local board on the facts, or by the evidence offered there, or by knowledge outside of the evidence on which the board may have acted, but, ordinarily at least, are entitled to take testimony when a determinative issue of fact is raised.

Id. at 462, 221 N.W. at 359 (emphasis added). Later in the same opinion, this seemingly expansive de novo review is qualified:

If it had been intended to give to the aggrieved party the right to remove the *492 determination of the entire matter from the local officers and board to the court, it is reasonable to suppose that the remedy provided would have been appeal rather than certiorari....

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... The trial de novo permitted, and the determination of whether testimony is necessary, and the admission of such testimony, ... should be confined to the questions of illegality raised by the petition for the writ.... If one of the grounds of alleged illegality is arbitrary, unreasonable, or discriminatory action on the part of the board, and on the facts the reasonableness of the board’s action is open to a fair difference of opinion, there is, as to that, no illegality. The court is not, in such case, authorized to substitute its judgment for that of the local board.

Id. at 462-63, 221 N.W. at 359 (emphasis added). We noted that arbitrary and unreasonable action includes action that is not authorized by the statute defining the board’s power or that is contrary to or unsupported by the required facts. Id. at 463, 221 N.W. at 359.

Although one could argue our discussion of the statute in Anderson did not completely clarify the district court’s de novo fact-finding role, our subsequent cases consistently limited the trial de novo “to the questions of illegality raised by the petition for the writ.” Deardorf v. Bd. of Adjustment, 254 Iowa 380, 383, 118 N.W.2d 78, 80 (1962); accord Vogelaar v. Polk County Zoning Bd. of Adjustment, 188 N.W.2d 860, 863 (Iowa 1971). Our cases also confirmed that the statute did not provide “for trial de novo by equitable proceedings.” Deardorf, 254 Iowa at 383-85, 118 N.W.2d at 80 (examining sufficiency of evidence before the board on question of unnecessary hardship); accord Trailer City, Inc. v. Bd. of Adjustment, 218 N.W.2d 645, 647 (Iowa 1974) (“The term ‘de novo’ ... does not bear its equitable connotation.”); Vogelaar, 188 N.W.2d at 863 (noting trial is de novo only “in the sense that testimony in addition to the return may be taken if it appears to the court necessary for the proper disposition of the matter”); Zilm v. Zoning Bd. of Adjustment, 260 Iowa 787, 794-95, 150 N.W.2d 606, 611 (1967) (reversing district court’s determination of boundary line location contrary to that found by the board, stating there was no basis for finding board did not act reasonably and therefore, court could not substitute its judgment).

We now turn to our decision in Weldon v. Zoning Board, 250 N.W.2d 396 (Iowa 1977). In that case, we considered “what effect the statutes have on the mode and scope of district court review when a claim of illegality in the certiorari action involves an issue of the sufficiency of evidence to support the decision of the inferior tribunal.” Weldon, 250 N.W.2d at 400. We observed that section 414.18 had “modified” the rule applicable in ordinary certio-rari actions that “the findings of fact of the inferior tribunal may not be upset if they are supported by substantial evidence before that tribunal.” Id. We attributed this interpretation of section 414.18 to our decision in Anderson:

Therefore, the teaching of the Anderson case is that in a certiorari proceeding in a zoning case the district court finds the facts anew on the record made in the certiorari proceeding. That record will include the return to the writ and any additional evidence which may have been offered by the parties. However, the district court is not free to decide the case anew. Illegality of the challenged board action is established by reason of the court’s findings of fact if they do not provide substantial support *493 for the board decision. If the district court’s findings of fact leave the reasonableness of the board’s action open to a fair difference of opinion, the court may not substitute its decision for that of the board.

Id. at 401. It appears, then, that in Weldon we interpreted section 414.18 to place the entire fact-finding role on the district court even when the claimed illegality was that the evidence was not sufficient to support the board’s decision. See Giesey v. Bd. of Adjustment, 229 N.W.2d 258, 260 (Iowa 1975) (holding illegality exists when there is not substantial evidence to support the decision of the board).

Notwithstanding our attempt in Weldon to clarify what the legislature meant by the language “tried de novo,” in at least two subsequent cases in which the alleged illegality of the board’s decision was a lack of substantial evidence to support its decision, the district court simply reviewed the sufficiency of the evidence to support the board’s decision without making its own fact-findings. See Cyclone Sand & Gravel Co. v. Zoning Bd. of Adjustment, 351 N.W.2d 778, 783 (Iowa 1984); Jorgensen v. Bd. of Adjustment, 336 N.W.2d 423, 426 (Iowa 1983). These cases appear to be more in line with a case that predated Weldon, Buchholz v. Board of Adjustment, 199 N.W.2d 73 (Iowa 1972), which considered a county zoning statute identical to the city zoning statute at issue in this case. In Buchholz, we stated that “de novo” as used in section 335.21

does no more than permit the introduction of additional evidence in district court if the court finds that course necessary for proper disposition of the cause. With that qualification the decision of the administrative body is conclusive unless arbitrary, capricious or otherwise illegal.

199 N.W.2d at 78.

In considering the scope of review in the present appeal, this court is faced with the problem of ascertaining the meaning of section 414.18 in the face of conflicting case law. It is helpful, then, to examine general authorities in this area of the law. In Rathkopfs Law of Zoning, the authors state the review provision in the standard zoning enabling act “gives the court the power to take evidence when there is an issue raised by the pleadings in the proceeding other than whether the determination is supported by substantial evidence.” 6 Rathkopfs Law of Zoning § 62:46, at 62-123 (emphasis added).

In those cases in which the issue is whether the action of a board is based upon substantial evidence, the determination as to the validity of a board’s decision should be based upon the record of the proceedings before the board as supplemented by the testimony taken before the court. It should not decide the case merely on the basis of the testimony taken before it if the facts found by the court therein are materially at variance with those found by the board. The court cannot make new findings on issues presented below.

Id. at 62-129 (emphasis added).

The author clarifies that, with respect to issues of substantial evidence, “[i]t is only in those extraordinary cases in which it is not clear from the record what a board considered and how it arrived at its findings that additional testimony will ordinarily be taken in order for a court to evaluate [the board’s] determination.” Id. § 62:46, at 62-130 to -131. According to this treatise, other claims of illegality more *494 properly give rise to the need for additional testimony in district court:

Where an issue is raised by the petition and answer as to whether the determination was made in violation of lawful procedure, or was arbitrary and an abuse of discretion, the court should take evidence with respect to the matters thus put in issue, and apply the law thereto. Since such matters would not ordinarily appear in the return and record of the respondent in the proceedings, such authority will be utilized when questions of fact are presented which cannot be summarily decided in th