NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT 

PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

PHOENIX CEMENT COMPANY, Plaintiff/Appellant,

v.

YAVAPAI COUNTY, a political subdivision of the State of Arizona, 

Defendant/Appellee.

No. 1 CA-TX 14-0010

Appeal from the Arizona Tax Court

No. TX2011-000018 and TX2011-000751

(Consolidated)

The Honorable Dean M. Fink, Judge

AFFIRMED IN PART; VACATED AND REMANDED IN PART

COUNSEL

Lewis Roca Rothgerber, LLP, Phoenix and Tucson

By Susan M. Freeman, Rob Charles, Justin James Henderson

Counsel for Plaintiff/Appellant

Helm, Livesay, & Worthington, LTD, Tempe

By Roberta S. Livesay

Counsel for Defendant/Appellee

Cavanagh Law Firm, Phoenix

By James G. Busby, Jr.

Counsel for Amicus Curiae Arizona Rock Products Association
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

2

MEMORANDUM DECISION

Judge Andrew W. Gould delivered the decision of the Court, in which 

Presiding Judge Donn Kessler and Judge Lawrence F. Winthrop joined.

G O U L D, Judge:

¶1 Phoenix Cement Company appeals the tax court’s decision 

adopting the Yavapai County Assessor’s valuation of its property for tax 

years 2010 and 2011. For the following reasons, we affirm in part, vacate in 

part, and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Phoenix Cement manufactures cement at its plant in 

Clarkdale, Arizona. The Assessor values the machinery and equipment at 

the plant as personal property. Phoenix Cement timely challenged the 

Assessor’s full cash values of its property for tax years 2010 and 2011. After 

exhausting its administrative remedies, Phoenix Cement appealed the 

value of its property to tax court.1 

¶3 The court held a four-day bench trial. Phoenix Cement 

supported its proposed reduction in full cash value through the testimony 

of its expert appraiser, Dennis Neilson. Neilson testified that he valued the 

property using the cost approach to value, which is the same method the 

County used. Unlike the County, however, Neilson concluded there was

significant economic obsolescence, resulting from the recession’s impact on 

the cement industry, which reduced the value of the property. 

 

1 For tax year 2010, the Assessor assigned a full cash value of 

$117,159,730 to Phoenix Cement’s property. Phoenix Cement filed an 

administrative appeal and the County Board of Equalization reduced the 

value to $111,320,743. Phoenix Cement further appealed the Board’s 

decision to tax court. For tax year 2011, the Assessor valued the property 

at $118,415,787. Phoenix Cement again filed an administrative appeal, but 

this time the Board affirmed the Assessor’s valuation. Thereafter, Phoenix 

Cement appealed to tax court, and the two matters were consolidated. 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

3

¶4 After making specific findings of fact and conclusions of law, 

the tax court upheld the County’s determinations of full cash value and 

rejected Phoenix Cement’s proposed reduction in full cash value based on 

economic obsolescence. The tax court also permitted the County to add to

its valuation certain “escaped property” that Phoenix Cement had allegedly 

not reported, and assessed penalties and interest relating to the escaped 

property.

2 

¶5 Thereafter, the tax court entered judgment in favor of the 

County, and this appeal followed. We have jurisdiction pursuant to 

Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(1)(2015).

3 

DISCUSSION

¶6 In reviewing a judgment entered after a bench trial, we view 

the evidence in the light most favorable to upholding the trial court’s 

decision. Double AA Builders, Ltd. v. Grand State Const. L.L.C., 210 Ariz. 503, 

506, ¶ 9 (App. 2005). We will not set aside the tax court’s findings of fact 

unless they are clearly erroneous or not supported by substantial evidence. 

Nordstrom, Inc. v. Maricopa Cnty., 207 Ariz. 553, 558, ¶ 18 (App. 2004). We 

review pure questions of law and mixed questions of law and fact de novo. 

Eurofresh, Inc. v. Graham Cnty., 218 Ariz. 382, 385, ¶ 14 (App. 2007). 

