Appeal
from the Superior Court in Maricopa County The Honorable
Christopher T. Whitten, Judge No. TX2014-000129.
Opinion
of the Court of Appeals, Division One 242 Ariz. 395 (App.
2017) VACATED
Mark
Brnovich, Arizona Attorney General, Dominic E. Draye,
Solicitor General, Kenneth J. Love, Jerry A. Fries (argued),
Macaen F. Mahoney, Assistant Attorneys General, Phoenix,
Attorneys for Arizona Department of Revenue.
Paul
J. Mooney (argued), Bart S. Wilhoit, Mooney, Wright &
Moore, PLLC, Mesa; Mark S. Davies, Rachel G. Shalev, Orrick,
Herrington & Sutcliffe, LLP, Washington DC; Paul D.
Meyer, Orrick, Herrington & Sutcliffe, San Francisco, CA,
Pro Hac Vice Attorneys for Solarcity Corporation; Court S.
Rich, Logan V. Elia, Rose Law Group, PC, Scottsdale,
Attorneys for Sunrun, Inc.
Roberta S. Livesay, Joshua W. Carden, Helm, Livesay,
Worthington, LTD, Tempe, Attorneys for Amicus Curiae Arizona
Association of Counties.
Jason
Pistiner, Singer Pistiner, P.C., Scottsdale; Michael S.
Dicke, Casey O'Neill and Nair Diana Chang, Fenwick &
West LLP, San Francisco, CA, Pro Hac Vice Attorneys for
Amicus Curiae Arizona Solar Energy Industries Association.
Douglas S. John, Frazer Ryan Goldberg & Arnold, LLP,
Phoenix, Attorneys for Amicus Curiae NRG Energy, Inc.
Maureen Beyers, Beyers Farrell PLLC, Phoenix, Attorneys for
Amicus Curiae Jewish Community Campus, LLC.
JUSTICE TIMMER authored the opinion of the Court, in which
CHIEF JUSTICE BALES, VICE CHIEF JUSTICE BRUTINEL, and
JUSTICES PELANDER, BOLICK, GOULD, and LOPEZ joined.
OPINION
TIMMER, JUSTICE.
¶1
With exceptions, all property in Arizona is "subject to
taxation to be ascertained as provided by law." Ariz.
Const. art. 9, § 2(13); A.R.S. §
42-11002.[1] Property is valued for tax purposes either
"centrally" by the Arizona Department of Revenue
("ADOR") or "locally" by county
assessors. See A.R.S. §§ 42-13002 to
-13501; 42-14001 to -14503. Valuation is based on the
"full cash value" of the property as directed by
statute. Id. § 42-11001(6). Unless a statute
prescribes otherwise, full cash value corresponds to market
value, determined by applying standard appraisal methods and
techniques set by ADOR. Id. §§
42-11001(6), -11054(A)(1).
¶2
The issues here are whether ADOR or county assessors are
authorized to value solar panels owned by SolarCity
Corporation and Sunrun, Inc. (collectively,
"Taxpayers") and leased to residential and
commercial property owners; what valuation methodology
applies; and, assuming a zero-value provision in §
42-11054(C)(2) applies, whether it violates the Arizona
Constitution's Exemptions Clause or Uniformity Clause.
See Ariz. Const. art. 9, §§ 1-2. We hold
that ADOR is not authorized to value the leased solar panels.
We remand to the tax court to decide the remaining issues.
BACKGROUND
¶3
Taxpayers lease solar panels to homeowners and commercial
property owners. The panels are installed on or around a
building (e.g., on a rooftop) to capture solar energy,
convert it to electricity in a self-contained "inverter,
" and use it to power the property. Although the panels
operate "behind the . . . meter" - meaning they
operate independently of a utility company's power grid -
they transfer any excess energy to the utility company
through the grid for others' use. The utility company
...