Mountain Ranch Estates v. Utah State Tax Comm'n, 20030423.

• Court: Utah Supreme Court
• Writing for the Court: NEHRING, Justice
• Citation: Mountain Ranch Estates v. Utah State Tax Comm'n, 100 P.3d 1206, 2004 UT 86 (Utah 2004)
• Decision Date: 26 October 2004
• Docket Number: No. 20030423.,20030423.
• Parties: MOUNTAIN RANCH ESTATES, Petitioner, v. UTAH STATE TAX COMMISSION, Respondent.

100 P.3d 1206

2004 UT 86

MOUNTAIN RANCH ESTATES, Petitioner, v. UTAH STATE TAX COMMISSION, Respondent.

No. 20030423.

Supreme Court of Utah.

October 26, 2004.

Joseph E. Tesch, Kraig J. Powell, Victoria W. Romney, Park City, for Mountain Ranch Estates.

Jami R. Brackin, David L. Thomas, Coalville, for The Board of Equalization of Summit County.

Mark L. Shurtleff, Att'y Gen., Laron J. Lind, Asst. Att'y Gen., Salt Lake City, for Utah State Tax Commission.

NEHRING, Justice:

¶ 1 Mountain Ranch Estates seeks review of the Utah State Tax Commission's final decision denying it an adjustment in its 2001 tax valuation. Mountain Ranch claims that the Commission erred when it refused to grant Mountain Ranch tax relief under Utah Code section 59-2-1006(4), which mandates a reduction in the assessed value of a property if the subject property's appraisal deviates five percent from the assessed value of comparable properties. We affirm.

FACTUAL AND PROCEDURAL HISTORY

¶ 2 Mr. Andrew Shaw purchased two hundred acres of land in the Snyderville Basin area of Summit County, Utah. Mr. Shaw applied for, and received, development approval for an eighty-one lot, single-family residential subdivision called Mountain Ranch Estates. By October 2000, much of the infrastructure work was complete, and lots were marketed and sold. By the end of 2000, Mountain Ranch had sold twelve totaling a little over $2 million.

¶ 3 The Summit County Assessor's Office assessed the value of the Mountain Ranch property for the purpose of determining property tax. The assessor assigned value to Mountain Ranch based on the sale prices of ten of the twelve lots sold. By using this data of actual lot sales, the assessor valued Mountain Ranch's unsold lots at ninety-five to one hundred percent of their list prices.

¶ 4 At approximately the same time Mountain Ranch was under development, a second Snyderville Basin subdivision, Glenwild Phase I, was underway. Glenwild and Mountain Ranch shared certain characteristics. Both employed some of the same contractors, and both were available for sale at approximately the same time. Mountain Ranch and Glenwild Phase I share similar mountain settings and views, and both are marketed to affluent purchasers seeking second homes. Unlike Mountain Ranch, however, Glenwild was approved as a three-phase development. Glenwild also has amenities not planned for Mountain Ranch such as gated access, a private golf course, tennis courts, and a clubhouse. By the end of 2000, while Mountain Ranch had sold twelve lots to Glenwild's seven, Glenwild's sales had produced $1 million more than Mountain Ranch's total sales. ¶ 5 The Summit County assessor valued each Glenwild lot by dividing the purchase price for the raw land comprising the subdivision by the total number of approved lots. The application of this formula resulted in an assessed value of Glenwild lots which was substantially less than the asking price for the lots. The ratio between the assessed value and asking price therefore greatly exceeded the ratio reached in the assessment of Mountain Ranch.

¶ 6 After failing to persuade the Summit County Board of Equalization to adjust its assessed valuation to match that of Glenwild, Mountain Ranch appealed to the Utah State Tax Commission. It challenged both the statutory and the constitutional legitimacy of its assessed valuation. Mountain Ranch contended that it was entitled to relief under Utah Code section 59-2-1006(4), which applies to property valued outside the range of five percent of the valuation assigned to comparable properties. It also claimed that it was denied equal protection in violation of the United States and Utah Constitutions. After a hearing, the Commission entered its findings of fact, conclusions of law, and final decision affirming the Board of Equalization. Mountain Ranch then sought review in this court, renewing its statutory and constitutional challenges. We affirm.

STANDARD OF REVIEW

¶ 7 The Commission's determination that Mountain Ranch was not entitled to an adjustment to its assessment under section 59-2-1006(4) requires us to apply several standards of review. Utah Code Ann. § 59-2-1006(4) (2000). We will affirm the Commission's factual findings, which here center on the similarities and differences between Mountain Ranch and Glenwild, if they are supported by substantial evidence. Utah Code Ann. § 59-1-610(1)(a) (2000). We have no occasion, however, to conduct such a review of the Commission's factual findings because we affirm the Commission's ruling on legal grounds independent of Mountain Ranch's factual challenges. We review the Commission's interpretation of section 59-2-1006(4) for correctness. Id. The interpretative dispute generated in this review concerns the meaning of "comparable properties." Id. § 59-2-1006(4). Finally, we also apply a nondeferential standard of review to the Commission's rulings on Mountain Ranch's constitutional claims. Id. § 59-1-610(1)(b).

