City of Spokane v. Horton
| Decision Date | 22 September 2016 |
| Docket Number | No. 33622–1–III (consolidated with No. 33623–9–III),33622–1–III (consolidated with No. 33623–9–III) |
| Citation | 196 Wash.App. 85,380 P.3d 1278 |
| Parties | City of Spokane, a municipal corporation located in the County of Spokane, State of Washington, Respondent, v. Vicki Horton, Spokane County Assessor, and Rob Chase, Spokane County Treasurer, Appellants, and The State of Washington, by and through the Department of Revenue, as interested party, Appellant. |
| Court | Washington Court of Appeals |
Michael F. Connelly, Etter, McMahon, Lamberson Van Wert & Oresk, 618 W. Riverside Ave., Ste. 210, Spokane, WA, 99201–5048, Ronald Paul Arkills, Attorney at Law, 1100 W. Mallon Ave., Spokane, WA, 99260–2043, James P. Emacio, Attorney at Law, 1115 W. Broadway Ave., Ofc. Cnty. Pros. Civil Div., Spokane, WA, 99260–0080, Andrew J. Krawczyk, Atty. General's Ofc./Revenue Division, P.O. Box 40123, Olympia, WA, 98504–0123, Robert W. Ferguson, Office of the Attorney General, P.O. Box 40100, Olympia, WA, 98504–0100, for Appellants.
Laura Debacker Mcaloon, Workland & Witherspoon, PLLC, 601 W. Main Ave., Ste. 714, Spokane, WA, 99201–0613, James McPhee, Workland & Witherspoon, PLLC, 601 W. Main Ave., Ste. 714, Spokane, WA, 99201–0677, for Respondent.
Monty Dale Cobb, WA Assoc. of County Officials, 206 10th Ave. S.E., Olympia, WA, 98501–1311, as Amicus Curiae on behalf of Washington Association of County Officials.
Lawrence–Berry, J.¶1 The City of Spokane (City) enacted Ordinance C–35231 (Ordinance) for the laudable purpose of providing some of its disadvantaged citizens with a property tax exemption. The Spokane County assessor and treasurer (collectively the County) refused to implement the Ordinance due to their belief it exceeded the City's statutory and constitutional authority. The Department of Revenue (DOR), also believing the Ordinance exceeded the City's statutory and constitutional authority, issued a directive to the county assessor not to implement the Ordinance.
¶2 In response, the City filed a complaint for a writ of mandamus to compel the County to implement the Ordinance. The trial court issued a writ of mandamus compelling the County to implement the Ordinance, in addition to related orders. The County and DOR appeal.
¶3 We conclude the Ordinance is unconstitutional because it violates article VII, section 9 of the Washington Constitution, which requires all municipal property taxes to be uniform in respect to persons and property. We, therefore, reverse the trial court's writ of mandamus and vacate its orders relating thereto.
FACTS
¶4 In November 2014, the voters in the City approved a property tax “levy lid lift” for the improvement of streets throughout the City. Clerk's Papers (CP) at 26. A levy lid lift is a mechanism by which a city can assess a higher levy rate than otherwise would be permitted. The new levy was not intended to create any new tax burdens, and the City represented as much to the voters when it put forth the proposal. Prior to placing the levy on the ballot, the City conferred with the Spokane County assessor's office that assured it that the levy would not result in any increased tax burdens. But, in January 2015, the assessor's office informed the City that the new levy would in fact result in an increase in property taxes for seniors and disabled persons, a total of approximately 5,000 people.
¶5 The City first attempted to work with the assessor's office to resolve this issue. The assessor's office sought advice from DOR, and involved DOR in the discussions with the City. When it became apparent the discussions were futile, the City enacted its own fix and, on February 9, 2015, passed the Ordinance.
¶6 The Ordinance is a property tax exemption for specific citizens living in the City—low income seniors, persons with permanent disabilities, and disabled veterans. After the City passed the Ordinance, the assessor's office sought advice from DOR as to whether the Ordinance was constitutional and within the City's taxing authority. Before a reply was received from DOR, the assessor's office prepared property tax assessment statements that did not apply the exemption granted by the Ordinance. The assessor's office informed the City it planned to mail the assessments without applying the exemption. The City requested that the assessor's office refrain from mailing the assessments without applying the exemption. The assessor's office replied that it could not do so until it received a response from DOR about the validity of the Ordinance. In response, the City filed a complaint seeking to enjoin the assessor's office from mailing any property tax assessments that did not apply the Ordinance. The Spokane County Superior Court granted the City's request and barred the assessor's office, via temporary restraining order, from mailing the property tax assessments until it received a response from DOR.
