Board of Tax Assessors v. City of Atlanta

• Decision Date: 27 June 2007
• Docket Number: No. A07A0517.,No. A07A0515.,No. A07A0516.,No. A07A0564.,A07A0515.,A07A0516.,A07A0517.,A07A0564.
• Citation: 648 S.E.2d 701,286 Ga. App. 193
• Parties: CLAYTON COUNTY BOARD OF TAX ASSESSORS v. CITY OF ATLANTA (four cases).
• Court: Georgia Court of Appeals

286 Ga. App. 193

648 S.E.2d 701

CLAYTON COUNTY BOARD OF TAX ASSESSORS v. CITY OF ATLANTA (four cases).

No. A07A0515.

No. A07A0516.

No. A07A0517.

No. A07A0564.

Court of Appeals of Georgia.

June 27, 2007.

Hancock, Dempsey & Everett, Brian Richard Dempsey, Jack R. Hancock, Forest Park, for Appellant.

Smith, Gambrell & Russell, Edward H. Wasmuth Jr., William Van Hearnburg Jr., Atlanta, for Appellee.

ANDREWS, Presiding Judge.

These four cases involve disputes between the City of Atlanta (the City) and the Clayton County Board of Tax Assessors (the Board) regarding the taxability of real properties located in Clayton County and owned by the City.¹ They have been consolidated for appeal.

In Case Nos. A07A0515 and A07A0564, the Board appeals the trial court's grant of the motion for summary judgment to the City regarding the taxability of the United States Postal Service's (USPS) new Air Mail Facility (AMF) for, respectively, tax years 2004 and 2003. The AMF was built by the USPS on real property at Hartsfield-Jackson International Airport (the "airport") leased from the City. In granting the City summary judgment, the trial court found the property exempt from taxation.

At issue in Case Nos. A07A0515 and A07A0516 is the taxability, respectively, of a Sheraton Hotel and a convention center located on real property owned by the City and located in Clayton County near the airport for tax year 2003. The Board appeals the trial court's grant of summary judgment to the City finding this property also exempt from taxation.

When reviewing the grant or denial of a motion for summary judgment, this Court conducts a de novo review of the law and the evidence. Desai v. Silver Dollar City, 229 Ga.App. 160, 163(1), 493 S.E.2d 540 (1997). "When a question of law is at issue, as here, we owe no deference to the trial court's ruling and apply the `plain legal error' standard of review." (Citation omitted.) Suarez v. Halbert, 246 Ga.App. 822, 824(1), 543 S.E.2d 733 (2000).

Case Nos. A07A0515 and A07A0564

The following facts are not disputed. In December 1996, the City entered into a lease agreement with the USPS for the lease of the property upon which the USPS built the new AMF at issue in these two appeals. As stated in the lease,

USPS is engaged in the business of transporting property and mail by aircraft, and desires to provide a larger mail sorting and distribution facility at the Airport that requires the use of certain facilities and land which the City owns; and . . . the existing mail facility is small and overburdened by the increased mail volume in the Atlanta Metropolitan Statistical Area[.]

(Emphasis supplied.)

The USPS began operations at the new AMF in 1998, and the existing mail facility was used as an annex to that facility for several years.

Clayton County, by letter of January 29, 2001, concluded that the new AMF was exempt from taxation. By letter of March 28, 2003, however, that tax exemption was removed, precipitating this dispute over tax years 2003 and 2004.

Regarding property owned by the City but located outside its territorial limits, OCGA § 48-5-41(a)(1)(B)(i) determines whether the City must pay taxes. This Code section provides that, in general, all public property is exempt from ad valorem property taxes. OCGA § 48-5-41(a)(1)(A). Public property located outside a political subdivision's territorial limits, however, is not exempt from taxation unless it has been "[d]eveloped by grading or other improvements to the extent of at least 25 percent of the total land area and facilities are located on the property which are actively used for a public or governmental purpose." (Emphasis supplied.) OCGA § 48-5-41(a)(1)(B)(i).

At issue here is the public or governmental purpose provided by OCGA § 6-3-20(a), which provides that:

Counties, municipalities, and other political subdivisions are authorized, separately or jointly, to acquire, establish, construct, expand, own, lease, control, equip, improve, maintain, operate, regulate, and police airports and landing fields for the use of aircraft. . . .

(Emphasis supplied.)

The burden of proof in a tax appeal to the superior court is on the party who initiated the appeal. Therefore, in this case the burden was on [the City]. Further, laws granting an exemption from taxation must be construed strictly in favor of the taxing authority, and all doubts must be resolved against the taxpayer. Consequently, no exemption will be allowed unless the exemption is clearly and distinctly intended by the legislature.