¶7 Taxpayers in Arizona have a duty to self-report personal 

property to the county assessor. See A.R.S. § 42-15053. Using the 

information reported by the taxpayer, the assessor values the property by 

determining the “acquisition cost less any appropriate depreciation as 

prescribed by tables adopted by the [Arizona Department of Revenue].” 

A.R.S. § 42-13054(A). Pursuant to A.R.S. § 42-13054(A), the taxable value of 

personal property determined by the assessor “shall not exceed the market 

value.” Id. 

¶8 If a taxpayer believes the assessor’s valuation exceeds market 

value, the taxpayer has a right to appeal. See A.R.S. §§ 42-16201, -16203, -

16207, -19051, -19052. However, in challenging a taxing authority’s 

 

2 After adding the value of the escaped property, the County 

calculated the full cash value of Phoenix Cement’s property to be 

$152,541,721 for tax year 2010 and $148,842,874 for tax year 2011. 

3 Absent material revisions after the relevant dates, we cite the current 

version of a statute unless otherwise indicated.
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

4

valuation of property, the taxpayer has the burden of proving that “the 

assessment is excessive” and must present evidence “from which the trial 

court can determine the full cash value of the property in question.” Graham 

Cnty. v. Graham Cnty. Elec. Co-op., Inc., 109 Ariz. 468, 469-70 (1973).

¶9 In this case, Phoenix Cement reported the cost of its personal 

property for tax years 2010 and 2011 to the Assessor who, in turn, 

determined the taxable value by calculating acquisition cost less 

depreciation. At trial and on appeal, Phoenix Cement challenges the 

Assessor’s valuations, asserting that his valuations for 2010 and 2011 

exceeded market value. Specifically, Phoenix Cement argues the tax court 

erred in: 

1. Refusing to adopt Phoenix Cement’s proposed value reduction 

based on economic obsolescence; 

2. Permitting the County’s tax auditor to testify as an expert; 

3. Permitting the County to add “escaped property” to the pending 

tax court appeal; and 

4. Assessing penalties and interest. 

I. Economic Obsolescence

¶10 As the tax court properly noted, “[b]y far, the greatest

difference between the valuations of the two parties’ experts is the existence 

or non-existence of economic obsolescence.” Economic obsolescence is 

defined as:

[T]he loss in value or usefulness of a property caused by 

factors external to the asset. These factors include increased 

cost of raw materials, labor, or utilities . . . ; reduced demand 

for the product; increased competition, environmental or 

other regulations; or similar factors.

American Society of Appraisers, Valuing Machinery and Equipment: The 

Fundamentals of Appraising Machinery and Technical Assets 76 (3d ed. 2011)

4

(emphasis added). This court similarly has defined economic obsolescence 

as “a loss in value caused by forces external to the property and outside the 

control of the property owner.” Ariz. Dep’t. of Revenue v. Questar S. Trails 

 

4 Both parties rely on this source as an authoritative treatise. 

 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

5

Pipeline Co., 215 Ariz. 577, 580, ¶ 12 (App. 2007) (quoting Magna Inv. & Dev. 

Corp. v. Pima Cnty., 128 Ariz. 291, 293 (App. 1981)). Additionally, in

Eurofresh, Inc. v. Graham Cnty., 218 Ariz. 382 (App. 2007), we defined the

term as “a temporary or permanent impairment of the utility or salability 

of an improvement or property due to negative influences outside the 

property.”5 218 Ariz. at 386, ¶ 22 (quoting Appraisal Institute, The Appraisal 

of Real Estate 363 (12th ed. 2001)).

¶11 Here, the County’s valuation of the property did not account 

for economic obsolescence beyond what may arguably be encompassed in 

the ADOR depreciation tables. Conversely, Phoenix Cement’s expert

opined that the economic recession, which resulted in decreased demand 

for cement, caused significant economic obsolescence that decreased the 

value of the plant. Specifically, in appraising the property, Neilson applied

a 50% “economic obsolescence penalty” to the property’s value for tax year 

2010, reducing the value of the property by half, and a 60% penalty for tax 

year 2011, reducing the value of the property by more than half.

