Opinion

IN THE SUPREME COURT OF IOWA

No. 13–0204

Filed May 30, 2014

TUNIS E. DEN HARTOG, SHIRLEY ANN SCHWEERTMAN, LEONARD

G. LYBBERT, JAMES EDWARD SCHUMAN, MICHAEL J. MAC, MARY

ELLEN MOLINARO, WILLIAM JAMES ROBERT, and MARK D.

FISHER,

Appellants,

vs.

CITY OF WATERLOO,

Appellee.

Appeal from the Iowa District Court for Black Hawk County,

Todd A. Geer, Judge.

Taxpayers appeal a district court ruling on the applicability of

statutory notice and sale provisions to road right-of-way held by the City.

REVERSED AND REMANDED WITH INSTRUCTIONS.

David R. Nagle, Waterloo, for appellants.

Ivan T. Webber and James R. Wainwright of Ahlers & Cooney, P.C.,

Des Moines, for appellee.

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HECHT, Justice.

A municipality agreed to transfer to a residential developer land

originally acquired for use as a road right-of-way. Taxpayers challenged

in this civil action the legality of the proposed transfer, contending the

municipality failed to follow statutory procedures for the sale of unused

right-of-way. The district court interpreted the relevant statute,

concluded the property in question was not unused right-of-way, and

dismissed the case. Upon appellate review, we conclude the land in

question is unused right-of-way and the municipality may therefore not

sell or transfer it to the developer without first following the statutory

procedure mandating notice to the present owners of adjacent property

and to the persons who owned the land at the time it was acquired for

road purposes. We therefore reverse the district court’s decision and

remand with instructions.

I. Background Facts and Proceedings.

The State of Iowa acquired property in Black Hawk County for

purposes of constructing a state highway in 1959. The highway had

originally been planned as, and enough land had been acquired for, a

four-lane project, but the highway was eventually constructed with just

two lanes. In 1983, the state transferred control of the highway and

attendant property to the City of Waterloo (the City), in accordance with

the terms of Iowa Code chapter 306, entitled “Establishment, Alteration,

and Vacation of Highways.” After the transfer, the highway property

became known as San Marnan Drive in Waterloo. The City has retained

jurisdiction and control over the property in the years since and has

maintained it with grading, mowing, and weed control.

The City has now indicated its intention to transfer the property to

Sunnyside South Addition, LLC (Sunnyside), as part of a development

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agreement. Under the terms of the agreement, Sunnyside proposes to

relocate San Marnan Drive by reconstructing it approximately eighty feet

south of its current position and intends to retain the property on which

the current San Marnan Drive sits for purposes of residential

construction. The City proposes to transfer the highway property to

Sunnyside according to the agreement for the sum of $1.00.

Taxpaying residents of Waterloo (the taxpayers) became aware of

and objected to the proposed transfer in 2011. They filed in the district

court a petition for writ of mandamus and temporary injunction

requesting postponement of the sale on the ground the City’s proposed

transaction failed to comply with certain appraisal, notice, right-of-first

refusal, and public bid requirements set forth in chapter 306. The City

denied the allegations and moved for summary judgment, contending the

sale procedure of chapter 306 applies only to property acquired for

highway purposes that has never been used as and is not currently used

as a highway (or for related roadway purposes), and insisting the chapter

is therefore inapplicable to the previously used and maintained property

here. The taxpayers resisted, contending part of the property had never

been used or developed and noting the City had indicated in a related

legal proceeding the property was subject to the chapter 306

requirements.

The district court sought supplemental briefing. In response, the

taxpayers added a contention that the chapter 306 requirements are

applicable to both land acquired for highway purposes but never used,

and land acquired for highway purposes and previously or currently in

use, whenever the controlling entity proposes to sell it. The City

maintained its position, contending the language of chapter 306

indicates it applies solely to property acquired, but never used, for

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highway purposes. The district court denied the City’s summary

judgment motion and held a bench trial in January 2013.

After trial and a site visit, the court found “the entire subject

property is used for public roadway purposes.” Then, determining the

chapter 306 requirements apply only to land not currently in use, the

court concluded the requirements were inapplicable to the property at

issue here and dismissed the taxpayers’ petition.

The taxpayers appealed the district court decision and we retained

the appeal.

II. Scope of Review.

The parties assert our review is for errors at law. Because

mandamus actions are triable in equity, however, our review is de novo.

Koenigs v. Mitchell Cnty. Bd. of Supervisors, 659 N.W.2d 589, 592 (Iowa

2003). We review the district court’s interpretation of statutory

provisions for errors at law. In re Estate of Whalen, 827 N.W.2d 184, 187

(Iowa 2013).

