Denver Center for the Performing Arts v. Briggs, 83SA146

• Citation: 696 P.2d 299
• Decision Date: 25 February 1985
• Docket Number: No. 83SA146,83SA146
• Parties: DENVER CENTER FOR THE PERFORMING ARTS, a Colorado non-profit corporation, Plaintiff-Appellant, v. Thomas P. BRIGGS, Manager of Revenue for the City and County of Denver; The Sales, Use and Occupational Tax Section of the Treasury Division of the City and County of Denver; The City and County of Denver, a Municipal Corporation; The Board of Council, City and County of Denver, and all members thereof; and Federico Pena, Mayor of the City and County of Denver, Defendants-Appellees.
• Court: Supreme Court of Colorado

Page 299

696 P.2d 299

DENVER CENTER FOR THE PERFORMING ARTS, a Colorado non-profit corporation, Plaintiff-Appellant, v. Thomas P. BRIGGS, Manager of Revenue for the City and County

of Denver; The Sales, Use and Occupational Tax Section of

the Treasury Division of the City and County of Denver; The

City and County of Denver, a Municipal Corporation; The

Board of Council, City and County of Denver, and all members

thereof; and Federico Pena, Mayor of the City and County of

Denver, Defendants-Appellees.

No. 83SA146.

Supreme Court of Colorado,

En Banc.

Feb. 25, 1985.

Robert E. Goodwin, Geer & Goodwin, P.C., Denver, Lester Ward, Predovich, Ward & Banner, Pueblo, for plaintiff-appellant.

Stephen H. Kaplan, City Atty., Donald E. Wilson, Asst. City Atty., Denver, for defendants-appellees.

DUBOFSKY, Justice.

The Denver Center for the Performing Arts (DCPA) appeals from a district court judgment upholding the Denver Manager of Revenue's decision sustaining assessment of the Facilities Development Admissions Tax (admissions tax) against the DCPA for events in the Denver Center Theatre and the Denver Center Cinema. The DCPA maintains that the collection of the tax violates its contract and lease with the City and County of Denver (Denver) and that the tax violates the state and federal constitutional guarantees of equal protection. The district court determined that the DCPA lacked standing to bring this suit, but, to facilitate review, the district court also ruled against the DCPA on the merits. Although we conclude that the DCPA has standing, we affirm the judgment of the district court.

On October 16, 1973, the DCPA and Denver entered into a contract to construct and lease a performing arts center to be operated by the DCPA. Under the contract, the city was to purchase all the land for the center and construct a concert hall. The DCPA would raise $5,000,000 toward the construction of the concert hall. Denver then would lease the concert hall to the DCPA for nominal rent. The DCPA would construct other theaters and facilities on the remainder of the land purchased by the city, and these facilities also would be leased to the DCPA upon payment of nominal rent. The contract provides that legal title to all of the land, buildings and facilities would remain vested in the city. The DCPA would be "entitled to retain all revenues" from the center, and the DCPA's leases would be conditioned upon "the property, structures, facilities and appurtenances" remaining tax exempt and upon the facilities being maintained as public facilities.

In 1974, Denver passed the Facilities Development Admissions Tax ordinance, imposing a ten percent tax on admissions to all events at city-owned facilities, including "the new Performing Arts Center." Denver, Colo., Revised Municipal Code § 53-345(1) (1982). The ordinance requires that the vendor of admissions state the amount of the tax separately from the sale price on tickets, id. § 53-348(c), and forbids the vendor from absorbing the tax or advertising that it will absorb the tax, id. § 53-349.

On February 25, 1977, the DCPA leased from Denver the land for the Denver Center Theatre and Denver Center Cinema. Under the 1973 contract, the lease provides that the DCPA will construct a theater or theaters, and "be entitled to maintain all revenues" derived from those facilities. The lease also provides "that legal title to the building, or buildings, to be constructed ... shall be vested in the City" and that "[t]he said building, or buildings, when constructed, shall become the property of the City...." The city and the DCPA entered into another lease on December 16, 1977, for the use of the Boettcher Concert Hall, then under construction by the city. That lease provides that the DCPA "shall be entitled to retain all revenues ... except the Facilities Development Admissions Tax." The lease specifically requires the DCPA to collect the tax on admissions to performances in the concert hall.