6 

¶12 This court addressed the application of economic 

obsolescence to property valuation in Eurofresh. We held that for a taxpayer 

to establish the existence of economic obsolescence, the taxpayer must offer 

probative evidence of (1) the cause of the obsolescence, (2) the quantity of 

the obsolescence, and (3) that the asserted cause of the obsolescence actually 

affects the subject property. Id. at 390, ¶ 37. In developing this test, we 

relied upon a decision from an Indiana court explaining that a taxpayer 

must establish “a connection to an actual loss in property value,” which in 

cases involving commercial property “usually means a decrease in the 

property’s income generating ability.” Id. at 388, ¶ 29 (citing Wal Mart 

Stores, Inc. v. Wayne Twp. Assessor, 825 N.E.2d 485, 488 (Ind. T.C. 2005)).

¶13 At trial, Phoenix Cement attempted to satisfy the Eurofresh

test by offering evidence of economic obsolescence. Specifically, Neilson

testified that the plant’s economic obsolescence was caused by “the 

 

5 In their joint pretrial statement, the parties agreed to adopt the 

definition of economic obsolescence set forth in Eurofresh. 

6 As a result, Neilson opined the full cash value of Phoenix Cement’s 

property for tax year 2010 was $86 million without incentives, and $75 

million with incentives. Neilson’s valuation of the property for tax year 

2011 was $68 million without incentives, and $57.5 million with incentives. 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

6

significant loss in demand for cement” during the recession. In support of 

this opinion, Nielson produced evidence showing the impact of the 

recession on the cement industry. Thereafter, Neilson attempted to 

quantify the obsolescence through application of an inutility penalty

formula.

7 Finally, Neilson offered evidence that the recession, the cause of 

the economic obsolescence, affected production at the Phoenix Cement 

plant. 

¶14 After considering Phoenix Cement’s evidence, the tax court 

concluded that “Plaintiff’s expert’s opinion of alleged external obsolescence 

is not persuasive.” The tax court found that “[t]o the extent Plaintiff’s 

expert considered the economic obsolescence to be temporary, he failed to 

properly account for the temporary nature in reaching his conclusion.” 

¶15 We defer to the tax court’s findings as long as the record 

supports them. In re the Gen. Adjudication of All Rights to Use Water in the 

Gila River Sys. & Source, 198 Ariz. 330, 337, ¶ 15 (2000); see also Ariz. R. Civ. 

P. 52(a) (“Findings of fact, whether based on oral or documentary evidence, 

shall not be set aside unless clearly erroneous, and due regard shall be given 

to the opportunity of the trial court to judge the credibility of witnesses.”). 

Additionally, the weight accorded expert testimony is within the sole 

province of the trial court. Magna Inv. & Dev. Corp. v. Pima Cnty., 128 Ariz. 

291, 294 (App. 1981). 

¶16 Our review of the record confirms the tax court did not abuse 

its discretion in determining that Neilson’s testimony was not persuasive 

in establishing the amount of obsolescence proposed. See Flores v. Cooper 

Tire & Rubber Co., 218 Ariz. 52, 57, ¶ 20 (App. 2008) (holding that this court 

reviews questions hinging on the resolution of conflicting facts or witness 

credibility for an abuse of discretion). The tax court’s finding is supported 

 

7 In Valuing Machinery and Equipment, the inutility penalty is 

described as follows:

Whenever the operating level of a plant or an asset is 

significantly less than its rated or design capability, and the 

condition is expected to exist for some time, the asset is less 

valuable than it would otherwise be. Such a penalty for 

inutility can be a measure of the loss in value for this form of 

economic obsolescence.

American Society of Appraisers, Valuing Machinery and Equipment: The 

Fundamentals of Appraising Machinery and Technical Assets 97 (2d ed. 2005). 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

7

by the testimony of Phoenix Cement’s vice president of finance, who 

testified that the company would not have sold the plant on the valuation 

dates for Neilson’s proposed values because the company anticipated that 

“the growth is going to come back and that [the] plant has a value that’s 

much higher than the current day value that we’re trying to obtain.” The 

vice president’s observation suggests that Neilson’s proposed values were 

lower than market value and supports the tax court’s conclusion that 

Neilson did not account for the temporary nature of the obsolescence in 

determining the value of the plant. 

