Transamerica Development Co. v. Maricopa County

• Court: Arizona Supreme Court
• Writing for the Court: CAMERON; HAYS, V.C.J., and JESSE A. UDALL
• Citation: Transamerica Development Co. v. Maricopa County, 489 P.2d 33, 107 Ariz. 396 (Ariz. 1971)
• Decision Date: 23 September 1971
• Docket Number: No. 10334,10334
• Parties: TRANSAMERICA DEVELOPMENT COMPANY, a California corporation, Appellant, v. The COUNTY OF MARICOPA of the State of Arizona, a body politic, and the Department of Property Valuation of the State of Arizona, Appellees.

Page 33

489 P.2d 33

107 Ariz. 396

TRANSAMERICA DEVELOPMENT COMPANY, a California corporation, Appellant, v. The COUNTY OF MARICOPA of the State of Arizona, a body politic, and the Department of Property Valuation of the State of Arizona, Appellees.

No. 10334.

Supreme Court of Arizona, In Division.

Sept. 23, 1971.

Rehearing Denied Oct. 19, 1971.

Murphy, Posner & Franks by Edward C. Voss, III, Phoenix, for appellant.

Beer & Kalyna by Olgerd W. Kalyna, Phoenix, for appellees.

CAMERON, Justice.

This is an appeal from a judgment of the Maricopa County Superior Court which affirmed a decision of the State Board of Tax Appeals fixing the valuation on appellant Transamerica Development Company's property, a shopping center located in Maricopa County, Arizona. Transamerica also appeals from the denial of its motion for a new trial.

We are called upon to determine whether the property in question was assessed at its actual full cash value for the year 1969, as the Maricopa County Assessor, the State Board of Property Tax Appeals, and the trial judge found to be the case, or whether the assessment was substantially in excess of actual full cash value as Transamerica contends.

The history of this controversy, which concerns the 1969 property taxes of Transamerica, actually begins with the settlement process of Transamerica's 1968 taxes. The original State valuation in 1968 was $1,946,700 for the land, $917,760 for the improvements, and $2,864,460 total. These figures were challenged by Transamerica, so the State brought in an expert appraiser, Mr. Larry Burke, to evaluate the property. Mr. Burke came up with $1,900,000 for the land, $412,500 for the improvements, and $2,312,500 total. Transamerica still protested, and a settlement was finally agreed upon in a June, 1969, proceeding in the Superior Court for Maricopa County. The settlement kept the original State determination for the improvements, $917,760, dropped the land valuation to $1,247,780, and totaled $2,165,540.

The following summarizes the three different sets of figures that emerged in the dispute over the 1968 taxes:

                            Burke
                                           (For the     Court
                                State       State)     Approved
                              ----------  ----------  ----------
                Land          $1,946,700  $1,900,000  $1,247,780
                Improvements     917,760     412,500     917,760
                              ----------  ----------  ----------
                Total         $2,864,460  $2,312,500  $2,165,540
                

When assessing Transamerica for 1969, the State did not change the $1,247,780 figure for the land, even though that figure was the result of a compromise and was $700,000 lower than both the State and Burke had originally appraised. The State did, however, increase its assessment of the improvements from the $917,760 figure both the court and it had used in the 1968 assessment to $1,258,385, resulting in a total of $2,506,165.

Since the land figure stayed constant, Transamerica concentrated its objections to the 1969 assessment on the $1,258,385 for improvements. Transamerica retained the State's former expert, Mr. Burke, who produced an appraisal of $1,017,220 for the improvements. (Burke although admitting it was a 'most unusual' procedure, assumed the figure $1,247,780 for the land and made no effort to validate that figure.) In December, 1969, the Superior Court for Maricopa County affirmed the decision of the State Board of Property Tax Appeals, in its appraisal of $1,247,780 for land, $1,258,385 for improvements, and $2,506,165 total. From this determination, Transamerica appeals. The following summarizes the valuations for 1969:

