Scottsdale/101 Associates, LLC v. Maricopa County
238 Ariz. 291
Ariz. Ct. App.2015Background
- Two commercial developments on state trust land (Scottsdale 101 and Desert Ridge Marketplace) include retail, restaurants, and large movie theaters; plaintiffs are the property owners (Taxpayers).
- Taxpayers challenged Maricopa County Assessor’s classification of the theaters as Class One (shopping center) rather than Class Nine (entertainment on government land), which carries a much lower assessment rate.
- Taxpayers filed timely claims under A.R.S. § 42-16203 and error-correction claims for earlier years; the tax court granted summary judgment for the County; appeals were consolidated.
- Core legal question: whether a valuation categorization (treated as a shopping center for valuation) mandates the same classification for assessment, and whether mixed-use assessment may treat discrete portions (movie theaters) as Class Nine.
- The Assessor had previously applied mixed-use assessments to other uses (e.g., day-care centers) within shopping centers; the Department of Revenue’s manual contemplates proportional classification for mixed uses.
- Legislature later amended Class One to exclude any portion that is Class Nine (2009), clarifying the treatment going forward; this appeal concerns pre-2009 tax years.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether valuation as a shopping center controls assessment classification | Valuation and classification are separate; theaters can be assessed under Class Nine despite valuation as shopping center | Because the Properties were valued as shopping centers, they must be classified (assessed) as shopping centers | Valuation and classification are distinct; valuation categorization does not automatically determine assessment class |
| Whether mixed-use assessment can allocate Class Nine to theaters inside a shopping center on government land | Mixed-use rules and Department manual allow discrete uses (theaters) to be separately classified as Class Nine; similar treatment applied to other in-center uses | Mixed-use cannot be applied to theaters within shopping centers; theaters are part of the shopping center (Class One) | Mixed-use assessment may apply; movie theaters within the shopping center on government land may qualify for Class Nine and should receive the most favorable tax treatment to taxpayer |
| Award of attorney’s fees on appeal under A.R.S. § 12-348 | Taxpayers requested fees as prevailing challengers to tax assessment | County opposed | Court awarded reasonable appellate attorney’s fees to Taxpayers subject to statutory limits |
Key Cases Cited
- CNL Hotels & Resorts, Inc. v. Maricopa County, 230 Ariz. 21 (2012) (discusses error-correction claims under § 42-16254 and review of county classification decisions)
- Scottsdale Princess P’ship v. Maricopa County, 230 Ariz. 425 (2012) (addressed Class Nine qualification for a hotel and evidentiary burden for primary use)
- Nordstrom, Inc. v. Maricopa County, 207 Ariz. 553 (2004) (valuation issue whether single store could be valued as a shopping center)
- Wilderness World, Inc. v. Dep’t of Revenue, 182 Ariz. 196 (1995) (de novo review of summary judgment in tax cases)
- Ariz. Dep’t of Revenue v. Cent. Newspapers, Inc., 222 Ariz. 626 (2009) (statutory construction in tax contexts reviewed de novo)
- State ex rel. Ariz. Dep’t of Revenue v. Capitol Castings, Inc., 207 Ariz. 445 (2004) (tax statutes construed liberally in favor of taxpayers)
- People’s Choice TV Corp. v. City of Tucson, 202 Ariz. 401 (2002) (ambiguities in tax statutes resolved for taxpayer)
- City of Phoenix v. Borden Co., 84 Ariz. 250 (1958) (tax statutes construed strongly against government)
- Aileen H. Char Life Interest v. Maricopa County, 208 Ariz. 286 (2004) (court’s reliance upon Department of Revenue manuals)