ANALYSIS

¶ 8 Mountain Ranch insists that it was erroneously denied relief mandated by section 59-2-1006(4) of the Utah Code. Utah Code Ann. § 59-2-1006(4) (2000). This statute requires the county board of equalization to "adjust property valuations to reflect a value equalized with the assessed value of other comparable properties if: ... (b) the commission determines that the property that is the subject of the appeal deviates in value plus or minus 5% from the assessed value of comparable properties." Id. Mountain Ranch contends that, contrary to the Commission's findings of fact, it successfully demonstrated that Glenwild was a "comparable property" to Mountain Ranch and, because Mountain Ranch was valued at five percent more than Glenwild, it is entitled to an adjustment of its valuation to match Glenwild's. The Commission read the terms "comparable properties" as used in section 59-2-1006(4) to require a party seeking an adjustment to present more than one similar but disparately valued property in order to be eligible for a valuation adjustment. Id. We agree.

¶ 9 We base our interpretation on the plain language of the statute and the compatibility of that interpretation with the Utah Constitution and Utah Property Tax Act.¹ Under our rules of statutory construction, we look first to the statute's plain language to determine its meaning. Lovendahl v. Jordan Sch. Dist., 2002 UT 130, ¶ 21, 63 P.3d 705. Under a plain language analysis, we interpret "comparable properties" to mean plural or multiple properties — more than one comparable property. As the Commission noted, Mountain Ranch's interpretation of section 59-2-1006(4) would mean that "any property owner could have its assessment lowered if it could find a single under-assessed comparable property even if the other 10, 20 or 30 comparable properties were assessed within 5 percent of the subject property's assessed value."

¶ 10 Mountain Ranch attempts to turn the Commission's reasoning on its head, contending that neither the Commission nor the Board of Equalization identified another suitable comparable property other than Glenwild and, therefore, Glenwild itself acquired the status of multiple properties because it represented "all" comparable properties. We do not read section 59-2-1006(4) to shift to the Commission or county the burden of producing comparable properties within the five-percent valuation range in order to avoid transforming the valuation of a single comparable property, identified by a property owner, into a benchmark of uniformity and equality to which the other property's valuation must be adjusted. See First Nat'l Bank of Nephi v. Christensen, 39 Utah 568, 578, 118 P. 778 (1911) (holding that the burden to show inequality of an assessment is on the taxpayer).

¶ 11 Our interpretation is supported not only by the plain language of section 59-2-1006(4), but by the constitutional and statutory provisions from which this valuation adjustment formula derives. "We read the plain language of the statute as a whole, and interpret its provisions in harmony with other statutes in the same chapter and related chapters." Miller v. Weaver, 2003 UT 12, ¶ 17, 66 P.3d 592. Article XIII, section 2 of the Utah Constitution states that "[a]ll tangible property in the state ... shall be taxed at a uniform and equal rate in proportion to its value, to be ascertained as provided by law." Utah Const. art. XIII, § 2, cl. 1.

¶ 12 The Utah Property Tax Act codified this constitutional mandate, providing that "[a]ll tangible taxable property shall be assessed and taxed at a uniform and equal rate on the basis of its fair market value." Utah Code Ann. § 59-2-103(1) (2000). The hallmarks of these constitutional and statutory directives are the notions of uniformity, equality, and a universal measure of valuation — fair market value. At the core of Mountain Ranch's argument is its contention that section 59-2-1006(4) reflects a legislative intention that considerations of uniform and equal tax assessment be given preeminent policy status over fair market value. Put another way, it reads the statute to stand for a taxation policy that prizes uniformity of valuation over accuracy of valuation, and a taxation policy that countenances erroneous property valuations so long as the error is uniformly applied. To make its case that it was comparable to Glenwild, Mountain Ranch must discredit fair market value as a relevant factor in conducting a section 59-2-1006(4) inquiry because it concedes that the assessment of its property properly reflects its fair market value.

¶ 13 According to Mountain Ranch, actual lot sales, rather than relative stages of completion, is, to use Mountain Ranch's term, the "sine qua non" of fair market value determination. Mountain Ranch was valued using its sales history, and its assessed valuation accurately reflected its fair market value. Although Glenwild had sold lots at or about their asking prices, their value was based on the...