Mesa Verde Co. v. Montezuma County Bd. of Equalization
| Decision Date | 24 April 1995 |
| Docket Number | No. 94SA20,94SA20 |
| Citation | 898 P.2d 1 |
| Parties | MESA VERDE COMPANY, Plaintiff-Appellee, v. The MONTEZUMA COUNTY BOARD OF EQUALIZATION and the Montezuma County Assessor, Defendants-Appellants, and The Property Tax Administrator of the State of Colorado, Intervenor. |
| Court | Colorado Supreme Court |
Holme Roberts & Owen LLC, Jeffrey A. Chase, James D. Butler, Stephanie M. Tuthill, Denver, for plaintiff-appellee.
Bob D. Slough, Cortez, for defendants-appellants.
Gale A. Norton, Atty. Gen., Stephen K. ErkenBrack, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Maurice G. Knaizer, Deputy Atty. Gen., Larry A. Williams, First Asst. Atty. Gen., General Legal Services Section, Denver, for intervenor.
The appellants, the Montezuma County Board of Equalization and the Montezuma County Assessor (referred to jointly as the County), and the intervenor, the Property Tax Administrator of the State of Colorado, appeal the judgment of the Montezuma County District Court. The court declared that the possessory interest in, and use of, four parcels of land (the subject land) located within the boundaries of Mesa Verde National Park (the Park) are exempt from taxation and overturned Montezuma County's assessment of property tax against the appellee, the Mesa Verde Company (Mesa Verde). The district court held that (1) section 39-3-135, 16B C.R.S. (1994), which provides for the taxation of exempt property, is facially unconstitutional; and (2) Mesa Verde's interest was exempt from taxation under the limiting provisions of sections 39-3-135(1) and (4)(c).
We reverse the judgment of the district court. We hold that (1) the exemptions authorized pursuant to sections 39-3-135(1) and (4)(c) are contrary to the Colorado Constitution; (2) taxation of Mesa Verde's use and possession of the subject land does not violate the Supremacy Clause of the United States Constitution; and (3) the possessory interest of Mesa Verde in the subject land is taxable pursuant to section 39-3-135(6).
The subject land, which lies within the boundaries of the Park, is owned in fee simple by the United States. Mesa Verde, a Colorado corporation, operates a concession within the Park which provides commercial facilities and services to the public. Mesa Verde has been operating its concession pursuant to an agreement with the United States since 1937. In 1982, Mesa Verde entered into a written contract with the United States pursuant to which it continues to operate the concession. Under the 1982 contract, Mesa Verde must provide, inter alia, lodging, food and beverage services, merchandising, automobile service stations and garages, and transportation within the Park. In turn, the Department of the Interior assigned to Mesa Verde government improvements and certain parcels of land within the Park necessary to Mesa Verde's concession operations. While title to all capital improvements remains in the federal government, this court approved taxation of Mesa Verde's possessory interest in both the capital improvements that it constructed or installed, and in existing government improvements, in Mesa Verde Co. v. Board of County Comm'rs, 178 Colo. 49, 495 P.2d 229 (1972).
In August 1989, the County listed, appraised, and assessed an actual value of the use of, and possessory interest in, the land on which Mesa Verde operates its concession within the Park for 1989 property tax purposes. 1 The Assessor valued Mesa Verde's interest in the subject land at $1,837,180 and included that interest in the 1989 property tax assessment roll for Montezuma County. Mesa Verde filed an action in Montezuma County District Court challenging the assessment. While that action was pending, the County assessed Mesa Verde for the 1990 tax year. Mesa Verde then brought a second action. The trial court consolidated the two actions and bifurcated for separate trials the issues of (1) whether the County's attempt to tax Mesa Verde is legal, and (2) the valuation of any taxable right Mesa Verde might be found to possess. The second issue has yet to be tried by the district court.
In its challenge to the County's taxation authority, Mesa Verde claimed that it was exempt from property tax pursuant to sections 39-3-135(1) and (4)(c). 2 The County filed a motion for partial summary judgment, asserting that the property was not exempt from taxation. The County argued that, to the extent sections 39-3-135(1) and (4)(c) established an exemption from taxation applicable to the property, the exemptions violated Article X, sections 3(1)(a), 6, 9, and 10 of the Colorado Constitution. Assuming for purposes of argument that the exemption was not unconstitutional under the cited state constitutional provisions, the County argued that the exemption violated equal protection guarantees under the Colorado and United States Constitutions by imposing a disproportionate tax burden on other taxpayers. Mesa Verde filed a cross-motion for summary judgment, asserting that the property was exempt from taxation pursuant to sections 39-3-135(1) and (4)(c), and further asserting that the County lacked standing to challenge the constitutionality of those statutory provisions.
