Vail Associates, Inc. v. Eagle County Board of County Commissioners

Judge ROY

concurring in part and dissenting in part.

I agree with the majority with respect to the standing of the Eagle County Board of Equalization (BOE) to challenge the constitutionality of § 39-3-136, C.R.S.1998. I further agree with the majority that the constitution is not self-executing, but I respectfully dissent from the balance of the majority opinion.

The constitution requires that “[ejach property tax levy shall be uniform upon all real and personal property not exempt from taxation.” Colo. Const, art. X, § 3(l)(a). It then provides that certain types or classes of property shall be exempt from taxation. Colo. Const, art X, §§ 3(l)(c) and (d), 4, 5.

The statutes authorize an annual tax on all “taxable property.” Section 39-1-111, C.R.S.1998. “Taxable property” is defined by statute as “all property, real and personal, not expressly exempted from taxation by law.” Section 39-1-102(16), C.R.S.1998. “Real property” is defined by statute as “[a]ll lands or interests in lands.... ” Section 39-l-102(14)(a), C.R.S.1998.

In 1975, the General Assembly, with specified exemptions, adopted a statute specifically authorizing the taxation of possessory interests in real property otherwise exempt from taxation which were held in connection with a business conducted for profit. Colo. Sess. Laws 1975, ch. 342, at 1462 (possessory interest statute).

In 1995, the supreme court held in Mesa Verde Co. v. Montezuma County Board of Equalization, 898 P.2d 1 (Colo.1995) (Mesa Verde II) that a concessionaire’s contractual right to use national park land was taxable as real property. In reaching this conclusion, the court relied on and construed §§ 39-1-111 (authority to tax), 39-1-102(16) (definition of taxable property), and 39-1-102(14)(a) (definition of real property). In addition, the Mesa Verde II court held that an exemption from taxation contained in the possessory interest statute — which would have exempted the concessionaire’s interest — was unconstitutional because it was not specifically authorized by Article X of the Colorado Constitution.

In 1996, the General Assembly repealed the possessory interest statute and adopted § 39-3-136, which provides:

The general assembly hereby finds and declares that:

(a) Section 3 of article X of the state constitution does not require the taxation of possessory interests, which are rights to use property that do not constitute the substantial equivalent of complete ownership of the property, in land, improvements, and personal property that are otherwise exempt from property taxation, absent express statutory authorization;
(b) This position is based, in part, upon the written proceedings of the 1875 Colorado constitutional convention, which reflect that the first draft of section 3 of article X of the state constitution expressly provided for the taxation of ‘all property, real, personal or possessory’, while the final version of this provision adopted by the constitutional convention provided only for the taxation of ‘all *59property, real and personal’ and did not refer to possessory property;

(c) In the opinion issued on April 24, 1995, entitled Mesa Verde Company v. The Montezuma County Board of Equalization and The Montezuma County Assessor, and The Property Tax Administrator of The State of Colorado (‘Mesa Verde II), 898 P.2d 1 (Colo.1995), the Colorado supreme court held that certain possessory interests in land are ‘real property’ within the meaning of section 39-1-102(14)(a) and are therefore subject to property taxation;

(d) If, based upon the supreme court’s decision in Mesa Verde II, possessory interests are taxable, a variety of possessory interests, such as grazing leases and permits on government land or government employees’ parking spaces in government-owned garages, become subject to property taxation and could be valued by different methods;

(e) Due to the supreme court’s decision in Mesa Verde II, the property tax treatment of possessory interests in exempt properties needs to be addressed to ensure the uniformity required by section 3 of article X of the state constitution;

(f) Subsection (2) of this section is intended to clearly state that possessory interests in exempt property shall be subject to property taxation only upon enactment of specific statutory provisions directing such taxation;
(g) The provisions of section 39-1-102(14)(a) and (14)(c) and section 39-1-106 do not direct the taxation of posses-sory interests in exempt properties; and
(h) Subsection (2) of this section shall not apply to and shall not be construed to affect or change the taxation of equities in state lands pursuant to section 39-5-106, the taxation of mines, quarries, or minerals, including hydrocarbons, pursuant to section 39-1-102(14)(b), articles 6 and 7 of this title, and any other article of this title, or the taxation of public utilities pursuant to article 4 of this title.
(2) Possessory interests in real or personal property that is exempt from taxation under this article shall not be subject to property taxation unless specific statutory provisions have been enacted that direct the taxation of such possesso-ry interests.

This statute is remarkable in at least two respects: (1) the General Assembly announced its interpretation of the Colorado Constitution, with a rationale; and (2) the General Assembly construed, without a rationale and without amending it, a statute adopted by a previous General Assembly, in a manner contrary to the previously announced opinion of the supreme court in Mesa Verde II.

I.

