Staples v. Concord Equities, L.L.C.

• Decision Date: 31 March 2009
• Docket Number: No. 1 CA-TX 08-0003.,1 CA-TX 08-0003.
• Citation: 209 P.3d 163,221 Ariz. 27
• Parties: Bill STAPLES, Pima County Assessor; Pima County, a body politic and subdivision of the State of Arizona, Plaintiffs/Appellants, v. CONCORD EQUITIES, L.L.C., a limited liability company, Defendant/Appellee.
• Court: Arizona Court of Appeals

209 P.3d 163

221 Ariz. 27

Bill STAPLES, Pima County Assessor; Pima County, a body politic and subdivision of the State of Arizona, Plaintiffs/Appellants, v. CONCORD EQUITIES, L.L.C., a limited liability company, Defendant/Appellee.

No. 1 CA-TX 08-0003.

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

March 31, 2009.

Barbara LaWall, Pima County Attorney By Terri A. Roberts, Deputy County Attorney, Tucson, Attorneys for Plaintiffs/Appellants.

Donald P. Roelke, Phoenix, Attorney for Defendant/Appellee.

OPINION

KESSLER, Judge.

¶ 1 Does the value for Arizona real property "roll over" to the next tax year as described in Arizona Revised Statutes ("A.R.S.") section 42-16002(B) (2004) when the value is set after an administrative appeal to the Arizona Tax Court? The Arizona Tax Court found that it does as a matter of law. We agree and affirm that judgment.

FACTS AND PROCEDURAL BACKGROUND

¶ 2 Concord Equities, L.L.C. ("Taxpayer") owns Parcel No. 137-11-428V (the "Property") in Pima County. Located on Mission Road in Tucson, the Property contains a 248-unit apartment complex named Mission Antigua Apartments.

¶ 3 Pima County Assessor Bill Staples (the "Assessor") mailed a notice of property valuation to Taxpayer in accordance with A.R.S. § 42-15101 (2003) for tax year 2006. The Assessor had set the full cash value at $7,867,800 and the limited property value at $7,201,920. Taxpayer instituted an appeal by filing a petition with the Assessor pursuant to A.R.S. § 42-16051 (2003).

¶ 4 When the Assessor recommended no change, Taxpayer appealed to the State Equalization Board (the "Board") under A.R.S. § 42-16157 (2001). The oral argument before the Board focused on whether A.R.S. § 42-16002 required the roll-over of tax year 2005 property values to tax year 2006.

¶ 5 The Board determined on September 21, 2005 that A.R.S. § 42-16002 required the full cash and limited property values for the 2005 tax year to roll over for tax year 2006. The 2005 value was based upon a full cash value of $6,696,000 to which the parties had stipulated in tax court (TX2004-000899), a reduction from the Assessor's previous determination of full cash value of $8,315,440. In that earlier case, Taxpayer had initiated review by filing a petition for review with the Assessor pursuant to A.R.S. § 42-16051, and then filed appeals to the Board and the tax court.

¶ 6 The Board reduced the full cash value to the tax year 2005 level, and the limited cash value accordingly dropped pursuant to A.R.S. § 42-13301 (1999). The Assessor and Pima County (the "County") then appealed to the tax court pursuant to A.R.S. §§ 42-16168(A) (1999), 42-16203 (2001), 42-16207 (1999), and 12-163 (2003).

¶ 7 Taxpayer answered, and the Assessor and Pima County moved for partial summary judgment on the application of A.R.S. § 42-16002. Taxpayer responded and cross-moved for summary judgment. After further briefing and oral argument, the tax court granted Taxpayer's motion, denied the Assessor and Pima County's motion, and awarded Taxpayer its costs. This appeal followed.

DISCUSSION

I. The Stipulated Judgment Resolved in a Tax Court Appeal is Entitled to Roll-Over Effect.

¶ 8 This court reviews the tax court's grant of summary judgment de novo. Wilderness World, Inc. v. Ariz. Dep't of Revenue, 182 Ariz. 196, 198, 895 P.2d 108, 110 (1995). Issues of statutory construction are also subject to de novo review. Univ. Med. Ctr. Corp. v. Ariz. Dep't of Revenue, 201 Ariz. 447, 450, ¶ 14, 36 P.3d 1217, 1220 (App. 2001).

¶ 9 We construe tax statutes liberally in favor of the taxpayer. Brink Elec. Constr. Co. v. Ariz. Dep't of Revenue, 184 Ariz. 354, 358, 909 P.2d 421, 425 (App.1995). Moreover, "[s]tatutes are to be construed as a whole, and related provisions in pari materia are to be harmonized if possible...." State ex rel. Church v. Ariz. Corp. Comm'n, 94 Ariz. 107, 110-11, 382 P.2d 222, 224 (1963).

¶ 10 Section 42-16002 (2004) provided:

A. The county assessor or county treasurer, whichever is appropriate, shall make the necessary changes in the tax roll and records to reflect the determinations that change valuations or classifications of property that result from reviews, administrative or judicial appeals or correction of errors and omissions under this title.

