Iowa Supreme Court building.

Iowa Supreme Court building.

The Iowa Supreme Court has ruled a Des Moines-based insurance company will have to pay more in property taxes for it headquarters in downtown Des Moines.

Wellmark completed its nearly 600,000 square foot headquarters in March of 2010 at a cost of around $150 million.

The outside of the building is finished with limestone, sandblasted precast concrete, and glass, with a large U-shaped, recessed, curved glass wall on the southern exposure. It features among its amenities, a convenience store, an art gallery, a full-service restaurant, and a conference center, as well as office space.

The Polk County Assessor valued the building at $99 million for property tax purposes. Wellmark appealed that valuation, arguing the sales data in Des Moines showed the building would not likely be resold to another company as a corporate headquarters. It said it is more likely part of the building would be a headquarters and the rest would be rented out as office space.

The district court and Iowa Court of Appeals agreed with Wellmark, and set the valuation for property taxes at 78 million dollars. The Iowa Supreme Court overturned the lower courts, saying there may be a lack of sales of corporate office buildings in Des Moines, the court does not believe that there is no market for the building, just no active market.

“It is true, of course, that the market for the Wellmark property for use as a single-tenant office building may be limited. But we think the fact that the property is currently being successfully used as a single-tenant corporate headquarters cannot go unnoticed. Current use is an indicator that there is demand for such a structure,” according to the ruling.

The ruling also says it is ironic that a taxpayer would build a 150 million dollar building and then say it is worth less than half that amount for tax purposes. “We further note that under the approach advocated by Wellmark, very expensive and costly properties such as large manufacturing concerns could escape fair taxation on the ground of lack of a local market for a specific use.”

The High Court says “a substantial discount in market value because of the lack of an active market strikes us as unjustified by the current record.” The Supreme Court says the $99 million evaluation for property taxes should stand.

The full ruling: Wellmark ruling PDF