I conclude, following the supreme court’s opinion in Mesa Verde II, that Vail’s posses-sory interest in land owned by the United States is taxable under § 39-1-111.

The BOE’s argument is based on language contained in a footnote in Mesa Verde II in which the supreme court indicated that the concessionaire’s real property interest would be taxable without the possessory interest statute. This language stated, in pertinent part:

We also note that because Mesa Verde’s possessory interest meets the definition of taxable property under § 39-1-102(16), even if Mesa Verde’s interest were not taxable under any provision of § 39-3-135 [possessory interest statute], it is taxable under § 39-1-111. Section 39-1-111 authorizes the imposition of property taxes against all ‘taxable property in the county.

Mesa Verde II, supra (fn.17).

In my view, the taxation of possessory interests in land owned by the United States does not rely on the footnote, but, rather, is fully contained and explained in the holding of the supreme court. In other words, the footnote makes explicit what was implicit in the court’s holding.

In Mesa Verde II, the supreme court held that a concessionaire’s use and occupancy of property owned by -the United States was real property within the meaning of § 39-1-102(14)(a), and was taxable pursuant to § 39-1-111. In so concluding, the supreme court *60did not rely on the possessory interest statute, and therefore, the General Assembly’s subsequent repeal of the possessory interest statute has no impact on the rationale or holding of Mesa Verde II in that regard.

Vail maintains that the General Assembly has, in essence, reversed Mesa Verde II by the adoption of § 39-3-136(l)(g), C.R.S.1998, which provides that § 39-l-102(14)(a) and (c), C.R.S.1998, do not direct the taxation of possessory interests in tax exempt properties. Vail’s assertion is, in my view, untenable.

The General Assembly did not amend the language contained in § 39-1-102(14) with the adoption of § 39-3-136(l)(g), but merely offered its construction thereof for the express purpose of legislatively overruling the supreme court’s holding in Mesa Verde II. In addition, it did so in its findings and declarations, not in the operative, portion of the legislation. Thus, the adoption of § 39-3-136(l)(g), at best, creates a conflict between the General Assembly and the supreme court as to the meaning and application of § 39-1-102(14).

Vail contends that § 39-l-136(l)(g) “clarifies” the meaning of the definition of real property contained in § 39-1-102(14). Again, I disagree.

Statutes require construction only if they are ambiguous. Bloomer v. Board of County Commissioners, 799 P.2d 942 (Colo.1990). In Mesa Verde II, the supreme court applied §§ 39-1-102(14) and 39-1-111 without any indication that it considered the statutes ambiguous.

Even if one assumes an ambiguity, however, the purpose of statutory construction is to ascertain and give effect to the legislative intent. Farmer’s Group, Inc. v. Williams, 805 P.2d 419 (Colo.1991). The legislative intent to be ascertained is that of the enacting legislature. Colorado Public Interest Research Group, Inc. v. Train, 507 F.2d 743 (10th Cir.1974), rev’d on other grounds, 426 U.S. 1, 96 S.Ct. 1938, 48 L.Ed.2d 434 (1976).

The construction of statutes is a question of law, not fact, and is entrusted to the courts. Fogg v. Macaluso, 892 P.2d 271 (Colo.1995); Nicholas v. North Colorado Medical Center, Inc. 902 P.2d 462 (Colo.App.1995), aff'd sub nom. North Colorado Medical Center, Inc. v. Committee on Anticompetitive Conduct, 914 P.2d 902 (Colo.1996).

' While it is common for a legislative body to make findings and declarations and announce both its intent and purpose to assist in the interpretation of the statute being adopted, it is extremely rare for a legislative body to offer its construction of a statute adopted by one of its predecessors. It is generally held that such a legislative interpretation is invalid as the construction of statutes is a judicial function. Nelson v. Brown, 242 Ala. 515, 7 So.2d 572 (1942); Cutrona v. Wilmington, 14 Del.Ch. 434, 127 A. 421 (1924); Commonwealth ex rel. Roney v. Warwick, 172 Pa. 140, 33 A. 373 (1895); Titusville Iron-Works v. Keystone Oil Co. 122 Pa. 627, 15 A. 917 (1888); see also 2A N. Singer, Sutherland on Statutory Construction § 45.03 at 18 (5th Ed.1992); Romero, Interpretive Directions in Statutes, 31 Harv. J. On Legislation 211 at 222-23 (1994-95).

I recognize that statements by a General Assembly that its amendment to a statute is for the purpose of clarifying, not changing, a statute is accorded considerable weight even though such does implicitly represent an interpretation of the statute. See Commercial Federal Savings & Loan Ass’n v. Douglas County Board of Equalization, 867 P.2d 17 (Colo.App.1993); Portofino Corp. v. Board of Assessment Appeals, 820 P.2d 1157 (Colo.App.1991). In those instances, however, the operative statute is, in fact, amended and the General Assembly is expressing its present intent.

