from the Arizona Tax Court No. TX2014-000212 The Honorable
Christopher T. Whitten, Judge.
Wright & Moore, PLLC, Mesa By Paul J. Mooney (argued) and
Bart S. Wilhoit Counsel for Plaintiffs/Appellants
Arizona Attorney General's Office, Phoenix By Macaen F.
Mahoney and Lisa Neuville (argued) Counsel for
Presiding Judge Paul J. McMurdie delivered the opinion of the
Court, in which Judge Kent E. Cattani and Judge Lawrence F.
Appellants Siete Solar, LLC ("Siete"), Mesquite
Solar, LLC ("Mesquite"), and Perrin Ranch Wind, LLC
("Perrin") appeal from the tax court's
dismissal of their complaint, and Arlington Valley Solar
Energy II, LLC ("Arlington") appeals the
court's grant of summary judgment for the Arizona
Department of Revenue (the "Department"). We affirm
the tax court's application of Arizona Revised Statutes
("A.R.S.") section 42-14153(C) and hold that a
statutory amendment enacted after the valuation date that
changes the method of valuation requires retroactive
application to apply to the corresponding tax year.
AND PROCEDURAL BACKGROUND
The parties do not dispute the facts in this case. Siete,
Mesquite, Perrin, and Arlington (collectively
"Taxpayers"), operate electric generation
facilities that use renewable energy equipment. As part of
the American Recovery and Reinvestment Act of 2009, Taxpayers
received either an investment tax credit or a cash grant in
lieu of the credit (either referred to as "tax
incentive") for a portion of the costs to build their
In February of each year, the Department provides a form to
facility owners requesting information necessary for the
valuation of property. A.R.S. § 42-14152(A). The
Department then calculates the value of renewable energy
equipment pursuant to A.R.S. § 42-14155 and A.R.S.
§ 42-14156 (collectively the "valuation
method"). Before an amendment in 2014, A.R.S. §
42-14155(B) directed the Department to value renewable energy
equipment at "twenty per cent of the depreciated cost of
the equipment," but provided no definition of
In 2013, Siete, Mesquite, and Perrin (the "2014
Appellants") each submitted an annual report to the
Department for the 2014 tax year reporting the cost of their
facilities. The 2014 Appellants' respective reports
calculated their cost of the energy equipment by subtracting
the amount received in tax incentives from the actual cost.
However, the Department disallowed the deducted tax-incentive
amounts before applying the valuation method to determine the
properties' full cash value (the "final
valuation"). The Department's refusal to deduct the
tax-incentive amounts from the actual cost increased the 2014
Appellants' tax liability. The 2014 Appellants appealed
to the State Board of Equalization, which upheld the
Department's final valuation. The 2014 Appellants
appealed the Board's decision.
While the 2014 Appellants' appeal was pending in the
superior court, the legislature enacted an amendment to
A.R.S. § 42-14155 (the "2014 Amendment"). The
2014 Amendment altered the valuation method by specifically
allowing taxpayers to deduct tax incentives from the cost of
renewable energy equipment. See A.R.S. §
42-14155(C)(4) (2014). Because the 2014 Amendment did not
contain an emergency provision or a retroactivity clause, it
became effective on July 24, 2014, the general effective date
for legislation enacted during the 2014 session. See
Ariz. Const. art. 4, pt. 1, § 1(3). Eventually, the 2014
tax year dispute resulted in an appeal to this court. See
Siete Solar, LLC v. Ariz. Dep't of Revenue (Siete
I), 1 CA-CV 15-0126, 2015 WL 8620672 (Ariz. App. Dec.
10, 2015) (mem. decision). On appeal, the 2014 Appellants
argued the 2014 Amendment should apply to their tax appeal
because it became effective before the taxes in question were
assessed. Id. at *3, ¶ 12.
In August 2014, while the dispute over the 2014 tax year
valuations continued, the Department issued the final
valuations for the 2015 tax year. Taxpayers had again
reported their cost as the actual cost minus the tax
incentives. The Department, applying the pre-amended version
of A.R.S. § 42-14155, again disallowed the tax incentive
amounts to be deducted from the actual costs before computing
the Taxpayers' final valuations. Taxpayers timely
appealed the 2015 final determination directly to the tax
court pursuant to A.R.S. § 42-16204. Taxpayers moved for
summary judgment, asserting the Department was obligated to
use the valuation method prescribed in the 2014 Amendment for
their final valuations. Because the 2014 Appellants'
appeal was still pending, the tax court stayed the 2015
tax-year proceedings pending a decision in the prior case.
In Siete I, we concluded that the 2014 Amendment was
not retroactive-nor was it a clarification of the law- and
thus, it did not apply to the 2014 tax year. 2015 WL 8620672,
at *4, ¶ 18. After the decision, the Department moved to
dismiss the 2014 Appellants' complaint for the 2015 tax
year based on issue preclusion and for summary judgment on
Arlington's claims. The tax court denied Taxpayers'
motion for summary judgment and granted the Department's
motions. Taxpayers timely appealed, and we have jurisdiction
pursuant to A.R.S. § 12-2101(A)(1).
Taxpayers argue on appeal that the tax court erred by: (1)
granting the Department's motion to dismiss the 2014
Appellants' claims based on issue preclusion and granting
the Department's summary judgment motion against
Arlington based on the decision in Siete I; and (2)
not applying the 2014 Amendment to the 2015 tax year,
resulting in the improper denial of Taxpayers' motion for
summary judgment on all claims.
We review the tax court's dismissal of a complaint for
failure to state a claim, Zubia v. Shapiro, 243
Ariz. 412, 414, ¶ 13 (2018), and grant of summary
judgment, Sw. Airlines Co. v. Ariz. Dep't of
Revenue, 217 Ariz. 451, 452, ¶ 6 (App. 2008),
de novo. Although Taxpayers' appeal presents
several procedural issues regarding the dismissal of the
claims, we confine ourselves to the one substantive issue
that is dispositive-whether the Department was required to
calculate the 2015 tax year final valuations in accordance
with the 2014 Amendment, which was enacted after the
valuation date but prior to the date when the Department must
determine the final valuation. Statutory interpretation
raises questions of law and is reviewed de novo. Calpine
Constr. Fin. Co. v. Ariz. Dep't of Revenue, 221
Ariz. 244, 247, ¶ 12 (App. 2009).
Taxpayers contend the tax court misapplied the law because:
(1) the legislature intended for the 2014 Amendment to apply
to the 2015 tax year; and (2) principles of retroactivity
need not apply because the 2014 Amendment was enacted before
the Department set the final valuations for the 2015 tax
year. Taxpayers assert the Department was not required to
apply the law as it existed on the valuation date.
Instead, they contend, A.R.S. § 42-14153(C) "merely
fixes the date the parties must use to determine full cash
value." We understand the Taxpayers' argument to be
that the legislature may change the valuation method at any