¶17 The tax court also found that “Plaintiff’s expert’s choice of 

2005 as the year in which to begin his economic obsolescence analysis was 

not supported by the evidence, and skewed the economic obsolescence 

findings significantly in the taxpayer’s favor.” Again, the record supports 

the tax court’s finding. The evidence shows that 2005 was “the very best 

year of actual production” for the plant. 

¶18 Finally, the record shows Neilson did not explain how the 

decrease in cement production affected the cement plant’s income 

generating ability; indeed, the record contains no such evidence. 

¶19 In sum, the record supports the tax court’s finding that 

Phoenix Cement failed to satisfy its burden of proving that the County’s 

assessment was “excessive” based on economic obsolescence. Graham 

Cnty., 109 Ariz. at 469-70. Accordingly, we affirm the tax court’s conclusion 

that Phoenix Cement is not entitled to a reduction in full cash value for tax 

years 2010 and 2011. 

¶20 However, we note that to the extent the tax court’s ruling 

could be interpreted to mean that Arizona law does not support the 

application of temporary economic obsolescence, we vacate that portion of 

the ruling. We confirm our decision in Eurofresh stating that taxpayers have 

the right to establish both temporary and permanent economic 

obsolescence by satisfying Eurofresh’s three-part test. Eurofresh, 218 Ariz. at 

386, ¶ 22. 

II. Admission of Boone’s Expert Testimony

¶21 The County’s expert, Kirk Boone, testified at trial regarding 

the “escaped property” that Phoenix Cement allegedly failed to report. He 

also testified in support of the County’s calculation of full cash value, which 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

8

involved the application of depreciation tables, prepared by the Arizona 

Department of Revenue, to the acquisition cost of the property.8 

¶22 Phoenix Cement filed a motion in limine seeking to exclude 

Boone’s testimony and reports on the grounds Boone lacked “the 

knowledge, skill, experience, training, or education necessary to testify as 

to the market value of the cement plant” and because he “failed to rely on 

accepted standard appraisal methods and techniques.” The tax court 

denied the motion stating: “The Court is not persuaded that Mr. Boone 

failed to apply accepted standard appraisal methods. How well he applied 

them goes to the weight which the Court as factfinder will place on his 

opinions.” On appeal, Phoenix Cement asserts that the tax court “erred by 

permitting the County’s auditor to testify as a valuation expert.”9 

¶23 “The question of whether any witness, whether or not 

designated ‘expert’ is competent to testify on a given subject rests in the 

sound discretion of the trial court, and its exercise will not be reviewed but 

for abuse.” Bd. of Regents of the Univ. & State Colleges of Ariz. v. Cannon, 86 

Ariz. 176, 178 (1959) (affirming the trial court’s decision to permit testimony 

by a lay person in a condemnation case); see also Maricopa Cnty. v. Barkley, 

168 Ariz. 234, 239 (App. 1990) (“The overarching rule which guides our 

review of the trial court’s decision of the qualifications of the witnesses as 

experts is that the determination of this matter is left to the discretion of the 

trial court.”). 

¶24 The tax court reached the following conclusion regarding

Boone’s testimony: “He’s worked for the government doing this sort of 

work for many years. From a different perspective obviously. But I believe 

that this is within his wheelhouse as an expert and I am going to allow it.” 

¶25 We find no abuse of discretion in the tax court’s decision to 

permit Boone to testify in support of the County’s calculation of full cash 

value. Boone is not an accredited appraiser and he did not perform a 

 

8 Although Boone testified regarding economic obsolescence, there is 

no indication in the tax court’s lengthy ruling that it gave any weight to 

Boone’s testimony. Rather, the court relied upon its finding that:

“Plaintiff’s expert’s opinion of alleged external obsolescence is not 

persuasive.” 

