Bd. of Cnty. Comm'rs v. N.M. Taxation & Revenue Dep't

BOARD OF COUNTY COMMISSIONERS, HARDING COUNTY;MOSQUERO MUNICIPAL SCHOOLS, BOARD OF EDUCATION;and ROY MUNICIPAL SCHOOLS, BOARD OF EDUCATION, Petitioners-Appellees, v. NEW MEXICO TAXATION AND REVENUE DEPARTMENT and DEMESIA PADILLA,Secretary of the New Mexico Taxation and Revenue Department, Respondents-Appellants.

Docket No. A-1-CA-36305

COURT OF APPEALS OF NEW MEXICO

May 24, 2019

This decision of the New Mexico Court of Appeals was not selected for publication in the New Mexico Appellate Reports. Refer to Rule 12-405 NMRA for restrictions on the citation of unpublished decisions. Electronic decisions may contain computer-generated errors or other deviations from the official version filed by the Court of Appeals.

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY, Francis J. Mathew, District Judge

COUNSEL

Gallegos Law Firm, P.C., J.E. Gallegos, Michael J. Condon, Santa Fe, NM or Appellees

Hector H. Balderas, Attorney General, David E. Mittle, Special Assistant Attorney General, Santa Fe, NM for Appellants.

JUDGES

KRISTINA BOGARDUS, Judge. WE CONCUR: LINDA M. VANZI, Judge JACQUELINE R. MEDINA, Judge

AUTHOR: KRISTINA BOGARDUS

MEMORANDUM OPINION

BOGARDUS, Judge.

{1} The New Mexico Taxation and Revenue Department (the Department) and the Department secretary, Respondents, appeal the following district court orders, all granted in favor of Petitioners, the Board of County Commissioners of Harding County, the Board of Education of Mosquero Municipal Schools, and the Board of Education of Roy Municipal Schools (collectively, Harding County): (1) Corrected Peremptory Writ of Mandamus (Peremptory Writ); (2) Order on Show Cause Proceeding (Contempt Order); and (3) Opinion and Order on Petitioners' Application for Fees and Costs (Order for Fees and Costs).¹ We conclude that the appeal of the Peremptory Writ is untimely and dismiss that appeal. We affirm the remaining orders.

BACKGROUND

{2} This appeal stems from Harding County's repeated requests for the Department to value certain property located in the county so that property tax could be assessed. If assessed, Harding County would receive a portion of the tax collected on the property, which consists of two high-voltage electric transmission lines and related facilities: the "Hess line," and the "Whiting line." Springer Electric Cooperative, Inc. (Springer) owns the Hess line, which has been in place since 2009. Ownership of the Whiting line, which was constructed in 2013, was uncertain when Harding County first took action against the Department, but it was later determined that Springer was the owner.

{3} Harding County made the requests of and took action against the Department because the Department plays a central role in the taxation of such properties. By law, the Department values properties "used for the generation, transmission or distribution of electric property or energy" according to a special method established by NMSA 1978, Section 7-36-29(A) (2016). Each year, the owner of such property must send its own assessment of the property's value to the Department. See NMSA 1978, § 7-38-8 (2007). The Department then must send a notice to the owner-taxpayer informing it of the amount it deems the net taxable value of the property. See NMSA 1978, § 7-38-20(B) (2012). A taxpayer may protest the Department's valuation. See NMSA 1978, § 7-38-39 (1983).

{4} Harding County first tried to have property tax revenue generated from the lines in 2009, when it asked the Department to issue Springer a notice of valuation for the Hess line. The Department did not respond to that or subsequent such requests until 2012. In 2012 a Department staff attorney drafted a memo to the Department secretary and others concluding that the line, a so-called "contribution in aid of construction" (CIAC)² property, was taxable—and that state law did not recognize a tax exemption for such property. Also that year, the Department sent Springer a notice of valuation of the Hess line. The Department had based its valuation on a figure reported by the Tri-State corporation (Tri-State), which had paid for some or all of the line's construction.

{5} Despite the initial 2012 valuation and similar valuations for each of the years from 2013 through 2015, no property tax revenue resulted from the Hess or Whiting lines. That is because Springer protested the Hess line valuation for each of those years, and both Springer and the Department exercised their statutory rights to waive indefinitely the requirement that the protest be resolved within 120 days. The waivers were in effect until the Department scheduled a protest hearing on the matter after this lawsuit was filed. Meanwhile, the Whiting line's owner was unknown throughout much of the period at issue, and so the line could not be taxed.

