GENERAL MOTORS CORPORATION, a Delaware corporation; DMB MESA PROVING GROUNDS, LLC, a Delaware limited liability company, Plaintiffs/Appellees,
MARICOPA COUNTY, Defendant/Appellant
Appeal from the Superior Court in Maricopa County. No. TX2007-000663. The Honorable Dean M. Fink, Judge. The Honorable Christopher Whitten, Judge.
For Plaintiffs/Appellees: Jeffrey B. Smith, William F. Begley, Cavanagh Law Firm, Phoenix.
For Defendant/Appellant: Roberta S. Livesay, Raushanah Daniels, Helm Livesay & Worthington, Ltd., Tempe.
Presiding Judge Kent E. Cattani delivered the opinion of the Court, in which Judge Lawrence F. Winthrop and Judge Peter B. Swann joined.
¶1 Arizona Revised Statutes (" A.R.S." ) § 42-16002(B)(1) provides that a tax valuation or classification determined in a successful tax appeal " rolls over" to the next tax year unless " [t]here is new construction, a structural change or a change of use on the property." In this appeal, we address the tax court's ruling that a " change of use" under the statute does not include a new owner's intent to redevelop the property for other uses. For reasons that follow, we affirm, concluding that a changed use under § 42-16002(B) must be a physical, objectively verifiable or demonstrable use or activity on the property itself, not just a change in ownership or of purpose, plan, or intent. We also affirm the tax court's ruling that, under A.R.S. § 42-16210, a valuation appeal may be pursued even if taxes that come due while the appeal is pending are not timely paid.
FACTS AND PROCEDURAL BACKGROUND
¶2 General Motors Corp. (" GM" ) operated a motor vehicle research and development desert proving ground on several parcels totaling approximately 3,200 acres in Mesa. In a prior tax appeal, GM challenged Maricopa County's valuation of the proving ground property for, as relevant here, the 2007 tax year. See Gen. Motors Corp. v. Maricopa County, TX2005-050340 (Ariz. Tax Ct.). A jury found that the full cash value of the property as of January 1, 2006 (the valuation date for the 2007 tax year, see A.R.S. § 42-11001(18)) should be reduced to $89,000,961.
¶3 In December 2006, GM sold the property to DMB Mesa Proving Grounds LLC (" DMB" ) for $265,000,000 pursuant to a sale-leaseback agreement under which GM, as DMB's tenant through 2009, would continue to operate the property as an automotive proving ground for at least two years. During the lease term, DMB retained the right to pursue zoning adjustments and to take other steps in anticipation of redeveloping the property for other purposes.
¶4 As of January 1, 2007, the County set the property's full cash value at $187,824,386 for the 2008 tax year. GM and DMB (collectively " Taxpayers" ) appealed that valuation to the tax court and moved for summary judgment, arguing that, under § 42-16002(B), the full cash value for the 2007 tax year determined by the jury ($89,000,961) should apply to the 2008 tax year as well. The County opposed, arguing that the sale to DMB had created " a change of use on the property," bringing the property within an exception to the rollover provision. See A.R.S. § 42-16002(B)(1). The tax court ruled in favor of Taxpayers, and the County timely appealed.
¶5 While the tax appeal was pending, the County discovered that Taxpayers had not
paid the second half of the 2010 taxes owed on the proving ground property until July 15, 2011, after the May 1 delinquency date had passed. See A.R.S. § 42-18052(B). At the County's request, this court stayed the appeal and revested jurisdiction in the tax court to address the County's contention that Taxpayers' failure to timely pay the 2010 property taxes required dismissal of the appeal. The tax court denied the County's motion for summary judgment on that ground, and the County filed an amended notice of appeal from that judgment as well. We have jurisdiction under Article 6, Section 9, of the Arizona Constitution and A.R.S. § § 12-120.21(A)(1) and -2101(A)(1).
¶6 The County argues--as it did before the tax court--that Taxpayers' appeal should have been dismissed because Taxpayers failed to timely pay property tax while the appeal was pending. Additionally, the County argues that the court should not have applied the rollover statute in determining the property's ...