¶7 DOR responded to the inquiry from the assessor's office a few days later. DOR's letter stated its opinion that the Ordinance “creates an exemption that is not authorized under state law, [and] it should not be implemented.” CP at 125. DOR informed the City that its letter was not binding on the assessor, and it was ultimately the assessor's decision whether the Ordinance should be implemented. Eventually, the City filed an amended complaint seeking a writ of mandamus to compel the County to implement the Ordinance.
¶8 The County answered the City's amended complaint, and also asserted that a writ of mandamus was not appropriate. The County's answer also named DOR as a necessary party, and sought to join DOR. DOR filed a memorandum opposing the County's joinder motion. The City replied to DOR's memorandum and to the County's answer. The trial court held a hearing on April 2, 2015, and issued a decision later that month.
¶9 The trial court issued a writ of mandamus, held that the Ordinance was constitutional, ordered DOR's letter to the contrary aned, ordered the County to implement the Ordinance in accordance with the writ of mandamus, stated that the order was a final judgment, and directed the City to present a motion in support of its request for damages and costs within 30 days.
¶10 The parties asked the trial court to clarify whether it joined DOR as a party to the case. The trial court entered an order adding DOR as a party, but for purposes of appeal only. The County and DOR timely appealed.
ANALYSIS
¶11 DOR argues the Ordinance is unconstitutional. Specifically, DOR argues the Ordinance violates Washington Constitution article VII, section 9, which requires all municipal property taxes to be uniform in respect to persons and property. If the Ordinance is unconstitutional, we need not reach the issues raised by the County concerning whether the remedy of writ of mandamus was inappropriate. See Caffall Bros. Forest Prods., Inc. v. State, 79 Wash.2d 223, 229, 484 P.2d 912 (1971) (). Because constitutional challenges are questions of law, our review is de novo. Amunrud v. Bd. of Appeals, 158 Wash.2d 208, 215, 143 P.3d 571 (2006).
¶12 To answer whether the Ordinance is constitutional, we first examine Washington Constitution article VII, sections 1, 9, and 10.1 We quote the pertinent portions of those sections below, and italicize phrases of particular significance to our decision:
CONST . art. VII, §§ 1, 9, 10 (emphasis added).
¶13 Section 1's emphasis on uniformity of taxes is “ ‘the highest and most important of all requirements applicable to taxation under our system.’ ” Inter Island Tel. Co. v. San Juan County, 125 Wash.2d 332, 334, 883 P.2d 1380 (1994)quoting Savage v . Pierce County, 68 Wash. 623, 625, 123 P. 1088 (1912) ). “Tax uniformity requires both an equal tax rate and equality in valuing the property taxed.” Belas v. Kiga, 135 Wash.2d 913, 923, 959 P.2d 1037 (1998). “If equality is lacking in either area of tax spectrum (i.e., either the rate of taxation or the assessment ratio), there will be a lack of uniformity in the tax burden.” Boeing Co. v. King County, 75 Wash.2d 160, 165, 449 P.2d 404 (1969).3
¶14 DOR argues the Ordinance violates section 9's uniformity requirement by applying two different regular property tax rates to real property in the City and by creating different assessment ratios between real property owned by its exempted citizens and real property not owned by its exempted citizens. The City does not dispute DOR's arguments that its property tax exemption creates nonuniformity.
¶15 Instead, the City responds by mischaracterizing DOR's argument. The City responds that section 1's uniformity requirement is superseded to the extent section 10 allows nonuniform rates for residential property owned by retired persons. The City's response fails to address DOR's actual argument, which relates to section 9, not section 1. The City's response also fails to justify the Ordinance to the extent it exempts persons beyond retired persons, the group designated in...
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City of Spokane v. Horton
...reversed and held that the City's ordinance violated article VII, section 9 of the Washington Constitution.1 City of Spokane v. Horton, 196 Wash. App. 85, 87, 380 P.3d 1278 (2016), review granted, 187 Wash.2d 1017, 390 P.3d 342 (2017). We affirm.2 FACTS AND PROCEDURAL HISTORY ¶ 3 In 2004, t......