The Arizona Supreme Court has vacated an appellate court opinion and remanded it to the tax court to determine the primary use of resort and golf course property and whether the golf course should be classified separately from the resort for property tax purposes.
The resort and golf course, with certain improvements, were located on leased state-owned land and classified as class nine property, which is afforded a lower tax rate. The county argued that the classification should be denied because the improvements might not exist at the termination of the leasehold interest in the property. Although finding the statute at issue ambiguous, the state high court supported the interpretation by the taxpayer because the statute contemplated that the tax classification, based on conditional improvements, would be considered at the time of taxation rather than requiring proof that the improvements would, in fact, exist at the end of the lease.
The state high court granted the county’s motion for summary judgment because the tax court did not cite any authority or evidence to support the taxpayer’s claim that the property met the primary use requirement, and the appellate court interpreted the tax court’s statement as a finding to establish primary use even though the issue had neither been briefed nor argued in the tax court.
CNL Hotels and Resorts Inc. v. Maricopa County, Arizona Supreme Court, No. CV-11-0072-PR, July 3, 2012 , ¶401-127