9 At trial, counsel for Phoenix Cement renewed its objection to Boone’s 

testimony. 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

9

market value appraisal of Phoenix Cement’s property. He does, however, 

have eighteen years of experience working with the North Carolina 

Department of Revenue, during which time he oversaw the “valuation and 

taxation of property by taxing units throughout the state.” Accordingly, we 

affirm the tax court’s decision to permit Boone to testify. 

III. Escaped Property

¶26 After Phoenix Cement’s administrative appeal was concluded 

and the tax court appeal was pending, the County conducted an audit of 

Phoenix Cement’s personal property and discovered alleged “escaped 

property” that Phoenix Cement did not report.

10 Prior to trial, Phoenix 

Cement filed a motion in limine asking the court to prohibit the County 

from introducing evidence of this escaped property. The tax court denied 

Phoenix Cement’s motion. Over Phoenix Cement’s objection, the County’s 

expert testified regarding the value of the escaped property at trial.11 

¶27 On appeal, Phoenix Cement argues that the County failed to 

follow the proper statutory procedure for assessing escaped property. We 

review issues of statutory interpretation de novo. Walgreen Ariz. Drug Co. 

v. Ariz. Dep’t of Revenue, 209 Ariz. 71, 72, ¶ 6 (App. 2004). 

¶28 The county has the authority to audit a taxpayer’s personal 

property report. See A.R.S. § 42-15053(F)(2). “On completing an audit or 

on discovering property that has not been reported, any property that was 

found to have escaped taxation is liable for the amount of taxes due 

determined under chapter 16, article 6 of this title.” Id. This statute directs 

the County to determine the value of escaped property by following the 

procedure set forth in the error correction statutes found in Article 6, which 

prescribe a statutory method for correcting property tax errors, defined to 

include “misreporting or failing to report property”. A.R.S. § 42-

 

10 Boone asserted there were eight items of escaped property for tax 

year 2010 and seven items for tax year 2011. 

11 A significant unreported asset was the blending and sweetening silo, 

which Appellant added at a cost of approximately $33 million. Phoenix 

Cement’s installation of this silo was substantially complete as of December 

2009, but Phoenix Cement did not report it on its 2010 personal property 

return. Phoenix Cement brought this omission to the County’s attention in 

a supplemental disclosure statement two months prior to trial. 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

10

16251(3)(d). Pursuant to the error correction statutes, if the Assessor detects 

an error in the reporting of property, she must send the taxpayer a notice of 

proposed correction. A.R.S. § 42-16252(A). Following receipt of the notice, 

a taxpayer has the opportunity to resolve the alleged error through an 

administrative process. A.R.S. § 42-16252(C)-(F). Thereafter, either party

may appeal to the board of equalization and to court. A.R.S. § 42-16252(G), 

(H). 

¶29 “Arizona and other states have historically recognized the 

importance of requiring strict adherence to taxation statutes.” See Braden v. 

Yuma Cnty. Bd. of Supervisors, 161 Ariz. 199, 202 (App. 1989); see also Pima 

Cnty. v. Cyprus-Pima Mining Co., 119 Ariz. 111, 113 (1978) (holding that the 

County’s right to appeal a tax valuation “is statutory and the method 

provided by the Legislature is exclusive.”). The County had the statutory 

right to audit Phoenix Cement’s personal property report pursuant to § 42-

15053(F)(2). Upon discovery of the alleged escaped property, however, the 

County should have followed the proper statutory procedure and sent a 

notice of proposed correction to Phoenix Cement, thereby providing the 

taxpayer with the opportunity to resolve the error administratively. It did 

not. Instead, the County by-passed the statutory procedure and added the 

issue concerning escaped property into Phoenix Cement’s pending tax 

court appeal. 

