Xerox Corp. v. BOARD OF COUNTY COM'RS, No. 02CA2026.

• Citation: 87 P.3d 189
• Decision Date: 09 October 2003
• Docket Number: No. 02CA2026.
• Parties: XEROX CORPORATION, Plaintiff-Appellant, v. BOARD OF COUNTY COMMISSIONERS of ARAPAHOE COUNTY, acting as the Arapahoe County Board of Equalization; Edward G. Bosier, in his official capacity as the Arapahoe County Assessor; Board of County Commissioners of El Paso County, acting as the El Paso County Board of Equalization; John M. Bass, in his official capacity as the El Paso County Assessor; Board of County Commissioners of Boulder County, acting as the Boulder County Board of Equalization; and Cindy Domenico, in her official capacity as the Boulder County Assessor, Defendants-Appellees, and Mary E. Huddleston, Property Tax Administrator, Intervenor-Appellee.
• Court: Court of Appeals of Colorado

87 P.3d 189

XEROX CORPORATION, Plaintiff-Appellant, v. BOARD OF COUNTY COMMISSIONERS of ARAPAHOE COUNTY, acting as the Arapahoe County Board of Equalization; Edward G. Bosier, in his official capacity as the Arapahoe County Assessor; Board of County Commissioners of El Paso County, acting as the El Paso County Board of Equalization; John M. Bass, in his official capacity as the El Paso County Assessor; Board of County Commissioners of Boulder County, acting as the Boulder County Board of Equalization; and Cindy Domenico, in her official capacity as the Boulder County Assessor, Defendants-Appellees, and Mary E. Huddleston, Property Tax Administrator, Intervenor-Appellee.

No. 02CA2026.

Colorado Court of Appeals, Div. III.

October 9, 2003.

Certiorari Denied April 12, 2004.

Downey & Knickrehm, P.C., Norman H. Wright, Denver, Colorado, for Plaintiff-Appellant.

Kathryn Schroeder, County Attorney, George D. Rosenberg, Assistant County Attorney, Littleton, Colorado, for Defendants-Appellees Board of County Commissioners of Arapahoe County, and Edward G. Bosier.

Michael A. Lucas, County Attorney, John N. Franklin, Assistant County Attorney, Colorado Springs, Colorado, for Defendants-Appellees Board of County Commissioners of El Paso County, and John M. Bass.

H. Lawrence Hoyt, County Attorney, Robert R. Gunning, Assistant County Attorney, Boulder, Colorado, for Defendants-Appellees Board of County Commissioners of Boulder County, and Cindy Domenico.

Ken Salazar, Attorney General, Larry A. Williams, First Assistant Attorney General, Denver, Colorado, for Intervenor-Appellee.

Opinion by Justice KIRSHBAUM.¹

Plaintiff, Xerox Corporation, appeals the summary judgment entered in favor of defendants, the Boards of Equalization and the County Assessors of Arapahoe, Boulder, and El Paso Counties, and intervenor, the Property Tax Administrator (the Administrator). We affirm.

I.

Plaintiff manufactures, leases, and sells various types of equipment, including copiers, printers, and reproduction devices and accessories. Because it owns the equipment it directly leases to consumers, under §§ 39-5-107 & 39-5-108, C.R.S.2002, plaintiff must annually file personal property declaration schedules in all counties wherein it has taxable property.

In 1999, plaintiff filed such schedules with the defendants. Plaintiff subsequently amended the schedules to reflect the costs incurred in manufacturing the equipment as the basis for reducing the assessed value of the equipment.

The assessors elected not to adopt plaintiff's proposed methodology. Indeed, they determined that the actual value of the equipment should be evaluated using comparable sales prices for like equipment, depreciated for age. The comparable sales price determinations were based on a memorandum issued by the Administrator to each of the assessors. The memo stated that the Colorado Division of Property Taxation (DPT) "[did] not support [plaintiff's] actions to report `manufacturer's cost' in lieu of comparable sales prices." Pursuant to § 39-5-122(2), C.R.S.2002, plaintiff objected to the assessors' methodology, and after the assessors denied plaintiff's requested relief, plaintiff appealed to the appropriate boards of equalization (BOEs), pursuant to § 39-8-106(1), C.R.S.2002. After conducting hearings, the BOEs issued resolutions denying plaintiff's appeals.

Thereafter, plaintiff petitioned for a consolidated judicial review of the BOE decisions. The Administrator intervened in the district court action.

Concluding that the parties differed in their interpretations of § 39-1-103(13), the district court granted summary judgment in favor of defendants. The court determined that the DPT's interpretation did not conflict with the statute and thus was entitled to deference.

II.

On appeal, plaintiff contends that the district court erred in granting summary judgment in favor of defendants because § 39-1-103(13) mandates that assessors use manufacturing costs rather than comparable sale prices to determine actual value of personal property for tax purposes. We disagree.

The district court's entry of summary judgment required the interpretation of tax statutes and regulations. To that extent, our review is de novo. Stell v. Colo. Dep't of Health Care Policy & Fin., 78 P.3d 1142 (Colo.App.2003).

