Senior Corp. v. Board of Assessment Appeals

Decision Date08 July 1985
Docket NumberNo. 83SA98,83SA98
Citation702 P.2d 732
PartiesSENIOR CORPORATION, Plaintiff-Appellant and Cross-Appellee, v. BOARD OF ASSESSMENT APPEALS of the State of Colorado; Board of County Commissioners of the County of Douglas, Defendants-Appellees, and Denver Southeast Suburban Water and Sanitation District, Defendant-Appellee and Cross-Appellant.
CourtColorado Supreme Court

Calkins, Kramer, Grimshaw & Harring, Wayne B. Schroeder, Daniel N. Larson, Denver, for plaintiff-appellant and cross-appellee.

Duane Woodard, Atty. Gen., Charles B. Howe, Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Billy Shuman, Asst. Atty. Gen., Denver, for defendant-appellee Board of Assessment Appeals.

James K. Kreutz, Englewood, for defendant-appellee Board of County Commissioners.

Moses, Wittemyer, Harrison & Woodruff, James R. Montgomery, Robert E.L. Beebe, Boulder, for defendant-appellee and cross-appellant.

Collins & Cockrel, P.C., Robert L. Tibbals, Jr., Denver, for amicus curiae Special Dist. Ass'n of Colorado.

KIRSHBAUM, Justice.

The appellant, Senior Corp. (Senior), appeals the district court's judgment affirming a decision of the Board of Assessment Appeals (BAA) which approved a tax levied by the Denver Southeast Suburban Water and Sanitation District (the District) on real property owned, at the time the taxes were levied, by Terracor, Inc. (Terracor), Senior's predecessor-in-interest. The district court rejected Senior's challenge to the constitutionality of the levy, but ordered the levy set aside because the District failed to have it approved by the Douglas County Board of County Commissioners (the Commissioners), as provided in section 32-1-207(2), 13 C.R.S. (1984 Supp.). The court also ordered that the tax would be reinstated in the event such approval were obtained. On appeal, Senior challenges the constitutionality of the levy, 1 asserts that the District had no authority to impose the tax, and argues that the levy was invalid because the District failed to follow requisite statutory procedures. The District cross-appeals that portion of the district court's order requiring it to seek approval of the levy from the Commissioners. We affirm in part, reverse in part and remand the cause with directions.

I

The facts material to this appeal are not disputed. The Denver Southeast Suburban Water and Sanitation District encompasses an area between Parker and Franktown in Douglas County. During the time pertinent to this lawsuit, Terracor owned much of the property within the District and planned to develop a residential community called "the Pinery" on this land. In 1970, the District and Terracor entered into an agreement providing for the financing, installation and operation of water and sewer service to the Pinery; subsequently, an initial service plan was formulated which projected the development, costs and revenues of water and sewer services for a portion of the Pinery. A supplement to this agreement was executed in 1973 and a new service plan, encompassing the original as well as a new service area, was issued in 1974. The service plans were submitted to and approved by the Douglas County Board of County Commissioners.

Development of the Pinery proceeded under Terracor's direction. The District designed and installed water and sewer facilities in the manner requested by Terracor. These installations consisted of "town-wide" facilities--major systems designed to serve more than one subdivision--and "in-tract" facilities--systems designed and constructed to serve a single subdivision and the lots therein exclusively. Development, however, did not proceed as rapidly as projected in either the 1971 or 1974 service plans. 2 Fewer parcels were subdivided, i.e., platted for development, than anticipated and one platted area had been vacated prior to development. Also, fewer houses and multiple-family structures had been connected to water and sewer systems than projected. As a consequence of slow development, revenue to the District in the form of tap fees, connection fees and service charges fell below expectations. 3

In 1979, Terracor and the District executed a new contract which rescinded and replaced the 1970 and 1973 agreements. This agreement expressly granted the District "the right to preserve its financial integrity, and to exercise independent judgment in making decisions relative to the expansion of its water and sewer utility systems." It defined "financial integrity," in part, as contemplating increases in the District's general ad valorem taxes, connection fees, tap fees, readiness-to-serve charges, and service charges. By the time this litigation commenced, Terracor had experienced serious financial difficulties and development of the Pinery by it had ceased.

