SCOTTSDALE/101 ASSOCIATES, LLC, an Arizona limited liability company; SCOTTSDALE 101 RETAIL, LLC, a Delaware limited liability company, Plaintiffs/Appellants,
MARICOPA COUNTY, a political subdivision of the State of Arizona, Defendant/Appellee. SCOTTSDALE 101 RETAIL, LLC, a Delaware limited liability company, Plaintiff/Appellant,
MARICOPA COUNTY, a political subdivision of the State of Arizona, Defendant/Appellee. VESTAR DRM-OPCO, LLC, a Delaware limited liability company, Plaintiff/Appellant,
MARICOPA COUNTY, a political subdivision of the State of Arizona, Defendant/Appellee.
Appeal from the Arizona Tax Court No. TX2008-000518, TX2009-000091, ST2008-000083, TX2008-000519, and TX2009-000041 The Honorable Dean M. Fink, Judge
Ballard Spahr, LLP, Phoenix By Brian W. LaCorte, Brunn W. Roysden, III Counsel for Plaintiffs/Appellants
Helm, Livesay, Worthington, Ltd., Tempe By Roberta A. Livesay, Raushanah Daniels Counsel for Defendant/Appellee
Presiding Judge Kent E. Cattani delivered the opinion of the Court, in which Judge Lawrence F. Winthrop and Judge Randall M. Howe joined.
¶1 This consolidated appeal involves a challenge to the property tax classification of properties located on state-owned land. The tax court granted summary judgment in favor of Appellee Maricopa County, concluding that the County properly assessed the properties as shopping centers. For reasons that follow, we conclude that the properties may qualify for mixed-use assessment, and we thus reverse and remand to the tax court for further proceedings consistent with this decision.
FACTS AND PROCEDURAL BACKGROUND
¶2 The properties in question are commercial developments located in north Phoenix. Appellants Scottsdale/101 Associates, Inc. and Scottsdale 101 Retail, LLC own Scottsdale 101, a development on state trust land that includes retail shops, restaurants, and a large movie theater complex. Appellant Vestar DRM-OPCO, LLC owns Desert Ridge Marketplace, which is also located on state trust land and consists of retail shops, restaurants, and a theater complex. We refer to Scottsdale 101 and Desert Ridge Marketplace collectively as "Properties" and to Scottsdale/101 Associates, Inc., Scottsdale 101 Retail, LLC, and Vestar DRM-OPCO, LLC collectively as "Taxpayers."
¶3 For tax year 2008, Taxpayers filed claims pursuant to Arizona Revised Statutes ("A.R.S.") § 42-16203,  which provides a process for challenging (within 60 days) the Board of Equalization's valuation/classification decision. For tax years 2004 through 2007, Taxpayers filed error correction claims pursuant to § 42-16254(G), which provides a means for contesting classification decisions from prior years. See CNL Hotels & Resorts, Inc. v. Maricopa County, 230 Ariz. 21, 25, ¶¶ 22– 23, 279 P.3d 1183, 1187 (2012).
¶4 In all four cases, Taxpayers alleged that the County Assessor ("Assessor") improperly classified the movie theaters that are part of the shopping centers as Class One, rather than Class Nine, properties. Class One properties include "real and personal property of shopping centers, " A.R.S. § 42-12001(8); Class Nine properties include improvements on government property that are "used exclusively for convention activities or athletic, recreational, entertainment, artistic or cultural facilities." A.R.S. § 42-12009(A)(1)(b).
¶5 Class One properties are taxed at a higher rate than Class Nine properties; Class Nine provides for preferential tax treatment for specified kinds of private development on government-owned land. See Scottsdale Princess P'ship v. Maricopa County, 230 Ariz. 425, 428, ¶ 12, 286 P.3d 174, 177 (App. 2012). For the years in question, under A.R.S. § 42-12001, Class One property had a statutory assessment ratio ranging from 23 ½ percent to 25 percent. A.R.S. § 42-15001 (1)-(4). Under § 42-12009, Class Nine property was assessed at one percent. A.R.S. § 42-15009.
¶6 The tax court granted the County's motions for summary judgment on the basis that the movie theaters met the requirements for treatment as Class One properties, and Taxpayers timely appealed. Because these four cases raise the same legal issue, we consolidated them on appeal.
¶7 We review de novo the tax court's grant of summary judgment. Wilderness World, Inc. v. Dep't of Revenue, 182 Ariz. 196, 198, 895 P.2d 108, 110 (1995). We likewise review de novo the tax court's construction of applicable statutes. Ariz. Dep't of Revenue v. Cent. Newspapers, Inc., 222 Ariz. 626, 629, ¶ 9, 218 P.3d 1083, 1086 (App. 2009). "[W]e liberally construe statutes imposing taxes in favor of taxpayers and against the government." State ex rel. Ariz. Dep 't of Revenue v. Capitol Castings, Inc., 207 Ariz. 445, 447, ¶ 10, 88 P.3d 159, 161 (2004). And, we resolve any ambiguities in such statutes in favor of the taxpayer. People's Choice TV Corp. v. City of Tucson, 202 Ariz. 401, 403, ¶ 7, 46 P.3d 412, 414 (2002); see also City of Phoenix v. Borden Co., 84 Ariz. 250, 252-53, 326 P.2d 841, 843 (1958) (statutes establishing property tax liability-in contrast to those creating an exemption-are "most strongly construed against the government and in favor of the taxpayer"). At issue here is (1) ...