regulations," the subject parcel was a "remainder parcel" that was
entitled to partial tax abatement. The Nevada Tax Commission (NTC)
referred the case to a Chief Administrative Law Judge (AU.
The AU J held a hearing, at which Hughes submitted
approximately 20 exhibits demonstrating other instances in which the
Assessor retroactively applied the remainder regulations, and as a result,
either treated the "smaller" newly created parcel as the remainder parcel
or allowed for all newly created parcels to be categorized as the remainder
parcel. In response, the Assessor explained that it attempted to effectuate
the legislative purpose behind NRS 361.4722 by trying to determine the
property owner's intent; and in this case, because another newly created
parcel was, at a size of 16.62 acres, much larger than the subject parcel, it
appeared that the owner's intent was for the subject parcel to be a "new
parcel for development" (NPD). In sum, the primary issue was whether
the Assessor should evaluate only whether the parcel's use has changed,
as provided in NAC 361.61034(3), or whether the Assessor should evaluate
the relative size of the new parcels along with other circumstantial
'The so-called "remainder regulations" were promulgated by the
Nevada Tax Commission—effective March 23, 2007—to provide a
methodology to evaluate whether a newly created parcel is eligible for a
partial abatement of property taxes. NAC 361.61032. Specifically, NAC
361.61034(1) states that all new parcels "must be separately evaluated to
determine whether there has been any change in the use of the property."
The remainder regulations require this evaluation because NAC
361.61034(3) provides that if a newly created parcel's use has changed,
then the parcel is a "new parcel for development," and may not receive a
tax abatement, whereas if the use has not changed, then it is a remainder
parcel, which may receive a tax abatement. NAC 361.61034(3).
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considerations to determine if any parcels "remained" after the owner
partitioned the NPDs.
The AU J submitted his proposed findings of fact, conclusions
of law, and decision (AU J proposed decision) to the NTC, finding that the
subject parcel should be treated as a remainder parcel, and therefore
subject to the tax abatement. The AU J found that treating the subject
parcel as a remainder parcel was "in accordance with NRS 361.4722, and
NAC 361.61002 to 361.61038." The AU J also recommended that the
amount of the abatement should be determined using the apportionment
formula set forth in NAC 361.61036. The NTC did not initially adopt the
AU J proposed decision, finding instead that the Assessor's original
interpretation of the statutes was appropriate (the first NTC decision).
After two separate petitions for judicial review, the district
court voided the NTC's decision. The district court found that the AUJ
decision was logical and well written, and that the Assessor's methodology
applied different standards to different properties, equating to a non-
uniform taxation in violation of Article X, Section 1, of the Nevada
Constitution. Following two district court remands, the NTC ultimately
reversed course and adopted the AL's proposed decision in its entirety
(the third NTC decision).
The district court affirmed the third NTC decision, concluding
that the Assessor had not met its burden of demonstrating that the
decision was unsupported by substantial evidence or was arbitrary or
capricious. Specifically, the district court found that the NTC did not
retroactively apply the remainder regulations. Instead, it found that the
NTC "applied the same standard as the remainder regulation[s], not
because the standard had been codified, but because it was a reasonable
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standard for determining whether the [slubject [p]arcel was a[n] [NPD]."
(internal quotations omitted). As a result, the district court ruled that "in
the absence of development activity [the subject parcel] should be treated
as a remainder parcel." The Assessor now appeals.
Standard of review
"On appeal from orders deciding petitions for judicial review,
this court reviews the administrative decision in the same manner as the
district court," and without deference to the district court's decision.
Nassiri v. Chiropractic Physicians' Bd., 130 Nev. , , 327 P.3d 487,
489 (2014); Kay v. Nunez, 122 Nev. 1100, 1105, 146 P.3d 801, 805 (2006)
("[T]his court affords no deference to the district court's ruling in judicial
review matters.").
"We review the factual determinations of administrative
agencies for clear error 'in view of the reliable, probative and substantial
evidence on the whole record' or for an 'abuse of discretion." Nassiri, 122
Nev. at , 146 P.3d at 489 (quoting NRS 233B.135(3)(e), (0). "Thus,
factual findings will only be overturned if they are not supported by
substantial evidence, which, we have explained, is evidence that a
reasonable mind could accept as adequately supporting the agency's
conclusions." Id.
We review questions of law de novo. City of N. Las Vegas v.