The basic framework for fair and uniform ad valorem taxation of real and personal property is set forth in the Colorado Constitution, article X, section 3, and is dependent upon a calculation of the "actual value" of the property to be taxed. Such calculation must be determined under "general laws, which shall prescribe such methods and regulations as shall secure just and equalized valuations for assessments of all real and personal property." Colo. Const. art. X, § 3(1)(a); see Gilpin County Bd. of Equalization v. Russell, 941 P.2d 257, 260-61 (Colo.1997)

.

Actual value is synonymous with market value, see City & County of Denver v. Bd. of Assessment Appeals, 848 P.2d 355, 360 (Colo.1993),

and is to be determined by one of three approaches: the cost approach, the market approach, or the income approach. Bd. of Assessment Appeals v. E.E. Sonnenberg & Sons, Inc., 797 P.2d 27 (Colo.1990).

The Administrator is authorized to prepare and publish materials concerning methods of appraisal and to require their utilization by assessors in valuing and assessing taxable property. See § 39-2-109(1)(e), C.R.S.2002. These manuals are binding upon the assessors. See Huddleston v. Grand County Bd. of Equalization, 913 P.2d 15 (Colo.1996)

; Padre Resort, Inc. v. Jefferson County Bd. of Equalization, 30 P.3d 813 (Colo.App.2001).

III.

Section 39-1-103(13) provides, in part:

(a) [I]n the consideration of the cost approach, market approach, and income approach to the appraisal of personal property by assessing officers, the cost approach shall establish the maximum value of property if all costs incurred in the acquisition and installation of such property are fully and completely disclosed by the property owner to the assessing officer.

(b) Therefore, in the assessment of taxable personal property, the assessing officer shall consider the value derived from the cost approach to be the maximum value of the property if the property owner has timely filed his declaration and the declaration contains all relevant information pertaining to the valuation of the property and, also includes, a full disclosure of all costs incurred in the acquisition and installation of all personal property owned by or in the possession of the taxpayer.

The parties disagree with respect to the meaning of the phrase "costs incurred in the acquisition and installation" of the property. Plaintiff contends that its cost of manufacturing property must form the basis for assessing the real value of the equipment under the statute. Defendants argue that the trial court properly gave deference to the DPT's statutory interpretation utilizing comparable sales prices as the starting point for application of the cost approach method here. We agree with defendants.

In interpreting a comprehensive legislative scheme such as the taxation statutes, courts must first examine the statutory language in an effort to give full effect to the legislative intent. Huddleston v. Grand County Bd. of Equalization, supra; Manor Vail Condo. Ass'n v. Bd. of Equalization,

956 P.2d 654 (Colo.App.1998).

Where statutory language is clear and unambiguous, there is no need to resort to interpretive rules of statutory construction. Huddleston v. Grand County Bd. of Equalization, supra.

However, judicial deference to administrative interpretation of a statute is appropriate when the legislative language is subject to different reasonable interpretations and the issue falls within an administrative agency's special expertise. See Huddleston v. Grand County Bd. of Equalization, supra, 913 P.2d at 17; Manor Vail Condo. Ass'n v. Bd. of Equalization, supra, 956 P.2d at 659; see also Colo. State Pers. Bd. v. Dep't of Corr., 988 P.2d 1147, 1150 (Colo.1999). If a statute is silent or ambiguous with respect to a specific issue, courts must consider whether the agency's regulation is based on a permissible construction of the statute. Smith v. Farmers Ins. Exch., 9 P.3d 335, 340 (Colo.2000).

A.

Here, the phrase "all costs incurred in the acquisition and installation" in § 39-1-103(13) is susceptible to more than one reasonable interpretation. See Manor Vail Condo. Ass'n v. Bd. of Equalization, supra, 956 P.2d at 659

.

On its face, the statute is unclear as to what the word "acquisition" encompasses, and the statute does not elsewhere define the term. Webster's Third New International Dictionary 18-19 (1986) defines "acquisition" as "the act or action of acquiring," and "acquire" is defined as "to get as one's own; to come into possession or control or power of disposal of often by some uncertain or unspecified means." Similarly, Black's Law Dictionary 24 (7th ed.1999) defines "acquisition" as "the gaining of possession or control over something." Gaining possession or control of, for example, a copier could be accomplished either by purchasing it or by manufacturing it; thus, the statutory language is susceptible to more than one interpretation.

B.

The Administrator, through the Assessor's Reference Library (ARL) manuals, has construed § 39-1-103(13) to authorize the use of comparable sales prices to serve as the basis for the cost approach method. According to the ARL, such cost approach method is based upon the principle that the value of a property equals the cost of acquiring an equally desirable substitute property. It is essentially an estimate of the cost of replacing the subject property with a new property that is equivalent in function and utility. See 5 Division of Property Taxation, Colorado Department of Local Affairs, Assessor's Reference Library: Personal Property Valuation Manual § 3.4 (1989, rev.vol.2002); see also Bd. of Assessment...