PPF Amli 1260 Republican St. v. Wilson

1

PPF AMLI 1260 REPUBLICAN STREET, LLC, a Delaware limited liability company, Appellant, v. JOHN WILSON, King County Assessor, Respondent.

No. 85666-9-I

Court of Appeals of Washington, Division 1

May 28, 2024

UNPUBLISHED OPINION

Bowman, J.

In 2017, the King County Assessor (Assessor) mistakenly underassessed PPF AMLI 1260 Republican Street LLC's (AMLI's) 10-parcel, two-building, mixed-use development after AMLI requested the Assessor merge the 10 tax parcels. During the merge, the Assessor failed to add the value of the "killed" parcels to the 1 "surviving" parcel. The Assessor corrected the mistake under RCW 84.48.065, resulting in a higher tax bill for AMLI. AMLI appealed the correction to the King County Board of Equalization (BOE), which affirmed the correction. AMLI then appealed to the Washington State Board of Tax Appeals (BTA) which granted summary judgment in favor of the Assessor. AMLI now appeals to this court, arguing the correction was an impermissible revaluation of its property. We conclude that the Assessor's correction was improper under RCW 84.48.065 and that the BTA erred by granting summary judgment. We reverse the BTA's decision on summary judgment and remand for consideration of whether other lawful bases support the revaluation and, if not, to vacate the Assessor's value correction.

FACTS

AMLI owns a mixed-use development in Seattle's South Lake Union neighborhood. It consists of two buildings with restaurant and retail space on the ground floors and apartments on the upper floors. AMLI built the development on 10 tax parcels. "Economic Unit 1" consists of 2 parcels and one building and "Economic Unit 2" consists of 8 parcels and the second building.

In April 2017, AMLI requested the Assessor merge the development into a single parcel for tax purposes. On June 13, 2017 while the merge request was pending, the Assessor's apartment appraiser valued AMLI's property. Unaware of the merge request, the appraiser valued each of the 10 parcels separately for the 2017 tax year. The appraiser used the income appraisal method^[1] to value Economic Unit 1 at $59,261,000. But the appraiser used a weighted appraisal method^[2] to value Economic Unit 2 at $92,960,000. The appraiser entered the value of each parcel into the Assessor's value tracking software, "Real Property." The total value for all 10 parcels was $152,221,000.

The next day on June 14, 2017, the Assessor completed AMLI's merge request, consolidating the characteristics of AMLI's property into a single tax parcel. To accomplish the merge, the Assessor administratively selected the lowest numbered parcel with improvements as the "surviving" parcel. That parcel was part of Economic Unit 1 and reflected the value of a single parcel with the first building, totaling $53,193,800. And it eliminated, or "killed," the other nine parcels. But the Assessor inadvertently failed to add the value of the killed parcels-the land-only parcel of Economic Unit 1 and all of Economic Unit 2-to the surviving parcel. That is, the surviving parcel reflected the value of only one building and one parcel. In September 2017, the Assessor posted the erroneous value to its "assessment roll."^[3] The King County Treasurer then sent AMLI its tax bill based on the erroneous assessment.

In December 2017, the Assessor learned of the error. So, in March 2018, the Assessor updated the value of AMLI's property and processed a tax roll correction. The Assessor issued a letter to AMLI, notifying it of the correction to its real property value. The letter said that the Assessor made the change under RCW 84.48.065 because of a "[p]osting error." And it showed a new assessed value of AMLI's property of $140,520,000 instead of $152,221,000, which was the total value the appraiser entered into Real Property in June 2017. But by that time, the Assessor's assessment and subsequent tax rolls were "closed."

AMLI appealed the correction to the BOE. It argued the revision was unauthorized under RCW 84.48.065 and should be treated as omitted property under RCW 84.40.080. The BOE agreed that "the omitted building constitutes omitted property" under RCW 84.40.080 but found that the property was correctly assigned its "true and fair value" of $140,520,000 under WAC 458-12-050(4).^[4]The BOE affirmed the revision.

AMLI then appealed to the BTA. The Assessor and AMLI cross moved for summary judgment. In its motion, the Assessor argued that the correction "was authorized under [the Assessor's] RCW 84.48.065 manifest error authority." AMLI argued that neither RCW 84.40.080 nor RCW 84.48.065 "authorize county assessors to retroactively increase the land and improvement values listed on the final assessment and tax rolls" because of a "posting error."