¶30 The tax court permitted the County to offer testimony 

regarding the “escaped property and concluded that “[p]roperty not 

reported by a taxpayer on the Business Property Form 82520 is subject [to]

this tax appeal under A.R.S. § 42-16255(B).” For the tax years at issue in this 

case, § 42-16255 provided:

. . . If an administrative or judicial appeal is pending regarding 

the subject property, the alleged error shall be adjudicated as 

part of the administrative or judicial appeal for the affected 

tax year. 

A.R.S. § 42-16255(B) (2009). In 2014, the legislature enacted technical and 

conforming amendments to the error correction statues, and § 42-16255(B)

as amended now provides:

If an administrative or judicial appeal is pending regarding 

the subject property, any alleged error that was already the 

subject of a notice of proposed correction under section 42-

16252 or a notice of claim under section 42-16254 shall be 

adjudicated as part of the administrative or judicial appeal for 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

11

the affected tax year without requiring the parties to exhaust 

their administrative appeal remedies under this article.

A.R.S. § 42-16255(B) (amended by S.B. 1352 (2d Reg. Sess. 2014)) (emphasis 

added). 

¶31 It is clear from the amended statute that the County must 

initiate the error correction procedure before it can adjudicate an alleged 

error as part of a pending judicial appeal. “An amendment which, in effect, 

construes and clarifies a prior statute will be accepted as the legislative 

declaration of the original act.” City of Mesa v. Killingsworth, 96 Ariz. 290, 

297 (1964); see also Ariz. State Senate, Fact Sheet for S.B. 1352 (2d Reg. Sess. 

2014) (explaining that the purpose of the 2014 amendments were to make 

“various technical and conforming changes”). Although the amended 

version of § 42-16255(B) does not apply to the case at hand, which involves 

tax years 2010 and 2011, the amendment clarifies the legislature’s original 

intent and persuades us that in order to adjudicate an alleged error as part 

of a pending judicial appeal, the county must first initiate the error 

correction procedure. See Police Pension Bd. v. Warren, 97 Ariz. 180, 187 

(1965) (holding that although “subsequent legislation clarifying a statute is 

not necessarily controlling on a court, it is strongly indicative of the 

legislature’s original intent”). 

¶32 Accordingly, we vacate that portion of the tax court’s 

judgment determining that the County was entitled to include the escaped 

property in the full cash value of Phoenix Cement’s property, with one 

exception. Phoenix Cement admitted prior to trial that the valuation for tax 

year 2010 should include the cost of “blending and sweetening” equipment 

that came on-line in 2009, and Neilson prepared revised reports reflecting 

this additional cost for 2010, as well as the impact of the addition on the 

2011 valuation. At trial, Phoenix Cement’s counsel informed the court that 

the parties had stipulated to the inclusion of the blending and sweetening 

equipment for tax year 2010. 

¶33 “If issues are tried without objection, it amounts to implied 

consent and . . . the case will be treated as though the amendments were 

made.” Gilliland v. Rodriquez, 77 Ariz. 163, 167 (1954); Starkovich v. Noye, 111 

Ariz. 347, 349 (1974) (“It is also the rule that the admission of evidence 

without objection will enlarge the pleadings and render it proper for the 

trial court to treat the pleadings as though amended so as to conform to the 

proof.”). The inclusion of the blending and sweetening equipment for tax 

year 2010 was tried without objection. Accordingly, the taxable values of 

Phoenix Cement’s property for tax years 2010 and 2011 shall be the values
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

12

determined by the County Board of Equalization adjusted for the addition 

of the blending and sweetening equipment for tax year 2010. We remand 

to the tax court for purposes of determining the appropriate 2010 and 2011 

valuations.12 As to the remainder of the alleged “escaped property”, the 

County must follow the proper statutory procedure.

13

IV. Penalties and Interest

¶34 After determining the County was entitled to an increase in 

the plant’s full cash values for tax years 2010 and 2011 based on the addition 

of the escaped property, the tax court applied a ten percent penalty to the 

value of the escaped property pursuant to A.R.S. § 42-15055(C).

14 That 

statutory penalty only applies, however, if a taxpayer fails to deliver a 

personal property report as required by § 42-15052. A.R.S. § 42-15055(C). 

