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County of Clark v. LB Props., Inc.

Supreme Court of Nevada

December 12, 2013

COUNTY OF CLARK, Nevada, and Mark Schofield, In his Official Capacity as Clark County Assessor, Appellants,
v.
LB PROPERTIES, INC., An Illinois Corporation, Respondent.

Steven B. Wolfson, District Attorney, and Paul D. Johnson, Deputy District Attorney, Clark County, for Appellants.

Page 295

Lionel Sawyer & Collins and William J. McKean, Reno; Frazer Ryan Goldberg & Arnold LLP and Douglas S. John, Phoenix, Arizona, for Respondent.

BEFORE THE COURT EN BANC.

OPINION [1]

PICKERING, C.J.:

In this appeal we consider whether a regulation promulgated by the Nevada Tax Commission to value remainder parcels of real property for tax abatement purposes applies retroactively.

I.

In 2005, the Legislature enacted NRS 361.4722, which caps real property taxes by providing partial tax abatements calculated with reference to assessed valuations for the preceding fiscal year on, as relevant here, remainder parcels of real property.[2] The abatement statute generally requires a remainder parcel's prior-year assessed valuation to be determined as if it " had been separately established for that property for that prior fiscal year based upon all the assumptions, costs, values, calculations and other factors and considerations that would have been used for the valuation of that property for that prior fiscal year." NRS 361.4722(2)(a)(1). The Legislature did not provide additional specifics. Instead, it delegated authority to the Nevada Tax Commission (NTC) to adopt implementing regulations. See NRS 361.4722(5) (" The Nevada Tax Commission shall adopt such regulations as it deems appropriate to ensure that this section is carried out in a uniform and equal manner." ).

Exercising its delegated authority, the NTC promulgated NAC 361.61038, effective March 23, 2007, which sets forth an apportionment formula for calculating remainder-parcel property values for purposes of NRS 361.4722. Both the regulation's valuation method and the assessor's prior approach are complex, but they can be summarized as follows: The regulation adopts an apportionment formula and calculates taxable value by determining the percent of value the smaller parcel contributed to the larger parcel during the fiscal year, thus assigning a pro-rata share to the remainder parcel. The assessor's prior approach had been to determine taxable value by calculating what the property would have been worth had it existed as a separate piece of land during the relevant tax year, and included consideration of factors such as size, shape, topography, and the value of comparable parcels.

The parcel at issue is owned by respondent LB Properties, Inc. It was divided from a larger piece of land before the regulation's enactment and, the parties concede, is properly characterized as a " remainder parcel" under NRS 361.4722(6), reprinted supra note 2. Appellant, the Clark County Assessor, valued the land under the multifactored approach he used before NAC 361.61038 was enacted. Seeking application of the new regulation's apportionment formula, LB Properties appealed to the NTC. The NTC assigned an administrative law judge to the case, who determined that NAC 361.61038 should apply. The NTC disagreed. It upheld the Assessor's valuation and declined to apply its new regulation retroactively. LB Properties petitioned for judicial review. The district court reversed the NTC and directed it to apply NAC 361.61038 to LB Properties' remainder parcel.

II.

The parties primarily dispute whether NAC 361.61038 applies retroactively and, if so, whether it conflicts with the Nevada Constitution, Article 10, Section 1, and is void

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as a result.[3] Because the regulation does not apply retroactively, this court need not reach the Assessor's challenge to its constitutionality. We also reject LB Properties' constitutional challenge to ...


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