2023 UT 6

IN THE

SUPREME COURT OF THE STATE OF UTAH

DURBANO PROPERTIES, LC,

Petitioner,

v.

UTAH STATE TAX COMMISSION,

Respondent.

No. 20210594

Heard October 5, 2022

Filed May 4, 2023

On Petition for Review of Agency Decision

Attorneys:

Douglas M. Durbano, Richard A. Bednar, Layton, for petitioners

Sean D. Reyes, Att‟y Gen., Sarah Goldberg, Asst. Solic. Gen.,

Salt Lake City, for respondents

JUSTICE HAGEN authored the opinion of the Court, in which

CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE PEARCE,

JUSTICE PETERSEN, and JUSTICE POHLMAN joined.

JUSTICE HAGEN, opinion of the Court:

INTRODUCTION

¶1 The Utah Constitution allows the legislature to enact a 

property tax exemption of “up to 45% of the fair market value of 

residential property, as defined by statute.” UTAH CONST. art. XIII, 

§ 3(2)(a)(iv). The legislature chose to enact such an exemption but 

limited the definition of “residential property” to “any property 

used for residential purposes as a primary residence.” UTAH CODE

§ 59-2-102(34)(a).

¶2 For several years, Durbano Properties, LC received that

exemption for a rental property it owned in Washington County. But 

in 2018, the County denied the exemption because it determined that 

the property was not being used as a primary residence. When the 

exemption was denied again the following year, Durbano Properties

challenged the decision before the Utah State Tax Commission, 

arguing that the property qualified under the statute. The Tax 
DURBANO PROPERTIES v. TAX COMMISSION

Opinion of the Court

2

Commission agreed with the County‟s determination that the 

property did not qualify because it was not being used as a primary 

residence.

¶3 Durbano Properties also argued that the legislature‟s 

definition of “residential property” violated the very constitutional 

provision that empowers the legislature to enact a residential 

property tax exemption. But the Tax Commission expressly declined 

to reach that constitutional argument.

¶4 In this petition, Durbano Properties raises the same

constitutional argument, but it does not explain how limiting the 

residential exemption to property used as a primary residence 

violates the permissive authority granted to the legislature. If the 

legislature chooses to grant a property tax exemption for residential 

property, our constitution expressly provides that the term 

“residential property” bears whatever meaning the legislature has 

assigned to it “by statute.” See UTAH CONST. art. XIII, § 3(2)(a)(iv). 

Because Durbano Properties has not persuaded us that the 

legislature‟s definition exceeds that authority, we decline to disturb 

the Tax Commission‟s decision.

BACKGROUND

¶5 Durbano Properties, LC owns property in a residential 

community in Washington County, Utah. For the 2010 through 2017

tax years, Durbano Properties received a residential tax exemption as 

provided by the Property Tax Act. See UTAH CODE § 59-2-103(3).

Under the Act, property owners are allowed an exemption equal to 

45% of the fair market value of “property used for residential 

purposes as a primary residence.” See id. §§ 59-2-103(3), -102(34)(a).

¶6 In 2017, the Washington County Board of Equalization 

notified Durbano Properties that the property would no longer 

qualify for the residential tax exemption because it was not being 

used as a “primary residence.” The County subsequently denied 

Durbano Properties‟ application for the exemption for the 2018 and 

2019 tax years.

¶7 Durbano Properties challenged the County‟s denial of its 2019 

residential tax exemption application. After a formal hearing, the 

Utah State Tax Commission determined that Durbano Properties 

had failed to show that the property was used as a primary residence 

during the relevant period. Accordingly, it concluded that the 

County correctly denied Durbano Properties‟ requested exemption.

As part of that challenge, Durbano Properties argued that the 

legislature‟s definition of residential property violated the Utah 
2023 UT 6

Opinion of the Court

3

Constitution, but the Tax Commission expressly declined to address 

that argument, noting that it lacked jurisdiction to determine the 

constitutionality of legislative enactments.

