Premiere Rv & Mini Stor. v. Maricopa County

• Decision Date: 15 September 2009
• Docket Number: No. 1 CA-TX 08-0009.,1 CA-TX 08-0009.
• Parties: PREMIERE RV & MINI STORAGE LLC, Plaintiff/Appellee, v. MARICOPA COUNTY, a political subdivision of the State of Arizona, Defendant/Appellant.
• Court: Arizona Court of Appeals

215 P.3d 1121

222 Ariz. 440

PREMIERE RV & MINI STORAGE LLC, Plaintiff/Appellee, v. MARICOPA COUNTY, a political subdivision of the State of Arizona, Defendant/Appellant.

No. 1 CA-TX 08-0009.

Court of Appeals of Arizona, Division 1, Department T.

September 15, 2009.

Nearhood Law Offices, PLC By James R. Nearhood, Scottsdale, Attorneys for Plaintiff/Appellee.

Andrew P. Thomas, Maricopa County Attorney By Louis F. Comus, III, Deputy County Attorney And Jean W. Rice, Deputy County Attorney, Phoenix, Co-Counsel for Defendant/Appellant.

Law Office of Jerry A. Fries By Jerry A. Fries, Phoenix, Co-Counsel for Defendant/Appellant.

OPINION

SWANN, Judge.

¶ 1 When a parcel of real property is "split" into two or more parcels, the method by which property is valued for tax purposes is affected. The timing of the split can therefore have a significant effect on the amount of tax levied, and this case requires us to decide when a split occurs. We hold that when a portion of a parcel is sold, a split occurs, for tax purposes, when the Assessor completes the process of identifying and valuing the resulting parcels—not at the moment of the sale.

FACTS AND PROCEDURAL HISTORY

¶ 2 In 2003, there existed a 17-acre parcel, Maricopa County tax parcel number 501-46-003E (the "Parent Parcel"), that was comprised of a 16-acre mini-storage property and one acre of vacant land. On December 12, 2003, the owner of the Parent Parcel conveyed the one acre of vacant land to Desert West Holdings, Inc. ("Desert West"). On December 17, 2003, the owner of the Parent Parcel conveyed the 16-acre mini-storage property to KTP Holdings, LLC, DLP Holdings, LLC and MKP Holdings, LLC. On December 30, 2004, KTP, DLP and MKP conveyed the mini-storage property (the "Subject Property") to Premiere RV & Mini Storage ("Premiere").

¶ 3 In April 2004, the Assessor became aware of the 2003 sales of the two portions of the Parent Parcel. By that time, the Assessor had already valued the Parent Parcel for purposes of the 2005 tax year and had mailed the initial 2005 valuation notice to the original owner of the Parent Parcel pursuant to A.R.S. § 42-15101. The valuation date for the 2005 tax year was January 1, 2004.

¶ 4 There are two methods of valuation of real property under Arizona law. A.R.S. § 42-13301(A) ("Rule A") prescribes a methodology that prevents rapid rises in limited property value ("LPV") that might result from market increases, and generally applies when there have been no changes to the property that would affect its value. A.R.S. § 42-13302 ("Rule B") permits LPV to be determined by reference to the value of comparable properties. Rule B applies in a number of circumstances, including changes to the property by construction or destruction of improvements and "splits." In a rapidly appreciating real estate market, it is to the taxpayer's advantage to have a Rule B valuation applied as early as possible. In a declining market, delayed application of Rule B benefits the taxpayer, as the valuation then reflects more of the decrease in surrounding property values.

¶ 5 When a parcel is split, A.R.S. § 42-15105 permits the Assessor to amend the valuation and inform the owner of any change to the valuation on or before September 30 of the valuation year. Here, as in many cases, the Assessor was unable to complete his internal process to effect a change in the identification of the newly split parcels in the tax roll and value those parcels before September 30, 2004, the last day for notice of changed valuation for the 2004 valuation year.

¶ 6 In the 2003 valuation year, the Assessor had determined the 2004 tax year full cash value ("FCV") and LPV of the Parent Parcel were $2,870,100 and $2,298,698, respectively. A.R.S. § 42-13302(B) provides that when a split occurs after September 30 of the valuation year, the total LPV of the new parcels remains the same as the LPV of the original parcel, and the Assessor apportions that LPV among the new parcels. For the 2004 tax year, therefore, the Assessor apportioned the FCV and LPV of the Parent Parcel to the new parcels as follows:

                Parcel             2004 FCV     2004 LPV
                    One Acre lot       $   47,534   $   38,071
                    Subject Property   $2,822,566   $2,260,627
                                       __________   __________
                                       $2,870,100   $2,298,698
                

¶ 7 If he was correct in his contention that the split occurred after September 30, 2004, the Assessor was without the statutory authority to determine a new FCV in the 2004 valuation year. The Assessor, therefore, used the 2004 FCV that he had allocated to the Subject Property (which was based on the FCV of the Parent Parcel determined in the 2003 valuation year) to calculate the LPV for the 2005 tax year.

