2015 Opinion No. 25
Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Eric J. Wildman, District Judge.
The decision of the district court is affirmed.
Michael R. Jones, PLLC, Boise, argued for appellant. Robert N. Jones argued.
Ada County Prosecuting Attorney's Office, Boise, for respondent. Claire S. Tardiff argued.
HORTON, Justice. Chief Justice BURDICK and Justices EISMANN, J. JONES and Justice Pro Tem WALTERS CONCUR.
This is an appeal from the Ada County district court's decision affirming the Board of Tax Appeals' (the BTA) decision to deny appellant, Jayo Development, Inc.'s (Jayo Development) application for a business inventory property tax exemption. In 2012, Jayo Development applied for a property tax exemption pursuant to Idaho Code section 63-602W(4), claiming that the property qualified as site improvements held by a land developer. The Ada County Board of Equalization (the BOE) denied the application. Subsequently, the BTA and the district court both affirmed the denial. On appeal, Jayo Development argues that the plain language of the statute entitles it to the exemption, that the district court erred in relying on IDAPA 35.01.03.620 in denying Jayo Development the tax exemption, and that the 2013 amendment of Idaho Code section 63-602W(4) clarified the legislature's intent and supports its interpretation of the statute. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Jayo Construction, Inc. (Jayo Construction), a land developing business, acquired forty-one parcels of real property located in seven different real estate developments in Idaho (the Parcels). In 2008, Jayo Construction made site improvements to the property by installing utilities, roads, sidewalks, and curbs. At the time the improvements were made, Douglas Jayo was the sole shareholder of Jayo Construction.
In December of 2008, Jayo Construction was reorganized. To that end, on December 26, 2008, Jayo Construction was dissolved and that same day, Jayo Construction LLC (Jayo LLC) was formed. In the process, the Parcels were transferred from Jayo Construction to Douglas Jayo personally, and then from Douglas Jayo to Jayo LLC. Douglas Jayo was the managing member of Jayo LLC and all assets of Jayo Construction were transferred to Jayo LLC.
In February of 2010, Jayo LLC was dissolved and Jayo Development was formed. Douglas Jayo is the sole shareholder of Jayo Development. Much like the 2008 reorganization, the Parcels were conveyed from Jayo LLC to Douglas Jayo personally, who then conveyed the Parcels to Jayo Development.
In 2012, Jayo Development timely filed a site improvement tax exemption application for the Parcels with the Ada County Assessor for the 2012 tax year. Jayo Development sought the exemption pursuant to Idaho Code section 63-602W(4), which was enacted
in 2012 to include site improvements in the business inventory tax exemption.
On May 24, 2012, the Ada County Assessor issued a Notice of Exemption Denial, denying Jayo Development's site improvement exemption application. The Ada County Assessor reasoned that Jayo Development was not entitled to the exemption because Jayo Construction developed the property and then lost the exemption when it transferred title to the property to Douglas Jayo. Jayo Development appealed to the BOE. The BOE affirmed the Assessor's denial of the application.
Jayo Development appealed the decision of the BOE to the BTA. The BTA held a hearing to determine whether Jayo Development qualified for the property tax emption pursuant to Idaho Code section 63-602W(4). The BOE argued Jayo Development did not qualify for the exemption because it was not the developer who installed the site improvements, as those were installed by Jayo Construction. The BOE also argued that the site improvement exemption was lost upon conveyance of the property from the land developer based on IDAPA 35.01.03.620.04 (Rule 620) as it existed in 2012.
The BTA affirmed the decision. The BTA reasoned that the site improvements were added by Jayo Construction, and that Jayo Development was a different legal entity which obtained the Parcels after multiple conveyances, thus precluding it from obtaining the exemption. The BTA entered a final decision and order on April 4, 2013.
Jayo Development timely filed a petition for judicial review with the Ada County district court. Jayo Development and the BOE filed cross-motions for summary judgment. The district court granted the BOE's motion for summary judgment and denied Jayo Development's motion. The district court reasoned that Jayo Development was not entitled to the site improvement exemption under the plain and unambiguous language of Idaho Code section 63-602W(4). Further, the district court explained that even if the statute was ambiguous, Jayo Development would not be entitled to the exemption based on IDAPA 35.01.03.620.04, as the agency's interpretation of the statute supported the district court's interpretation that the exemption was lost upon the conveyance of the Parcels. In short, the district court concluded that only a land developer making site improvements was entitled to the exemption under the 2012 statute.
Jayo Development timely appealed to ...