III. Discussion.

Section 306.23 of chapter 306 sets forth the specific procedural

rights the taxpayers seek to invoke here. When an agency 1 in control of

land “which is unused right-of-way” intends to sell the land, the section

provides the agency must determine the fair market value of the land by

independent appraisal and give notice of the intent to sell and the fair

market value to both the previous owner of the land and the owner of the

“adjacent land from which the” piece of land was originally purchased.

See Iowa Code § 306.23(1) (2013). These individuals must then be given

1“Agency” is defined broadly in this context to mean “any governmental body

which exercises jurisdiction over any road as provided in section 306.4.” Iowa Code

§ 306.2(1) (2013).

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the opportunity “to be heard and make offers within sixty days of the

date the notice is mailed,” and any offer equaling or exceeding the others

and exceeding fair market value must “be given preference by the

agency.” Id. § 306.23(2). If no offers meeting these criteria are received,

the provision directs the agency to “transfer the land for a public purpose

or proceed with the sale of the property.” Id. Section 306.22 sets forth

specific “terms and conditions” for these sales, or alternatively, grants

the agency authority to sell tracts for cash. Id. § 306.22(1) (“[T]he agency

in control of the highway may sell the tract for cash.”); id. § 306.22(2)

(“The department may contract for the sale of any tract of land subject to

the following terms and conditions: . . . .”).

As noted, the parties dispute the meaning and import of the phrase

“which is unused right-of-way” in section 306.23. 2 The City urges the

phrase plainly refers narrowly to land not currently in use for roadway or

related purposes. The taxpayers respond that section 306.23 is very

clearly to be read in connection with section 306.22, which defines all

“unused right-of-way” by implication in setting forth sale conditions for

unused right-of-way and referring broadly to any land the agency

adjudges “will not be used” for roadway purposes. See Iowa Code

§ 306.22 (“Sale of unused right-of-way.”). The parties agree section

306.23 must incorporate the meaning of section 306.22, and the broad

designation in section 306.22, the taxpayers contend, clearly reaches

land currently in use so long as the agency has reached a determination

2The parties agree “right-of-way” in this context refers to the entire “area of land”

reserved “for roadway purposes,” and agree the area denoted here is coextensive with

the area denoted by the word “road” in section 306.3. See Iowa Code § 306.3(7)

(defining “Public road right-of-way”). “Road,” for purposes of chapter 306, refers to the

“entire width” of the “way or place” “open to the use of the public . . . for purposes of

vehicular traffic.” Id. § 306.3(8).

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the land is no longer needed and will no longer be used for roadway

purposes, as the City has here.

We have often explained we construe statutory phrases not by

assessing solely words and phrases in isolation, but instead by

incorporating considerations of the structure and purpose of the statute

in its entirety. In re Estate of Melby, 841 N.W.2d 867, 879 (Iowa 2014).

Consideration of the context in which words are used allows us to give

them ordinary meanings best achieving the statute’s purpose. Id. We

look to related statutory provisions and our caselaw for these structural,

linguistic, and purposive contextual cues. Id. at 879–80.

As a starting point here, we find it instructive chapter 306 is

entitled “Establishment, Alteration, and Vacation of Highways,” and very

clearly sets forth provisions and procedures for establishing, altering,

improving, closing, and vacating roads. See, e.g., Iowa Code § 306.10

(“Power to establish, alter, or vacate.”); id. § 306.18 (“Establishment.”);

Hansell v. Massey, 244 Iowa 969, 970, 59 N.W.2d 221, 221 (1953)

(noting a secondary “road, if vacated, could have been reestablished . . .

only by following the regular statutory procedure for establishing

highways[]”). From these provisions, a clear picture of the procedural

framework for agency action with respect to roadways emerges.

Section 306.10 grants an agency the “power, on its own motion, to

alter or vacate and close any” road system, and similarly, “to establish

new” roads as part of the road system it currently controls. Iowa Code

§ 306.10. In establishing a road, the agency “need not cause a hearing

to be held . . . but may do so.” Id. § 306.18. When vacating or closing

any road or part thereof, by contrast, the agency must generally hold a

hearing regarding the closing, and provide the requisite notice to all

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“adjoining property owners,” among other enumerated parties. 3 Id.

§ 306.11 (“Hearing — place — date.”); id. § 306.12 (“Notice — service.”);

id. § 306.13 (“Notice — requirements.”).