I. Writ Proceedings

{6} In May 2015 Harding County petitioned the district court to compel the Department to value the lines for property tax purposes and to resolve protests related to the Hess line. The district court granted the petition and issued an alternative writ of mandamus against the Department. Instead of immediately complying with the alternative writ, the Department elected—as the writ allowed—to show cause why the Department did not perform the duties ordered by the writ. The Department argued that (1) it had already complied with the writ by having valued the property at issue, (2) the writ was improvidently granted, and (3) the writ was legally insufficient. The Department requested that the district court (1) find that it had performed the duties ordered by the writ, (2) quash the writ, or (3) delay issuing a peremptory writ until the property's final values were established through an Administrative Hearings Office (AHO) tax-protest hearing.

{7} Not persuaded by the Department's arguments, the district court issued the Peremptory Writ, which included findings, conclusions, and orders; those relevant to this appeal are summarized as follows. The district court found that (1) the Department had not valued the Hess line for property tax purposes for the years from 2009 through 2011, but did value that line beginning in 2012 using a construction-cost-based amount reported by Tri-State; (2) the Department had "done nothing to conclude" Springer's protests of those 2012 through 2015 valuations; (3) the Whiting line, which appeared to the Harding County assessor to be owned by Springer, was constructed in 2013 and had not been valued by the Department for property tax purposes; and (4) as a result, Harding County could not collect property tax on the lines for any of the years of their existence.

{8} The district court concluded that (1) the Department was required by law to perform valuations of the Hess and Whiting lines and to report the values to Harding County; (2) no constitutional or statutory exemption from property tax applied to the lines, let alone under a CIAC "theory"; and (3) the Department's waiver of the 120-day requirement in connection with Springer's protests did not permit unlimited delay in resolving them.

{9} Lastly, the district court ordered the Department to (1) promptly issue notices of valuation, determined in accordance with Section 7-36-29 (2015), of the Hess line for the years 2009 through 2011; (2) present the writ's rulings on taxability of the Hess lineto the hearing officer assigned to conduct the hearing on Springer's 2012 through 2015 valuation protests; (3) upon issuance of the hearing officer's decision, certify to the Harding County assessor the final valuations of the Hess line for those years; (4) immediately investigate the ownership and construction of the Whiting line and, once ownership was confirmed, value the line in accordance with Section 7-36-29 (2015) and certify the valuation to the Harding County assessor; and (5) complete those actions, and report to the district court on that completion, within 180 days—that is, on or before April 27, 2016.

II. Department's Response to Peremptory Writ

{10} Four days after the final writ hearing, the Department requested an AHO hearing on Springer's 2012 through 2015 valuation protests. On January 5, 2016, the AHO continued the hearing at Springer's request and rescheduled it for January 27, 2016. At the end of the January 27 hearing, the hearing officer ordered the parties to submit proposed findings of fact and conclusions of law within two weeks. The parties asked for and were granted an extension until the end of the legislative session. Then, on February 19, 2016, Springer moved to reopen the AHO record to submit evidence of recent legislative action relevant to the matter. The hearing officer agreed and took administrative notice of that action, described as follows.

{11} During the 2016 legislative session, Section 7-36-29 (2015) was amended to include an exception to the definition of "tangible property cost," which is the basis for determining the value of property subject to Section 7-36-29's special method of valuation. See S.B. 47, 52nd Leg., 2nd Sess. (N.M. 2016), available at https://nmlegis.gov/Sessions/16%20Regular/final/SB0047.pdf. Specifically, the following language was added to the statute: " 'tangible property cost' . . . excludes the cost of property contributed to, or acquired with funds contributed to, a utility by or on behalf of a ratepayer or potential ratepayer for the expansion, improvement or replacement of property used for the transmission or distribution of electric power of the utility." Compare § 7-36-29(B)(7) (2015), with § 7-36-29(B)(6) (2016). In other words, according to the revised statute, property subject to Section 7-36-29 that falls under the exception is not "tangible property" and thus has no taxable value. See § 7-26-29 (2016).

{12} Having taken administrative notice of the statute's amendment, the hearing officer ruled in Springer's favor by concluding in his March 26, 2016, decision and order (AHO Decision) that "the tangible property cost valuation of the Hess line for purposes of ...