The BTA upheld the Assessor's action. It concluded that the property was not omitted from the tax rolls, so RCW 84.48.080 did not apply. But it concluded that the corrected assessment was authorized under the Assessor's authority to fix manifest errors under RCW 84.48.065. Accordingly, it granted summary judgment for the Assessor. AMLI filed for an exception to the BTA's decision, which the BTA denied.

AMLI petitioned for judicial review in the superior court. The parties agreed to direct review by this court, and the trial court certified this appeal for direct review under RCW 34.05.518.

ANALYSIS

AMLI argues the BTA erred by granting summary judgment for the Assessor because the Assessor's revaluation of AMLI's property was not permitted by statute. We agree.

1. Standard of Review

The Administrative Procedure Act (APA), chapter 34.05 RCW, governs appeals from the BTA. Dep't of Revenue v. GameStop, Inc., 8 Wn.App. 2d 74, 81, 436 P.3d 435 (2019). We review the BTA's actions de novo based on statutory interpretation. Id. If the plain language of a statute is unambiguous, we give effect to the statute's plain meaning as an expression of legislative intent. Id. The rules of statutory interpretation also apply to administrative rules and regulations. Dep't of Licensing v. Cannon, 147 Wn.2d 41, 56, 50 P.3d 627 (2002) (we interpret a WAC provision to ascertain and give effect to its underlying policy and intent). We will reverse a BTA decision if it is based on an erroneous interpretation or application of the law. GameStop, 8 Wn.App. 2d at 81 (citing RCW 34.05.570(3)(d)). The burden of showing the invalidity of the BTA's decision is on the party asserting invalidity. Id.

When an administrative decision is made on summary judgment, we "overlay the APA standard of review with the summary judgment standard." Verizon NW, Inc. v. Emp. Sec. Dep't, 164 Wn.2d 909, 915-16, 194 P.3d 255 (2008). So, we view the facts in the record in the light most favorable to the nonmoving party. Id. at 916. "Summary judgment is appropriate only where the undisputed facts entitle the moving party to judgment as a matter of law." Id. We grant summary judgment only if reasonable persons could reach but one conclusion from all the evidence. Dep't of Revenue v. Advanced H2O, LLC, 11 Wn.App. 2d 384, 393, 453 P.3d 1011 (2019).

2. Statutory Background

The Washington Constitution requires uniformity of all taxes on the same class of property within the territorial limits of the authority levying the tax. Article VII, § 1.^[5] To comply with that mandate, the legislature has established a statutory process for county assessors, county treasurers, county boards of equalization, and the Department of Revenue (DOR) to calculate, levy, and collect taxes statewide. See generally Title 84 RCW.^[6]

The taxation process starts with a county assessor, who values all parcels of taxable property in their county. RCW 84.40.040. The assessor must "determine as nearly as practicable the true and fair value of each tract or lot of land listed for taxation and of each improvement located thereon." Id. The assessor must "enter [100] percent of the true and fair value of such land and value of such improvements, together with the total of such [100] percent valuations, opposite each description of property on the assessment list and tax roll." Id. An assessor must also "maintain an active and systematic program of revaluation" of property "on a continuous basis." RCW 84.41.030(1).^[7] "All taxable real property within a county must be revalued annually." Id.^[8] The assessor updates the assessment list and subsequent tax roll with those revaluations annually. RCW 84.41.041(1).

By July 15 of the applicable tax year, county assessors certify their assessment rolls to their county's board of equalization. RCW 84.40.320. The board then equalizes^[9] the assessments and conveys the roll to the DOR. RCW 84.48.010(1), .080(1). In September and October of the tax year, the DOR establishes equalization ratios for state-assessed companies and railroad operations. RCW 84.48.080(1). The DOR then levies taxes and apportions all the state taxes among the counties. RCW 84.48.080(2). Finally, the DOR certifies for public inspection its record of proceedings for the tax levies made for state purposes and the apportionment among the counties. RCW 84.48.080(4). After certification, the DOR transmits its record of proceedings to each county assessor, specifying the tax amount to be levied and collected for state purposes for the year. RCW 84.48.110.

After a county assessor receives the DOR's record of proceedings the assessor extends those state-wide taxes to their county's tax roll. RCW 84.48.120. The assessor then certifies the equalized assessed values to district tax officials, who calculate and certify back to the assessor the rates necessary to raise the authorized district-level taxes. RCW 84.48.130; RCW 84.52.070. When the district officials return their certified calculations, the assessor extends ...