(Citations omitted.) Apollo Travel Svcs. v. Gwinnett County Bd. of Tax Assessors, 230 Ga.App. 790, 791(1), 498 S.E.2d 297 (1998). See also City of Atlanta v. Clayton County Bd. of Tax Assessors, 271 Ga.App. 84, 86, 608 S.E.2d 710 (2004) ("all tax exemptions are to be strictly construed since taxation is the rule and exemption is the exception.")(punctuation omitted).

1. In its first enumerations of error in these two cases,² the Board contends that consideration of whether AMF was reasonably and uniformly used for the public convenience and welfare to facilitate the effective operation of the air transportation facility is precluded by collateral estoppel based on City of Atlanta v. Clayton County Bd. of Tax Assessors, supra.

"`It is axiomatic that the same issue cannot be relitigated ad infinitum. (Cit.)' [Cit.]" Johnson v. State, 272 Ga.App. 294, 296(6), 612 S.E.2d 29 (2005).

[W]here there is identity of parties and subject matter, res judicata bars relitigation of matters that were or could have been litigated in an earlier action. [Cit.] Collateral estoppel like res judicata, requires identity of parties or privity. However, unlike res judicata, collateral estoppel does not require identity of the claim but only precludes readjudication of an issue already adjudicated between the parties or their privies in a prior action. [Cit.]

Hardwick v. Williams, 272 Ga.App. 680, 682(2)(b), 613 S.E.2d 215 (2005).

Collateral estoppel is applicable to ad valorem property tax appeals to the Superior Courts. Thomas County Bd. of Tax Assessors v. Thomasville Garden Center, 277 Ga. App. 591, 593(2), 627 S.E.2d 192 (2006).

In 2002, the City appealed the Board's determination that the old postal facility at the airport, which was being used as an annex for the AMF, was not exempt from taxation. The superior court order upholding the Board's finding was affirmed by this Court in City of Atlanta v. Clayton County Bd. of Tax Assessors, supra. We found that

resolution of this case turns on whether the City acquired, leased, or owned the parcel for the purpose of "airports and landing fields for the use of aircraft." In Clayton County Bd. of Tax Assessors v. City of Atlanta, 164 Ga.App. 864, 298 S.E.2d 544 (1982), we determined that this language "encompasses all property reasonably and uniformly used for the public convenience and welfare to facilitate the effective operation of the air transportation facility." Id. at 868(2) . In this case, the trial court properly concluded that the parcel at issue does not fall within the scope of the definition outlined in Clayton County, supra. The record shows that on January 1, 2001, the parcel was used by the Postal Service as a mail sorting and transfer facility. [The tax year at issue is 2002. The record is unclear as to the precise use on January 1, 2002.] As an annex to a newer mail facility also located at the airport and built in 1998, it was referred to as the "old postal facility." [We do not address whether the City should pay ad valorem taxes for any fee interest it holds on the parcel where the new mail facility is located.] In 2000, the City had begun negotiating with the Postal Service to buy out the remaining term of its lease on the annex. In October 2002, the Postal Service agreed to allow the City to buy its lease. The City took possession in late 2002 and demolished the annex in 2003. We find that while it was economical and convenient for the Postal Service to have an onsite annex to its newer facility, the Postal Service's use of the annex did not "facilitate the effective operation of the airport." Instead, it facilitated the effective operation of the Postal Service. Moreover, the City's subsequent purchase of the Postal Service's lease and demolition of the annex demonstrates that the annex did not facilitate the effective operation of the airport. The trial court did not err by concluding the City was not entitled to the exemption embodied in OCGA § 48-5-41(a)(1)(B)(i).

(Footnote omitted; emphasis supplied.) City of Atlanta v. Clayton County Bd. of Tax Assessors, supra, 271 Ga.App. at 86-87, 608 S.E.2d 710.³

The order of the superior court, affirmed by this Court, additionally stated that:

The question to here be resolved is not whether the leasehold interest is or is not taxable, but whether the City of Atlanta's fee ownership interest, which exists separate and apart from the leasehold held by the United States Postal Service, is to be taxed to the City. As to that interest the City is acting not in its governmental capacity, but in its proprietary capacity, or as a regular commercial entity, in that it is leasing a property for the purpose of generating rental revenue for the City. See Rabun Gap-Nacoochee School [v. Thomas, 228 Ga. 231, 184 S.E.2d 824 (1971)]. With regard to that fact, there is no dispute. And as to the mere fact that a lease to the United States Post Office or any other lessee places the City in the role of market participant[,] there can be no dispute.

(Bold emphasis in original. Italicized emphasis supplied.)

This portion of the order was not the subject of any enumerations of error in the appeal and remains conclusive between the City and the Board as to the capacity of the City in leasing to the USPS. Jenkins v. Jenkins, 281 Ga.App. 756, 761(1)(c), 637 S.E.2d 56 (2006).

Further, in a separate action seeking refunds of the ad valorem taxes paid by the...