Warburton, 127 Nev. , 262 P.3d 715, 718 (2011). However,
"[a]lthough statutory construction is generally a question of law reviewed
de novo, this court `defer[s] to an agency's interpretation of its governing
statutes or regulations if the interpretation is within the language of the
statute." Taylor v. Dep't of Health & Human Servs., 129 Nev. ,
314 P.3d 949, 951 (2013) (quoting Dutchess Bus. Servs., Inc. v. Nev. State
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Bd. of Pharmacy, 124 Nev. 701, 709, 191 P.3d 1159, 1165 (2008)
(alteration in original)). "[This] court may remand or affirm [a] final
decision or set it aside in whole or in part if substantial rights of the
petitioner have been prejudiced because the final decision of the agency is
. . . [i]n violation of. . statutory provisions." NRS 233B.135(3)(a). When
interpreting an unambiguous statute we "impart it with [its] ordinary
meaning and [do] not go beyond that meaning." Star Ins. Co. v. Neighbors,
122 Nev. 773, 776, 138 P.3d 507, 510 (2006).
The NTC erred when it adopted the AM proposed decision because the AUJ
proposed decision misapplied NRS 361.4722(6)
The Assessor argues that the AU J proposed decision and,
subsequently, the third NTC decision, misinterpreted NRS 361.4722(6).
The Assessor alleges that NRS 361.4722(6) requires a two prong analysis
and that the aforementioned decisions ignored the first prong and
mistakenly determined only the second prong. We agree. 2
NRS 361.4722(6) defines a remainder parcel as:
[A] parcel of real property which remains after the
creation of new parcels of real property for
2 Another key point of contention in this case is whether or not the
remainder regulations were applied retroactively. See Cnty. of Clark ix LB
Props., Inc., 129 Nev. „ 315 P.3d 294, 296 (2013) (explaining that
legislative regulations generally may not be applied retroactively). We
conclude, however, that whether or not the remainder regulations were
applied retroactively is inconsequential at this point. As explained in this
order, NRS 361.4722(6) requires a two prong analysis. The ALJ proposed
decision ignored the first prong. Because we are reversing the district
court order due to the AL's misapplication of NRS 361.4722(6), the issue
of whether the AU J retroactively applied the remainder regulations is
moot.
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development from one or more existing parcels of
real property, if the use of that remaining parcel
has not changed from the immediately preceding
fiscal year.
Under this definition, a remainder parcel cannot exist without the
formation of an NPD. And a parcel cannot be a remainder parcel if it
underwent a change in use. Thus, the statute creates a two prong test for
determining whether a parcel of land is a remainder parcel.
Under the first prong, upon the division of a larger parcel, the
Assessor must determine if one of the subdivided parcels is an NPD. The
Assessor must first identify if there is an NPD, because under NRS
361.4722(6), there cannot be a remainder parcel unless one of the other
subdivided parcels is an NPD. For example, if fictional parcel A was
completely divided into parcels B and C, both B and C cannot be
remainder parcels because one must be an NPD. In other words, for B to
be a remainder parcel, C would have to be an NPD, and vice versa. To
determine whether a parcel is an NPD, the Assessor applies a multifactor
approach. See Cnty. of Clark, 129 Nev. at 315 P.3d at 296-97
(approving of the Assessor's multifactor approach in determining taxable
value). The multifactor approach includes consideration of the size of the
parcel, the money spent separating the parcel, how the parcel aligns with
developed parcels in that area, and the zoning of the parcel. Upon
completion of this analysis, after the Assessor determines which of the
subdivided parcels is an NPD, the Assessor may proceed to NRS
361.4722(6)'s second prong with regard to the non-NPD parcels.
Under the second prong, once another parcel has been
classified as an NPD, the Assessor examines whether the use of the
subject parcel has changed, in order to determine if it is indeed a
remainder parcel. See NRS 361.4722(6) (explaining that "if the use of that
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remaining parcel has not changed from the immediately preceding fiscal
year" then it is a remainder parcel (emphasis added)). If the parcel's use
has changed, the parcel cannot be a remainder parcel.
In the present case, when the 46.59 acre master parcel was
split, the Assessor applied the multi-prong approach and determined that
the 3.62 acre subject parcel was an NPD and, thus, was not a remainder
parcel. The AU J proposed decision, however, which the NTC adopted and
the district court affirmed, found that the subject parcel's use did not
change and it, therefore, was a remainder parcel under NRS 361.4722.
We conclude that the reasoning applied by the AU J proposed
decision, which was subsequently adopted in the third NTC decision, is at
odds with NRS 361.4722(6) because it merely takes into consideration the
second prong, use change, and not the first prong, whether an NPD was
created by the partition. Specifically, prior to determining that the subject
parcel was a remainder parcel, the AU J proposed decision did not
determine whether another parcel partitioned from the master parcel was
an NPD. Instead, the AI, proposed decision concluded that the subject
parcel was a remainder parcel simply because its use did not change. This
one-sided analysis violated NRS 361.4722(6). 3 See NRS 233B.135(3)(a).
3 Hughes argues that "there is no evidence in the record regarding
whether the other seven parcels that were created at the same time as the
subject parcel were considered remainder parcels or [NPDs]." Therefore,
Hughes contends that the Assessor's argument that the KA proposed
decision failed to comply with NRS 361.4722(6)'s two prong analysis is not
justiciable because the argument is based on hypothetical facts,
specifically that the other seven sub-divided parcels from the master
parcel were designated as remainder parcels as well, thus requiring that
the subject parcel be designated as an NPD. Hughes' justiciability
continued on next page . . .