Notably, the notice and hearing provisions for vacating and closing

make specific reference to roads an agency intends to change or alter, as

presumably many, if not most, instances of road alteration and

relocation will involve both a vacation and closing of one roadway or

piece of roadway, and an establishment, in a different location, of a new

roadway or piece of roadway, much like the scenario the City proposes in

the case before us. See id. § 306.11 (“If the road to be vacated or

changed is a [road spanning two counties, the counties acting jointly]

shall fix a date for a hearing . . . .” (emphasis added)). Our general

assembly has required this hearing procedure before closing a roadway,

we have long recognized, in part because “the owner of land abutting a

highway may suffer special damage because of its vacation.” Hansell,

244 Iowa at 972, 59 N.W.2d at 223. Similarly, we have explained, “the

owner of land so situated that it can be reached by no convenient way

other than the vacated road” may also suffer special damages as a result

of the vacating and closing. Id. at 973, 59 N.W.2d at 223. The hearing,

we have noted, protects those property interests “which cannot be taken

from [the enumerated landowners] without compensation.” Id. at 972,

59 N.W.2d at 223.

At a hearing on vacation, all interested parties meeting the

statute’s prerequisites may be heard on their damages claims. Id.

§ 306.14. After the hearing on vacation, the agency is directed to “enter

3The agency need not hold a vacation hearing “[i]f the proposed vacation is of

part of a road right-of-way held by easement and will not change the existing traveled

portion of the road or deny access to the road by adjoining landowners.” Iowa Code

§ 306.11.

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an order either dismissing the proceedings, or vacating and closing the

road . . . in which event it shall determine and state in the order the

amount of the damages allowed to each claimant.” Id. § 306.16 (“Final

order.”). That order is then final, unless “rescinded as provided in

section 306.17,” which grants unsatisfied parties the right to appeal the

agency’s damages determinations in the district court. Id. § 306.16–.17.

If the agency concludes the damages “as finally determined on appeal are

excessive,” the agency has the option of rescinding its order, and

retaining jurisdiction and control over the road. Id. § 306.17. Otherwise,

the road remains “vacat[ed] and clos[ed],” as provided by the order

entered in section 306.16. Id. § 306.16.

Sections 306.22 and 306.23, which set forth procedures governing

an agency’s sales of all “unused right-of-way,” must be read in the

context of this statutory backdrop. See id. § 306.22 (“Sale of unused

right-of-way.”). The sale conditions and procedures are invoked, section

306.22 directs, when title to land “has been or may be acquired” for

roadway purposes and “when in the judgment of the agency” the land

“will not be used in connection” with roadway purposes. Id. As standard

Iowa Department of Transportation practice and standard county

practice reveals, the sale procedures will often follow a damages hearing

regarding vacation, and the procedures recognize the interests of distinct

sets of parties. See, e.g., Iowa Dep’t of Transp., Instructional

Memorandums to County Engineers, I.M. No. 4.030, at 2 (2002), available

at http://www.iowadot.gov/local_systems/publications/im/imtoc.pdf

(“Vacated road right-of-way held by fee title may be sold under Iowa Code

section 306.22 (unused right-of-way).”). Compare Iowa Code § 306.12

(granting hearing rights regarding vacation and closing of roadway to

“adjoining property owners,” adjoining utility companies, and county

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boards of supervisors in control of the tract), with id. § 306.23(1)

(granting right of notice of sale and right-of-first-refusal to adjacent

property owner of unused right-of-way and to “person who owned the

land at the time it was purchased”) and id. § 306.24 (“Any sale of land as

herein authorized . . . shall be upon the condition[] that the tract . . . so

sold shall not be used . . . to the material damage of the adjacent

owner.”). The broad, backward-looking and future-oriented description

of the land subject to designation as “unused” under section 306.22 for

purposes of sale is instructive given the straightforward framework of

chapter 306.

More specifically, given the procedure the agency must follow in

vacating or relocating tracts used for roads or parts thereof, and given

the resulting court order, which designates tracts previously used for

roads or parts thereof “vacat[ed] and clos[ed],” we conclude those tracts

having been subject to the procedure and subject to final order fit

comfortably within the class of previously acquired land section 306.22

designates as “unused” for the agency’s purposes going forward,

regardless whether the tracts may have been used previously. That

determination informs our conclusion the definition of “unused” cannot

be as narrow as the City contends here. The qualification in section

306.22 that the agency must adjudge the land “will not be used in

connection” with roadway purposes going forward need not have any

bearing on the determination. 4 The qualification merely suggests in

4We note in many scenarios a determination the tract “will not be used” will have

happened at some time prior and may implicate the statutory damages hearing

procedure for abutting and adjacent owners, which might in turn result in a vacation

order, which might in turn have the effect of satisfying the “unused” criterion of section

306.22. In cases where the agency concludes the damages awards are excessive,

however, and retains jurisdiction over the tract, the final order is rescinded and the

tract might then fail to satisfy the section 306.22 criteria.

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some scenarios where land has been acquired or will be acquired,

regardless whether the land has been previously used or through the

statutory vacation procedure, the agency may determine the land will be

used at some point in the future as a roadway, and in those instances

the agency need not sell the tract. 5 Id. § 306.22; see also id. § 306.38

(granting agency authority to rent previously acquired property pending

future use).