B. If a review or administrative appeal pursuant to article 2, 3 or 4 of this chapter results in a reduction of the valuation or a change in the classification of property, in the next year the valuation or classification of property shall be the valuation or classification that was determined by the review or appeal unless either:

1. There is new construction, a structural change or a change of use on the property.

2. Chapters 11 through 19 of this title require a specific annual formula for the valuation.

C. This section does not limit the right of a property owner to appeal the valuation or classification of the property.

(Emphasis added, footnotes omitted). This section, which reflects the amended Laws 2004, ch. 295, applies retroactively to taxable years beginning January 1, 2004. A.R.S. § 42-16002 (Retroactive Application).

¶ 11 The roll-over provision, A.R.S. § 42-16002(B) (2004), applies to this case because Taxpayer pursued an appeal to the Board and tax court under statutes in Articles 2 and 4 of chapter 16. Taxpayer appealed the 2005 tax year valuation in the underlying case by filing a petition pursuant to A.R.S. § 42-16051(A) of Article 2 in Chapter 16, which provides: "An owner of property which in the owner's opinion has been valued too high or otherwise improperly valued or listed on the roll may file a petition with the assessor on a written form prescribed by the [Arizona Department of Revenue]." Another Article 2 provision, A.R.S. § 42-16056, supplied Taxpayer's right to appeal to the Board. Article 4 of Chapter 16 also applies because one of its provisions, A.R.S. § 42-16168(A) (1999), states that any party "[t]hat is dissatisfied with the valuation or classification of property reviewed by the state board may appeal to court as provided by § 42-16203." Taxpayer pursued its appeal in the underlying case to the Assessor, the Board, and the tax court under these statutes before achieving a stipulated judgment.

¶ 12 We agree with the tax court that Taxpayer's claim is governed by the 2004 version of A.R.S. § 42-16002(B) and entitled to roll-over effect. An appeal initiated under Article 2 and culminating in tax court review under Article 4 falls within A.R.S § 42-16002(B). Consequently, the value achieved via stipulation in tax court is entitled to roll-over effect unless A.R.S. § 42-16002(B)(1) or (2) applies.

¶ 13 Prior to its amendment in 2004, A.R.S. § 42-16002 provided: "In the year subsequent to an appeal, the valuation or classification of property is the valuation or classification that was determined in the preceding year at the highest level of appeal unless there is new construction, a structural change or a change of use on the property." The 2004 amendment rewrote the introductory language to read: "If a review or administrative appeal pursuant to article 2, 3 or 4 of this chapter results in a reduction of the valuation...." A.R.S. § 42-16002(B). The 2006 amendment revised the statute again by inserting "a judicial appeal pursuant to article 5 of this chapter" after the "article 2, 3 or 4 of this chapter" in A.R.S. § 42-16002(B). The 2006 amendment did not include a retroactivity clause, and thus does not govern this case. See A.R.S. § 1-244 (2002)(a statute does not apply retroactively unless expressly specified by the legislature).

¶ 14 The evolution of the statute supports the tax court's interpretation. The language A.R.S. § 42-16002(B) employed prior to 2004 indicates that the legislature did not intend to exclude from the statute's scope the last level of administrative appeal — a decision of the tax court. This court has recognized that an appeal to the tax court is the culmination or highest point of the appeal process:

First, let us state that in our opinion the administrative appeal and/or direct appeal procedures culminating in a § 42-151 [now § 42-16207] appeal to the Superior Court do not constitute the exclusive means by which a dissatisfied taxpayer may question the factual correctness of the classification or valuation of his property as contended by the taxing authorities. Rather, it is our opinion that these same issues may be raised in a § 42-204, subsec. C suit for refund after payment under protest.

Maricopa County v. Chatwin, 17 Ariz.App. 576, 582, 499 P.2d 190, 196 (1972)(emphasis added); see generally Op. Att'y Gen. No. 103-010 (Ariz. Dec. 15, 2003)("In the year subsequent to an appeal ... the full cash value of property is the value determined at the highest level of appeal.").

¶ 15 In the 2004 amended version, A.R.S. § 42-16002(B) similarly granted roll-over effect to values obtained on appeal pursuant to Articles 2, 3, and 4. These articles incorporate provisions for appeals, leading to tax court review, including A.R.S. §§ 42-16051(A), 42-16056, and 42-16168(A). Consequently, A.R.S. § 42-16002(B) (2004) is consistent with the earlier version of A.R.S. § 42-16002(B).

¶ 16 Notwithstanding the express references to Articles 2 and 4 in the 2004 version, the Assessor and County argue that the 2004 amendment deprives taxpayers of roll-over effect when their administrative appeals are ultimately resolved in the tax court. We disagree.

¶ 17 The County and Assessor provide us with no rational basis for distinguishing the level of the administrative appeal at which the reduction is made. It is hard to imagine that the Arizona Legislature intended to deny roll-over effect to an appeal resolved in court but to grant it to one resolved at a lower administrative level. The statute's plain language calls for a value to roll over when a reduced valuation is obtained on appeal to the Assessor (Article 2), a county board of equalization (Article 3...