A study conducted in 1981 by engineering consultants for the District concluded that approximately thirty percent of the capital costs of town-wide water and sewer facilities in the Pinery, or a sum of $1,202,256, had been incurred by the District to serve property that remained unplatted. The interest on the bonded indebtedness of the District attributable to these facilities was $82,999. On October 30, 1981, the District adopted its budget for fiscal year 1982 which determined that this interest should be paid by the property for which those facilities had been installed. The budget thus divided the District into two areas for tax purposes. Ten unplatted parcels for which town-wide facilities had been constructed constituted the first area and were taxed at a rate of 530 mills per dollar of assessed valuation. All of these parcels were then owned by Terracor. All other land within the District, which consisted of platted subdivisions that were served by both town-wide and in-tract facilities and unplatted land outside the area served by town-wide facilities, comprised the second area and was taxed at a rate of 15 mills. 4

The ten Terracor parcels subject to the tax levy of 530 mills had an assessed valuation in 1981 of $150,580; the tax from this levy totalled $79,807.40 for 1982. 5 Terracor petitioned the Commissioners to abate taxes in this amount. The petition was denied on December 22, 1981, and Terracor filed an appeal with the BAA. 6 The District intervened as a party respondent in this proceeding. The BAA affirmed, holding that the District "acted within its statutory authority, as provided in [section] 32-1-1006 et seq., [13 C.R.S. (1984 Supp.) ] in setting different mill levies for different areas within the District." 7

Terracor then filed a complaint for judicial review of the BAA's order, pursuant to section 24-4-106, 10 C.R.S. (1982), of the State Administrative Procedure Act. 8 Terracor also sought declaratory relief pursuant to sections 13-51-101 to -115, 6 C.R.S. (1973 & 1984 Supp.), and C.R.C.P. 57. The district court concluded that the tax did not violate constitutional requirements of uniformity and upheld the authority of the District to classify property according to services and facilities furnished. However, the court ruled that the 530 mill levy constituted a material modification of the 1974 service plan and, therefore, was subject to the requirement in section 32-1-207(2), 13 C.R.S. (1984 Supp.), of approval by the Commissioners. The district court then set aside the BAA order and ordered the cause remanded to the BAA to set aside the order of the Commissioners "pending compliance by the District with [section] 32-1-207(2)." The court further ordered that the BAA order be reinstated in the event the Commissioners approved the District's levy. This appeal followed.

II

Senior contends that the District's tax levies violate the uniform taxation provision of article X, section 3, of the Colorado Constitution. Although Senior denominates its argument as an attack on section 32-1-1006(1)(b), 13 C.R.S. (1984 Supp.), "as applied," portions of its argument in effect challenge the validity of the statute on its face. 9 We reject Senior's argument.

Section 32-1-1006(1)(b) provides in part:

[T]he board of any sanitation, water and sanitation, or water district has the following powers for and on behalf of such district:

....

(b)(I) To divide such district into areas according to the water or sanitation services furnished or to be furnished therein. The board has the power to fix different rates, fees, tolls, or charges and different rates of levy for tax purposes against all of the taxable property within the several areas of such district according to the services and facilities furnished or to be furnished therein within a reasonable time....

(II) If the board divides a special district into areas according to the facilities and services furnished or to be furnished, to determine the amount of money necessary to be raised by taxation within each such area, taking into consideration other sources of revenue within the area, and to fix a levy which, when levied upon every dollar of the valuation for assessment of taxable property within such area of the special district, will supply funds for the payments of the costs of acquiring, operating, and maintaining the services or facilities furnished in such area and will pay promptly, when due, the principal or interest on bonds or other obligations issued and its pro rata share of the general operating expenses of the district.

The BAA and the district court held that the District acted within the powers granted by this statute, and Senior does not dispute that conclusion here. Senior argues, however, that any statutory scheme that results in different tax levies on various geographical areas within the territorial limits of the taxing authority violates article X, section 3, of the Colorado Constitution.

When the District adopted its budget for fiscal year 1982, section 3 of article X provided, in pertinent part as follows:

All taxes shall be uniform upon each of the various classes of real and personal property located within the territorial limits...

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