In May 1991, the district court granted summary judgment to Mesa Verde. The district court found that Mesa Verde does not enjoy a taxable "ownership interest" in the subject land. The district court also held that Mesa Verde's use and possessory interest in the subject land was nevertheless exempt from Colorado property tax under the plain language of sections 39-3-135(1) and 39-3-135(4)(c), and that the actions of the Board and the Assessor were therefore illegal. Further, the district court found that the appellants had no standing to challenge the constitutionality of the statute.
The County appealed the district court's decision to this court. The only issue raised by the County on appeal was the propriety of the district court's ruling that it lacked standing to challenge the constitutionality of sections 39-3-135(1) and (4)(c). In Mesa Verde Co. v. Montezuma County Board of Equalization, 831 P.2d 482 (Colo.1992), we affirmed the district court.
After the enactment of section 30-11-105.1, 12A C.R.S. (1994 Supp.), which gave the appellants standing to challenge the constitutionality of section 39-3-135, the County filed a motion to vacate the judgment of the district court. 3 The parties then stipulated that the County had standing to challenge the constitutionality of section 39-3-135, and that the County's motion to vacate would be treated as a motion for summary judgment.
Pursuant to the parties' stipulation, the district court entered an order partially vacating its May 1991 order to the extent that it had determined that the appellants lacked standing to challenge the constitutionality of the statute. The district court further stated that "the [May 1991] Order shall remain in full force and effect unless and until this court determines that C.R.S. section 39-3-135 is unconstitutional."
In October of 1993, the district court denied the County's motion for summary judgment and held that Mesa Verde remained entitled to judgment as a matter of law. The district court found that, under United States v. Colorado, 627 F.2d 217 (10th Cir.1980), aff'd sub nom., Jefferson County v. United States, 450 U.S. 901, 101 S.Ct. 1335, 67 L.Ed.2d 325 (1981), and Southern Cafeteria, Inc. v. Property Tax Administrator, 677 P.2d 362 (Colo.App.1983), section 39-3-135 is unconstitutional as applied to users of federally-owned real property because it violates the Supremacy Clause of the United States Constitution. The district court held that neither the subject land nor any alleged interest of Mesa Verde in the subject land is subject to Colorado property taxation and that the County was without authority to tax Mesa Verde's use and possessory interest.
The County thereafter appealed to this court. 4 We now review the following questions:
(1) Whether the [district] court erred in failing to vacate the judgment because the actual value of Mesa Verde's possessory interest is taxable under Colorado law.
(2) Whether the [district] court erred in failing to find the exemptions in 39-3-135(1) and (4)(c) unconstitutional and void but not the entire statute.
(3) Whether the [district] court erred in finding 39-3-135 [to be] in violation of the Supremacy Clause of the United States Constitution.
We reverse the judgment of the district court and hold that Mesa Verde's use and possessory interest in the federal land where its concession is located is subject to the tax imposed by Montezuma County.
We first determine whether Mesa Verde's use and possession of the subject land owned by the federal government and used by Mesa Verde pursuant to the terms of the concession contract is "real property" subject to property tax under Colorado law. Because we find that it is, we then determine whether Mesa Verde's interest falls under the exemptions from taxation provided in sections 39-3-135(1) and (4)(c) for park concessionaires. We find that it does.
Mesa Verde contends that neither the subject land nor Mesa Verde's interest in the subject land is "real property" within the meaning of section 39-1-102(14)(a). Mesa Verde asserts that title to the subject land is held by the United States and has not been "acquired from the government of the United States ... or from the state" as required by section 39-1-102(14)(a).
The County maintains that Mesa Verde's possessory interest in the subject land is "real property." Relying upon Article X, Section 10, of the Colorado Constitution, 5 and section 39-1-106, 16B C.R.S. (1994), 6 the County contends that the General Assembly enacted section 39-3-135 in order to allow the taxation of a private company with a possessory interest in publicly-owned real property. According to the County, although the United...
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