Therefore, even though it is apparent that the General -Assembly wished and intended to reverse the decision of the supreme court in Mesa Verde II and that it had the power to do so by amending either § 39-1-102(14) or §39-1-111, or both, I conclude that I am bound by the holding of the supreme court in Mesa Verde II.

II.

I further conclude that § 39-3-136(2), C.R.S.1998, is unconstitutional on its face, as *61it creates an exemption from taxation not enumerated in the state constitution.

Article 10, Section 6 of the Colorado Constitution provides that “[a]ll laws exempting from taxation property other than that specified in this article shall be void.”

In Mesa Verde II, the supreme court held that provisions of § 39-3-135 which exempted some possessory interests in tax exempt property held for profit were unconstitutional because the specified exemptions were not authorized by the constitution. Section 39-3-136(2) provides that possessory interests in tax exempt property shall not be subject to taxation without specific legislative authorization.

The analysis of the supreme court in Mesa Verde II did not rely on the repealed § 39-3-135. It relied instead on §§ 39-1-111 and 39-1-102(14), neither of which has been repealed nor amended.

Vail argues that the Colorado Constitution does not mandate the taxation of possessory interests. This argument is premised, in large part, on the history of taxation and the proceedings of the constitutional convention. While I agree that the constitution does not mandate the taxation of possessory interests, I conclude that the plain meaning of the constitution permits the taxation of possesso-ry interests.

Prior to the adoption of the constitution, a tax was imposed on improvements installed by private parties on public land as though the private party owned the underlying land. Colo. Sess. Laws 1874, at 226-27. At the constitutional convention in 1875, the first draft of what later became Colo. Const., art. X, § 3, provided:

All taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws which shall prescribe such regulations as shall secure a just valuation for taxation of all property, real, personal or possesso-ry....

Proceedings of the Constitutional Convention 414 (1907).

After the convention resolved itself to the committee of the whole, the word “possesso-ry” was deleted from the draft, leaving the operative phrase as “all real and personal property not exempt from taxation under this article.” It is the deletion of “possesso-ry” during the deliberations of the constitutional convention upon which Vail relies in arguing, and the General Assembly in finding, that the term “real property” as used in the constitution does not include possessory interests in real property.

If there is an ambiguity in the constitution, the cardinal rule of construction is to construe that instrument in accordance with the intention of the enacting body. The Colorado Constitution was drafted by a constitutional convention and was submitted to, and adopted by, the voters at an election held March 14, 1876. See Enabling Act § 5. Therefore, the goal of construing the constitution is to ascertain, if possible, the intention or understanding of the electorate and the proceedings of the constitutional convention are to be resorted to only when all other guides fail. In re Senate Resolution No. 2 Concerning Constitutionality of House Bill No. 6, 94 Colo. 101, 31 P.2d 325 (1933).

The proceedings of the constitutional convention, however, have been held to be of no assistance in interpreting the language of a constitution adopted by the electorate. Alexander v. People, 7 Colo. 155, 2 P. 894 (1884); but see Schwartz v. People, 46 Colo. 239, 104 P. 92 (1909)(courts may refer to proceedings of constitutional convention to ascertain intent in construing an ambiguous provision of the constitution).

Words used in constitutions are to be given their natural and popular meaning by which they are generally understood by the people who adopted them. In re Senate Resolution No. 2 Concerning Constitutionality of House Bill No. 6, supra; Prior v. Noland, 68 Colo. 263, 188 P. 729 (1920).

Perhaps the more notable treatises on the interpretation of constitutions states:

In the first place, then, every word employed in the Constitution is to be expounded in its plain, obvious and common sense meaning, unless the context furnishes some ground to control, qualify, or enlarge it. Constitutions are not designed *62for the meta-physical or logical subtleties, for niceties of expression, for critical propriety, for elaborate shades of meaning, or for the exercise of philosophical acuteness or judicial research. They are instruments of a practical nature founded on the common business of human life, adapted to common wants, designed for common use, and fitted for common understandings. The people make them, the people adopt them, the people must be supposed to read them, with the help of common-sense, and cannot be presumed to admit in them any recondite meaning or extraordinary gloss.

1 J. Story, Story on the Constitution § 451 at 345 (5th ed. 1891). '

“Real property” is, and has been, defined as:

Land, and generally whatever is erected or growing upon or affixed to land. Also rights issuing out of, annexed to, and exercisable within or about land. A general term for lands, tenements, and heredita-ments; property which, on the death of the owner intestate, passes to his heir.

Blacks Law Dictionary 1218 (6th ed.l990)(emphasis added).