The DCPA opened the Denver Center Theatre on December 31, 1979, and the Denver Center Cinema in April 1980. Early in 1981, the Denver Department of Revenue audited ticket sales for both the theater and the cinema. On January 21, 1981 Denver assessed the DCPA $98,972.91, including tax, penalty and interest on admissions during the period from the opening of the theater and the cinema through December 1980. The DCPA filed a petition to review this assessment before the Manager of the Department of Revenue. On March 31, 1981, the Department of Revenue assessed the DCPA for admissions to the theater and cinema in the months of January and February 1981. The DCPA amended its petition for review to include the later assessment as well. The DCPA did not challenge the amounts of the assessments, which were based on the DCPA's audited records, but rather asserted that the DCPA should not be subject to the tax for events at the theater and the cinema.

After a hearing, the Manager of Revenue sustained both assessments against the DCPA. The Manager of Revenue found that the theater and the cinema were city-owned facilities upon which admissions taxes should be collected, that the provisions of the 1973 contract and the 1977 lease were not intended to exempt the DCPA from collecting taxes or to allow the DCPA to retain the taxes, and that the DCPA in fact did collect the taxes during the period covered by the assessment. ¹ The manager also held that the admissions tax assessment did not violate any of the constitutional rights asserted by the DCPA.

The DCPA petitioned the district court for review of the Manager of Revenue's decision under C.R.C.P. 106(a)(4) and for declaratory judgment under C.R.C.P. 57. The district court held that the DCPA did not have standing to challenge the application of the tax because the DCPA had not shown any injury-in-fact from the tax. However, to facilitate appellate review, the court also ruled on the remaining issues in the DCPA's petition.

The district court refused to hear the petition for declaratory judgment under C.R.C.P. 57, holding that certiorari review under C.R.C.P. 106(a)(4) was adequate. As C.R.C.P. 106(a)(4) provides only for review of the administrative record, the court did not allow the DCPA to present any testimony or enlarge the record. After reviewing the record, the district court upheld the Manager of Revenue's findings that the 1973 contract and the 1977 lease did not exempt the DCPA from collecting the tax, and that the passage of the tax did not modify or impair the contracts. The court further held that the tax did not violate other constitutional guarantees of due process, equal protection or uniformity of taxation. The court also determined that there was no foundation in fact for the DCPA's claim that it did not have to collect the tax because the theater and the cinema were not city-owned. Therefore, the court upheld the manager's ruling under C.R.C.P. 106(a)(4), determining that the manager neither exceeded his jurisdiction nor abused his discretion.

The DCPA now appeals the decision of the district court on several grounds. The DCPA maintains that it has standing to challenge the assessment and that declaratory judgment under C.R.C.P. 57 is available simultaneously with certiorari review under C.R.C.P. 106. The DCPA further contends that the 1973 contract and 1977 lease unambiguously exempt it from collecting the tax or, in the alternative, that the contract should be so construed. The DCPA alleges that the assessment of the admissions tax violates federal and state constitutional guarantees against the impairment of the obligation of contracts and federal and state equal protection guarantees. The DCPA's final argument is that the admissions tax does not by its terms apply to the Denver Center Cinema and Denver Center Theatre because these facilities are not owned by the city.

I.

The first issue raised is whether the DCPA, as a collector of admissions taxes, has standing to protest the assessments made against it by the Denver Department of Revenue. Today we ruled in Friends of Chamber Music v. City and County of Denver, 696 P.2d 309 (Colo.1985), that Friends of Chamber Music, as a collector of the admissions tax, does not have standing to challenge the tax because the injury it alleged--that the admissions tax deprives it of property without due process of law--was not an injury to a legally protected right. Without readdressing the principles of standing outlined in Friends of Chamber Music v. City and County of Denver, we conclude in this case that the DCPA's allegations are sufficient to confer standing.

To determine whether the DCPA as a tax collector has standing to challenge the validity of the tax as applied to it, we need to consider whether the DCPA's allegations are sufficient under the two-part standing test of Wimberly v. Ettenberg, 194 Colo. 163, 168, 570 P.2d 535, 539 (1977): (1) whether the plaintiff has suffered actual injury from the challenged governmental action; and (2) whether the injury is to a legally protected or cognizable interest. The DCPA alleges that it is injured by both its current tax bill of over $100,000 and its potential future losses in patronage or revenue when it must either raise its ticket prices or receive a lower return thereon by deducting the tax from the price. As the DCPA maintains that it never collected the admissions tax from patrons of the theater or the cinema, the allegation that it will have to pay $100,000 of its own funds meets the first part of the Wimberly test. ² This allegation distinguishes the present case from Wade v. State, 97 Colo. 52, 55, 47 P.2d 412, 413 (1935), in which the tax collector was held to have no standing because it acknowledged that it had already collected the motor fuel tax from purchasers and then sought to avoid remitting the tax to the state. See Friends of Chamber Music, at 315.

The second part of the Wimberly test is met by the DCPA's contentions...