                                   Burke (for
                                                  Transamerica
                                   State             Title)            Court
                              ----------------  ----------------  ----------------
                Land          $1,247,780 *  $1,247,780 *  $1,247,780 *
                Improvements   1,258,385         1,117,220        1,258,385
                              ----------------  ----------------  ----------------
                Total         $2,506,165        $2,365,000        $2,506,165
                * The compromise figure also used for 1968
                

Appellant contends that since the value of the land had been agreed to, the question before the State Board and the Superior Court should be limited to determining the actual cash value of the improvements with the total valuation adjusted accordingly. With this we disagree.

The sections that set forth the duties and general procedures of the State Tax Commission--s 42--103 to § 42--109 A.R.S.; the Department of Property Valuation--s 42--121 to § 42--129 A.R.S.; the Division of Appraisal and Assessment Standards--s 42--136 A.R.S.; and the State Board of Property Tax Appeals--s 42--141 to § 42--147 A.R.S.--all speek solely in terms of Property valuation and the review of Property valuation. Similar language is found in § 42--245, subsec A, par. 2 A.R.S. which outlines the appeal process to the State Board of Tax Appeals:

'A. Any person dissatisfied with the valuation or classification of his property as fixed by the county board of equalization may appeal in the following manner:

'2. To the state board of property tax appeals * * *.'

§ 42--245.01 A.R.S., which prescribes the procedure for appealing to the Superior Court, is virtually identical:

'Any person dissatisfied with the valuation or classification of his property as determined by the county assessor may, whether or not he files an appeal with the assessor, county board or state board, appeal to the superior court * * *.'

The duty of the Superior Court is described in similar terms by § 42--147, subsec. C A.R.S.:

'C. If the court finds that the valuation is excessive, the court shall find the full cash value of the property * * *.'

Finally, § 42--312 A.R.S., provides that the tax levy should not be allocated between land and improvements, but:

'A. * * * shall be a lien upon the property assessed.'

These provisions lead us to cnclude that the legislature intended that tax boards and reviewing courts should treat property valuation as a single entity, rather than the sum of its two component parts, land and improvements. There is only one provision which would indicate the contrary--s 42--227, subsec. A A.R.S.:

'A. For property tax purposes the valuation of all taxable property shall be determined at its market value. The valuation of land and improvements thereon shall be determined separately. * * *.'

Authorities from jurisdictions with similar statutes overwhelmingly favor the proposition urged by the State in this case: that property valuation must be treated as a single entity. In Pennsylvania, which has an almost identical law, the State Supreme Court has stated:

'Evidence presented by appraisers must be directed to the market value of the property as a whole. The direction of a statute which requires the assessors to show a separate valuation for the land and for the building is not a directive to a court reviewing an assessment on appeal. * * * The thing from which the property owner appeals and, therefore the concern before the court is the total assessment of the property as a unit. The itemization of an assessment required of an assessor separately for the land and for the building is but an intermediate step of the ascertainment of the taxable value of the property as whole.' Appeal of Rieck Ice Cream Co., 417 Pa. 249, 209 A.2d 383, 387 (1965).

See also Casa Loma, Inc. v. Board of Prop. Assess., App. & Rev., 417 Pa. 257, 209 A.2d 387 (1965); McKnight Shop. Center v. Board of Prop. Assess., A. & R., 417 Pa. 234, 209 A.2d 389 (1965); Pittsburgh Miracle Mile Town & Country Shopping Center v. Board of Prop. A., A. & R., 417 Pa. 243, 209 A.2d 394 (1965); and Deitch Company v. Board of Property Assess., App. & Rev., 417 Pa. 213, 209 A.2d 397 (1965).

Similarly, the Supreme Judicial Court of Massachusetts has held:

'Land and buildings upon it are ordinarily parts of the same real estate, and they cannot be separated for the purpose of collecting taxes. They constitute a single...