¶ 8 In 2005, the Assessor used Rule B to determine a new FCV and LPV for the Subject Property for tax year 2006. The application of Rule B in that year resulted in a substantial increase in valuation—the Subject Property was assessed a FCV of $5,680,442 and a LPV of $4,828,376.

¶ 9 On January 18, 2007, Premiere filed its complaint alleging that, because the split should be deemed to have occurred before September 30, 2004, the County should have used Rule B to value the Subject Property for the 2005 tax year, not the 2006 tax year.

¶ 10 The parties agreed that the trial court's resolution of the legal issue would obviate the need for trial, and filed cross-motions for summary judgment. On July 29, 2008, the tax court granted Premiere's motion for summary judgment and denied the County's cross-motion. The essence of the tax court's holding was that a split occurs when the owner of a parcel sells a portion of the parcel—not when the Assessor fixes new values to the newly created parcels. The County timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).

STANDARD OF REVIEW

¶ 11 We review de novo the grant of a motion for summary judgment. Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 199, ¶ 15, 165 P.3d 173, 177 (App.2007). Where, as here, there are no disputed facts, we independently review the trial court's application of law to those facts and are not bound by the trial court's legal conclusions. Ariz. Joint Venture v. Ariz. Dep't of Revenue, 205 Ariz. 50, 53, ¶ 14, 66 P.3d 771, 774 (App.2002). Interpretation of a statute is a question of law, and we owe no deference to a trial court's construction. Turf Paradise, Inc. v. Maricopa County, 179 Ariz. 337, 340, 878 P.2d 1375, 1378 (App. 1994).

DISCUSSION

¶ 12 A.R.S. § 42-13302 (2006) provides:

A. In the following circumstances the limited property value shall be established at a level or percentage of full cash value that is comparable to that of other properties of the same or similar use or classification:

1. Land or improvements that were erroneously totally omitted from the property tax rolls in the preceding year.

2. Property for which a change in use has occurred since the preceding tax year.

3. Property that has been modified by construction, destruction or demolition since the preceding valuation year.

4. Property that has been split, subdivided or consolidated between January 1 through September 30 of the valuation year.

B. In the case of property that is split or consolidated after September 30 through December 31 of the valuation year, the total limited property value of the new parcel or parcels shall be the same as the total limited property value of the original parcel or parcels. For the following valuation year, the limited property value shall be established at a level or percentage of full cash value that is comparable to that of other properties of the same or similar use or classification. The new parcel or parcels shall retain the same value-adding characteristics that applied to the original parcel before being split or consolidated, except as provided in subsection A, paragraph 3 of this section.

(Emphases added.)¹

¶ 13 It is undisputed that a split occurred in this case as a consequence of the December 12, 2003 transaction. No Arizona statute, however, reveals when a split is deemed to occur for purposes of A.R.S. § 42-13302(A)(4) or whether formal action by the Assessor is required before a split occurs for tax purposes.

¶ 14 The fundamental goal of statutory construction is to give effect to legislative intent. Bustos v. W.M. Grace Dev., 192 Ariz. 396, 398, 966 P.2d 1000, 1002 (App.1997). "We look first to the language of the statute on the presumption that the legislature says what it means." Id. (citing Mail Boxes Etc., U.S.A. v. Industrial Comm'n of Ariz., 181 Ariz. 119, 121, 888 P.2d 777, 779 (1995)). "If statutory language is clear and unambiguous, it is normally conclusive unless clear legislative intent to the contrary exists or impossible or absurd consequences would result." Id. "But when the language is ambiguous, we may also consider `the context and subject matter, the effects and consequences of the statute, and other acts that are in pari materia.'" Jones v. Weston, 221 Ariz. 497, 212 P.3d 835 (App.2009) (quoting Ban v. Quigley, 168 Ariz. 196, 198, 812 P.2d 1014, 1016 (App. 1990)). "A statute is ambiguous `if there is uncertainty about the meaning or interpretation of ... [its] terms,' or if `the statute's text allows for more than one rational interpretation.'" Stein v. Sonus U.S.A., Inc., 214 Ariz. 200, 201, ¶ 3, 150 P.3d 773, 774 (App.2007) (quoting Hayes v. Continental Insurance Co., 178 Ariz. 264, 268, 872 P.2d 668, 672 (1994)).²

1. A.R.S. § 42-13302 Is Ambiguous As to the Effective Date of a Split.

¶ 15 Both parties reasonably contend that the plain language of A.R.S. § 42-13302 supports their respective interpretations. As Premiere argues, the language of the statute could demonstrate that the Legislature intended a change to the property, not a change to a tax parcel, to trigger a Rule B adjustment. Premiere focuses on the statute's express provisions requiring Rule B adjustments to LPV when...