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Therefore, we conclude that the AU I proposed decision, which the NTC
adopted and the district court affirmed, was decided in err and prejudiced
substantial rights of the Assessor. 4 Accordingly we,
ORDER the third NTC decision, which the district court
affirmed, REVERSED AND REMAND this matter for proceedings
consistent with this order.
Douglas
kvzi,e
Cherr
ibbonh
Pickering
. . . continued
argument, however, does not affect our conclusion because we are not
basing our decision on how the other seven parcels were designated. We
are simply concluding that the AU I proposed decision misinterpreted NRS
361.4722(6) by failing to apply its first prong. That said, it is likely that on
remand the administrative law judge will have to determine how the other
seven parcels were classified in order to assess the first prong of NRS
361.4722(6). Day v. Washoe Cnty. Sch. Dist., 121 Nev. 387, 389, 116 P.3d
68, 69 (2005) ("[T]his court has the inherent authority to remand
administrative agency cases for factual determinations." (internal
quotations omitted)).
4 We have considered the parties' remaining arguments and conclude
that it is unnecessary for us to reach their merits.
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(0) I ,!474
cc: Hon. James E. Wilson, District Judge
Clark County District Attorney/Civil Division
Fennemore Craig, P.C./Reno
Attorney General/Las Vegas
Carson City Clerk
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SAITTA, J., with whom HARDESTY, C.J., and PARRAGUIRRE, J., agree,
dissenting:
This case began over seven years ago. Prior to arriving at this
court, this case was before an administrative law judge, the NTC multiple
times, and various district court judges. Throughout this entire process,
the primary issues have been: (1) how to assess "use change" in order to
determine whether the subject parcel was a remainder parcel or an NPD,
and (2) how to best calculate a tax abatement, if necessary. Now the
majority chooses to shift the focus to whether or not one of the other seven
sub-divided parcels of the master parcel was ever classified as an NPD, a
fact not currently contained in the record. In analyzing this narrow issue,
the majority fails to give the AU J proposed decision proper deference,
which led the majority to mistakenly reverse and remand. Instead, in my
view, the third NTC decision should be affirmed because the AU J proposed
decision properly determined that the subject parcel was a remainder
parcel and set forth the best methodology for calculating the requisite tax
abatement.
The majority improperly reversed and remanded this case
because it failed to afford proper deference to the AL's interpretation of
NRS 361.4722(6). See Taylor v. Dep't of Health & Human Servs., 129 Nev.
„ 314 P.3d 949, 951 (2013) ("[T]his court defer[s] to an agency's
interpretation of its governing statutes or regulations if the interpretation
is within the language of the statute." (alteration in original) (internal
quotations omitted)). Assuming that the majority's plain language
reading of NRS 361.4722(6) is correct and that a two prong analysis is
required, the AU J proposed decision only satisfied the second prong
because those were the only facts made available to it. The ALJ could not
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decide whether any of the other seven sub-divided parcels split from the
master parcel were ever classified as an NPD because the Assessor did not
submit the requisite evidence for making that decision. Although perhaps
not as complete as the majority would prefer, the AL's interpretation of
NRS 361.4722(6) was within the language of NRS 361.4722(6).
Consequently, once afforded the proper level of deference, the AL's
interpretation of NRS 361.4722(6) was satisfactory and reversal and
remand was unnecessary.
The AU J proposed decision properly decided both primary
issues and should have been affirmed. First, the AU J utilized a proper
methodology for assessing "use change." The AU, making it clear that he
was using the remainder regulations as guidance and not precedent,
implemented a more objective approach than the approach proposed by
the Assessor, because he considered construction activity on the property.
Then, in accordance with his methodology, the AU J properly classified the
subject parcel as a remainder parcel. Further, the subject parcel's
classification as a remainder parcel conformed with the consistency,
uniformity, and predictability requirements of NRS 360.291. Second, the
AL's decision to implement the apportionment formula codified in the
remainder regulations is preferable to the Assessor's comparable sales
approach. Once again the AU J acted properly because he simply used the
remainder regulations as guidance.' Therefore, the AM proposed decision
properly decided the primary issues and should have been affirmed.
'The AL's handling of both issues was proper because he did not
apply the remainder regulations retroactively in either instance. See
Cnty. of Clark v. LB Props., Inc., 129 Nev. , 315 P.3d 294, 296
continued on next page . . .
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In sum, today's reversal and remand essentially starts this
seven year litigation anew with no clarity as to the primary issues. The
majority's failure to show the MA proposed decision the proper deference
has created a scenario where this court will likely face the exact same
questions once again after this case goes through another round of
administrative hearings and district court proceedings. Therefore, I
dissent.
J.
Saitta
We concur:
4_41,1 C.J.
Hardesty
Parraguirre
. . continued
(2013) (explaining that a regulation may only be applied prospectively
unless an intent to apply it retroactively was clearly manifested or the
regulation does not establish a substantive rule that creates a standard of
conduct and imposes new rights or duties).
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