At the time of the Constitutional Convention, the territorial legislature defined “real estate” for ad valorem tax purposes as:

Real estate for purposes of taxation shall include all lands within this Territory to which title has been acquired from the government of the United States, and the buildings, fixtures and other improvements thereon, including quarries, mineral, mineral springs and wells in, on, or under the same, and all rights and privileges appertaining thereto.

Colo. Sess. Laws 1870, at 88.

Later, the General Assembly added the following statement to the definition:

And also all buildings, fixtures and improvements made or owned by any person or persons upon public land in cases where such buildings, fixtures and improvements would be part of the real estate if the owner thereof had the fee simple estate in such land.

Colo. Sess. Laws 1874, at 226-27.

The present statutory definition of “real property,” which closely parallels the common law definition, has remained essentially unchanged since at least 1901. See Colo. Sess. Laws, 1901, ch. 3, § 13 at 45. The present definition states:

All lands or interests in lands to which title or the right of title has been acquired from the government of the United States or from sovereign authority ratified by treaties entered into by the United States, or from the state;....

Section 39-l-102(14)(a), C.R.S.1998.

In my view, the plain meaning of the term “real property” as used in the constitution includes possessory interests. Therefore, possessory interests are taxable under the plain meaning of the constitution. They are not, however, taxed by the constitution.

The constitution is not self-executing. City & County of Denver v. Security Life & Accident Co., 173 Colo. 248, 477 P.2d 369 (1970)(taxation of a possessory interest in personal property titled in a national bank which was tax exempt but leased to a private party cannot be taxed absent implementing legislation).

The supreme court held in Mesa Verde II that §§ 39-3-102(14) and 39-1-111 were sufficient, without more, to impose a property tax on the possessory interest in land owned by the United States. That being the case, § 39-3-136(2), like the repealed possessory interest statute, creates an exemption from taxation not authorized by the constitution and is, therefore, in my view, unconstitutional. Colo. Const, art 3, § 6; Mesa Verde II.

III.

I further conclude that § 39-3-136(2) does not apply to possessory interests in land owned by the United States.

Section 39-3-136(2) provides, in pertinent part:

Possessory interests in real or personal property that is exempt from taxation under this article shall not be subject to *63property taxation unless specific statutory provisions have been enacted that direct the taxation of such possessory interests. (emphasis added)

According to the plain language of the statute, a possessory interest in land which is tax-exempt by virtue of a statute shall not be subject to taxation absent specific statutory authorization. At the outset, I would note that the General Assembly is powerless either to create or destroy a property tax exemption. Colo. Const, art. 10, § 6. Land is either exempt from taxation under the constitution or it is taxable.

Here, the land is owned by the United States and is exempt from taxation by the Supremacy Clause, not by the Colorado Constitution or state statute. See McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579 (1819) (states may not tax federal property without congressional consent); see also Colorado Enabling Act § 4 (prohibits taxation of lands belonging to the United States).

Thus, applying the statute as written leads me to conclude that Vail’s possessory interests in land owned by the United States are not within the purview of § 39-3-136(2).

IV.

In addition, though not addressed by the majority, I would reject Vail’s contention that, because the BOE did not tax other holders of possessory interests in the county, the BOE’s taxation of Vail’s possessory interest violates the Equal Protection Clauses of the Colorado and United States Constitutions. Therefore, Vail argues, it should not be compelled to pay the tax.

In Bishop v. Colorado State Board of Assessment Appeals, 899 P.2d 251 (Colo.App.1994), property owners challenged the assessments assigned to their individual lots. The owners did not dispute the dollar valuation of their individual lots; rather, in an argument similar to Vail’s contention here, they argued that because other similar lots in the same subdivision had been undervalued, the assessed value of their lots should be reduced to equal the assessed value of the undervalued lots. A division of this court disagreed, and, relying at least in part on the undisputed correctness of the valuation, held that the property owners were not entitled to reductions in the tax assessments. See also Crocog Co. v. Arapahoe County Board of Equalization, 813 P.2d 768 (Colo.App.1990) (holding that property owner was not entitled to assessment reduction, even though similar property was assessed at much lower rate).

Although Bishop and Crocog were decided in the context of assessments, I find their reasoning persuasive, and would adopt it here. If the BOE has wrongfully failed to tax other possessory interests within the county, then the proper remedy is not for Vail to be relieved of its tax burden, but for the other possessory interest holders to be appropriately taxed. Cf. Crocog Co. v. Arapahoe County Board of Equalization, supra, 813 P.2d at 771 (“[A] countywide adjustment to conform all similarly situated property ... to one erroneous assessment in that county would undermine the very principles of statewide equalization upon which [property owner] relies.”).

Accordingly, I would reverse the order of the BAA and remand the matter with orders to reinstate the subject property interest to the tax warrant.