Additional statutory cues bolster our conclusion that the tract the

City proposes to transfer here qualifies as “unused” for purposes of the

chapter 306 sale procedures. First, section 306.22 indicates any sales

made according to its terms will be subject to the possessory rights of

certain utilities, who may continue in possession of those rights “in use

at the time of the sale.” Id. § 306.22(3). That language very clearly

suggests tracts sold according to the terms of sections 306.22 and

306.23 might be in use, or may have previously been in use, at the time

of the sale—at odds with the City’s position these sections can only

plausibly be read to apply to land not currently in use and never

previously used. See id.; see also id. § 306.19(6) (noting agency may

determine it “necessary to relocate a utility facility” in the course of

maintaining, relocating, establishing, or improving a road).

Second, when an agency has acquired property for use in

connection with a roadway and determines the tract “is not immediately

needed for such improvement,” section 306.38 grants the agency the

authority to “rent such land or buildings thereon” for fair market value.

5Alternatively,section 306.22 might suggest the agency cannot sell the tract in

those instances, but that question is not before us today. See id. § 306.22 (explaining

agency “may sell the tract” when agency determines tract will not be used for roadway

purposes without addressing what agency may do when it determines tract will be used

(emphasis added)).

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Id. § 306.38. This provision suggests, much like section 306.22(3), land

acquired and held by the agency might already be developed or in use

and may continue in that status until the agency makes some future

determination regarding use, and gives no indication the tract’s status at

acquisition should affect the agency’s obligations on disposition. Just as

importantly for our purposes, section 306.38 clearly duplicates the fair

market value principle articulated in section 306.23. This replication, we

believe, constitutes persuasive evidence of specific purposes underlying

the chapter 306 framework for agency action—namely, the promotion of

fairness, as nearly as is practicable, for all affected interests in tract uses

and transactions, and the protection of the financial interests, as nearly

as is practicable, of the controlling entity and affiliated taxpayers by

securing fair market value in these uses and transactions. See, e.g., id.

§ 306.15 (“After the road has been vacated and closed the board shall sell

[properties acquired in connection with vacation] at the best attainable

price.”); Bricker v. Iowa Cnty. Bd. of Supervisors, 240 N.W.2d 686, 690

(Iowa 1976) (“We agree with petitioners that [section] 306.11

contemplates a genuine hearing, not a sham.”); 1970 Op. Iowa Att’y Gen.

No. 70-3-11 (Mar. 5, 1970), 1970 WL 207604, *2 (“Surely it would

frustrate the purpose of the legislature in passing these particular

statutes, if the board or commission in control of the particular highway

or parcel could not exercise all reasonable means, within the framework

of those conditions set forth in the laws, to secure a reasonable price for

lands which were no longer needed for highway purposes and which

could best be sold to the public.”). Our determination the tract in

question here meets the “unused” requirements of sections 306.22 and

306.23 promotes these purposes in implicating the notice and fair-

market value procedures of section 306.23. Cf. Office of Right-of-Way,

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Iowa Dep’t of Transp., Property Management Policy and Procedure

Manual, at 56 (2007), available at http://www.iowadot.gov/rightofway/

propertymanage/pm_manual.html (“The notice provisions of Iowa Code

§ 306.23 are mandatory.”).

Finally, we note we are guided by the legislative history of section

306.22. Prior to 1974, section 306.22 designated as unused right-of-

way, and granted the agency the power to sell, any tract “[which] is not

now and will not hereafter be used in connection” with a roadway. See

Iowa Code § 306.22 (1973). That language may have been narrower than

the statutory language we construe today, in excluding from the category

of “unused right-of-way” subject to the section 306.22 and 306.23

procedural requirements, at least superficially, those tracts currently in

use. 6 The present statutory language makes no such specific reference

to land currently in use, and thus we cannot conclude the tract in

question here should escape the procedural requirements of sections

306.22 and 306.23.

Given the straightforward procedural framework for agency action

set forth in chapter 306, the linguistic and structural cues in related

provisions in chapter 306, the statutory purpose, and the legislative

history of section 306.22, we cannot conclude the “unused right-of-way”

designations of sections 306.22 and 306.23 are to be read narrowly to

exclude any land currently maintained by the City for some purpose. We

therefore conclude the district court erred in determining these

provisions and their procedural requirements are inapplicable to the

tract in question here.

6Perhaps an interpretive question would have arisen, whatever the state of

development of the tract at the time, had the tract been through the statutory vacation

and closing procedure and a final order had been entered vacating and closing the

property.

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IV. Conclusion.

We reverse the district court’s decision dismissing the plaintiffs’

petition and remand this case for entry of an order enjoining the City of

Waterloo from selling or transferring the subject property without first

following the procedures prescribed in Iowa Code section 306.23.

REVERSED AND REMANDED WITH INSTRUCTIONS.

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