Cantina Grill, JV v. City & County of Denver County Board of Equalization ex rel. Pumilla
2012 WL 4021510
Colo. Ct. App.2012Background
- Food and beverage concessionaires at Denver International Airport challenge the valuation of their possessory interests in tax-exempt DIA property.
- DIA is owned by the City and County of Denver and is exempt from ad valorem taxation; concessionaires operate spaces leased from the City under largely identical agreements.
- City began valuing possessory interests in 2002 using the Vail Associates framework and section 39-1-103(17)(a2) (now 39-1-108(17)).
- Concessionaires received 2010 valuation notices, appealed to the Board, then sought trial de novo under § 39-8-108(1), C.R.S. 2011.
- Trial court upheld the valuations; the court conducted de novo review, balancing the three valuation approaches via the Vail test, and rejected challenges to the statute and valuation methods.
- The court affirmed the Board’s valuations, ruling the possessory interests are taxable under Vail Associates and properly valued with deductions only for eligible costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutionality of the statute on its face | Concessionaires argue § 39-1-108(17)(a)(II)(A)-(B) is vague and overbroad. | Board/City contends the statute provides a clear methodology for valuing taxable possessory interests, not a tax imposition itself. | Not facially unconstitutional. |
| As-applied vagueness to concessionaires' interests | Statute is vague as applied to their tax-exempt interests. | Statute applies to valuation methodology, not to the taxability itself; Vail controls. | Not vague as applied. |
| Overbreadth of the statute | Statute sweeps too broadly and inhibits protected rights. | Valuation provisions do not infringe protected rights and align with Vail. | Not overbroad. |
| Taxability under Vail prong I (revenue-generating independence) | City controls (pricing, hours, security) negate private revenue independence. | Revenue primarily comes from the traveling public; independence shown despite controls. | Concessionaires' possessory interests provide independent revenue under Vail prong I. |
| Taxability under Vail prong II (exclusivity) | Nonexclusive language in the agreement undermines exclusivity. | Exclusivity is not absolute; the relevant question is whether others may use the same space for the same purpose. | Sufficient exclusivity established; second prong satisfied. |
Key Cases Cited
- Board of County Com'rs v. Vail Associates, Inc., 19 P.3d 1263 (Colo. 2001) (test for taxable possessory interests in exempt property: revenue independence, exclusion, duration)
- Mesa Verde Co. v. Bd. of Cnty. Comm'rs, 495 P.2d 229 (Colo. 1972) (define possessory interest and its taxation framework)
- Cherry Hills Country Club v. Bd. of Cnty. Comm'rs, 832 P.2d 1105 (Colo. App. 1992) (preserves taxation against exemptions; burden of proof on taxpayer)
- E-470 Public Highway Auth. v. Revenig, 91 P.3d 1038 (Colo. 2004) (statutory vagueness and standards for taxes and procedures)
- People v. Villa, 240 P.3d 343 (Colo. App. 2009) (standard for challenging constitutionality of statutes)
- People v. Cowillard, 131 P.3d 1146 (Colo. App. 2005) ( vagueness applied to challengers; as-applied challenges)
- City of Colorado Springs v. Blanche, 761 P.2d 212 (Colo. 1988) (as-applied vagueness and meaningful standards)
- Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489 (U.S. 1982) (facial vagueness standard for constitutionality)
- Hickman v. People, 988 P.2d 628 (Colo. 1999) (due process and vagueness considerations in statutory interpretation)