Here, Phoenix Cement submitted a personal property report for both tax 

years pursuant to A.R.S. § 42-15052. As a result, a penalty under § 42-

15055(C) is not warranted by the facts of this case. See Bonn & Jensen 

Chartered v. Ariz. Dept. of Revenue, 177 Ariz. 170, 174 (Ariz. Tax Ct. 1993)

 

12 The addition of the blending and sweetening equipment to the 

taxable value for tax year 2010 may have the effect of lowering the 

property’s value for tax year 2011 as the blending and sweetening assets, 

already included in the Assessor’s valuation for that year, would be valued 

as if one year older. 

13 The County’s list of “escaped property” included “[c]apitalized 

interest booked for equipment expansion from 2002-2007.” Because we 

determine that the County could not include the alleged escaped property

in the taxable value without following the proper statutory procedure, we 

need not determine whether capitalized interest is a taxable cost for 

property tax purposes. See Progressive Specialty Ins. Co. v. Farmers Ins. Co. of 

Ariz., 143 Ariz. 547, 548 (App. 1985) (explaining that appellate courts should 

not decide issues unless they are “required to do so in order to dispose of 

the appeal”).

14 The penalties for tax years 2010 and 2011 were $3,536,566 and 

$3,042,395, respectively. 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

13

(explaining that the penalty only applies “when the taxpayer fails to 

prepare and deliver a list of property”).15

¶35 The tax court also assessed sixteen percent interest on the 

taxes arising from the escaped property pursuant to A.R.S. § 42-18053. This 

statute provides that “all taxes bear interest from the time of delinquency 

at the rate of sixteen per cent per year simple until paid.” A.R.S. § 42-

18053(A). Interpreting the predecessor to this statute (A.R.S. § 42-342), our 

supreme court held that “only after taxes listed on the tax rolls have become 

delinquent can the taxpayer be charged 16% interest on delinquent 

amounts.” Ariz. Dep’t of Revenue v. Trico Elec. Co-op., Inc., 151 Ariz. 544, 550 

(1986). Here, the taxes arising from the escaped property were not listed on 

the tax rolls prior to entry of the tax court’s judgment in this case. 

Accordingly, those taxes were not delinquent, and the tax court’s 

imposition of 16% interest was error. See Waddell ex rel. Ariz. Dep’t of 

Revenue v. Mayo Found. for Med. Educ. & Research, 176 Ariz. 178, 180 (Ariz. 

Tax Ct. 1993) (holding that “there are no ‘delinquent’ taxes until the rolls 

are corrected to reflect this Court’s judgment and the Taxpayers fail to 

timely pay those taxes”). We therefore vacate that portion of the tax court’s 

judgment assessing penalties and interest against Phoenix Cement. 

CONCLUSION

¶36 For the foregoing reasons, we affirm the portion of the tax 

court’s judgment finding that Phoenix Cement is not entitled to a reduction

in the full cash value of its property for tax years 2010 and 2011 based on 

economic obsolescence. We vacate the portion of the judgment finding the 

County is entitled to an increase in the full cash value of the property to 

account for the alleged escaped property with the exception of the blending 

and sweetening equipment. On remand, the tax court should determine 

the 2010 and 2011 taxable values of Phoenix Cement’s property by adjusting 

the values determined by the County Board of Equalization to account for 

the addition of the blending and sweetening equipment in tax year 2010. 

 

15 On remand, once the error correction procedures have been 

completed, the tax court may consider whether to assess a penalty against 

the taxable value of the blending and sweetening equipment pursuant to 

A.R.S. § 42-15053. That statute authorizes a ten percent penalty against 

property that has escaped taxation. A.R.S. § 42-15053(F)(2) (“On 

completing an audit or on discovering property that has not been reported, 

any property that was found to have escaped taxation is liable for the 

amount of taxes due . . . plus a penalty equal to ten per cent of that 

amount.”). 
PHOENIX CEMENT v. YAVAPAI

Decision of the Court

14

Finally, we also vacate that portion of the judgment assessing penalties and 

interest.