¶8 In its petition before this court, Durbano Properties does not 

challenge the Tax Commission‟s determination that the property was 

not used as a “primary residence” for purposes of Utah Code section

59-2-102(34)(a). Instead, it argues only that the legislature has 

unconstitutionally limited the residential tax exemption to property 

used “as a primary residence.”

ISSUE AND STANDARD OF REVIEW

¶9 Durbano Properties argues that the legislature‟s residential 

property tax exemption violates article XIII, section 3 of the Utah 

Constitution because the statutory definition of “residential 

property” exceeds the scope of the legislature‟s constitutional 

authority. Because “it is not for the tax commission to determine 

questions of legality or constitutionality of legislative enactments,” 

State Tax Comm’n v. Wright, 596 P.2d 634, 636 (Utah 1979) (cleaned 

up), we have no agency decision to review and therefore address the 

constitutionality of the statute for the first time as a question of law.

See Waite v. Utah Labor Comm’n, 2017 UT 86, ¶ 5, 416 P.3d 635.

ANALYSIS

¶10 It is “well settled that the power of taxation is a legislative 

function, and unless restrained by the Constitution the exercise of 

this power is vested in the Legislature and its power over the subject 

is plenary and supreme.” Garrett Freight Lines, Inc. v. State Tax 

Comm’n, 135 P.2d 523, 530 (Utah 1943) (cleaned up). One such 

restraint on the legislature‟s power of taxation is the constitutional 

directive that all persons shall pay “a tax in proportion to the fair 

market value of . . . all tangible property in the State that is not 

exempt.” UTAH CONST. art. XIII, § 2(1). This property tax “shall be: 

(a) assessed at a uniform and equal rate in proportion to its fair 

market value, to be ascertained as provided by law; and (b) taxed at 

a uniform and equal rate.” Id.

¶11 But section 3 of article XIII sets forth several exceptions to 

that general rule. Some of the exceptions are mandatory, while 

others are permissive. See generally id. § 3. For instance, section 3 

necessarily exempts “property owned by the State,” “property 

owned by a nonprofit entity used exclusively for religious, 

charitable, or educational purposes,” and “places of burial not held 

or used for private or corporate benefit.” See id. § 3(1). Because these 

exemptions are grounded in the Utah Constitution, “[t]he legislature 
DURBANO PROPERTIES v. TAX COMMISSION

Opinion of the Court

4

cannot narrow or otherwise alter” them. See Salt Lake Cnty. ex rel. Bd. 

of Equalization of Salt Lake Cnty. v. Tax Comm’n of Utah ex rel. Utah 

Transit Auth., 780 P.2d 1231, 1233 (Utah 1989).

¶12 Other exemptions are permissible at the legislature‟s 

discretion. Relevant here, section 3 provides that “[t]he Legislature 

may by statute exempt . . . up to 45% of the fair market value of 

residential property, as defined by statute.” UTAH CONST. art. XIII, 

§ 3(2)(a)(iv).

¶13 Our legislature chose to enact such a residential property 

exemption. Under Utah Code section 59-2-103(3), “the fair market 

value of residential property located within the state is allowed a 

residential exemption equal to a 45% reduction in the value of the 

property,” subject to other statutory provisions. And, as 

contemplated by the constitution, the legislature defined “residential 

property” by statute. For purposes of the exemption, “residential

property” is defined as “any property used for residential purposes 

as a primary residence.” Id. § 59-2-102(34)(a).

¶14 Durbano Properties challenges the “primary residence” 

requirement of that statutory definition. It argues that limiting the 

“residential property” exemption in this way violates section 3 of 

article XIII of the Utah Constitution because it excludes property that 

is being used for residential purposes when it is not also used as a 

primary residence. Because the legislature has exempted some but 

not all property used for residential purposes, Durbano Properties 

contends that the legislature‟s definition “is constitutionally flawed.”

¶15 “When we interpret constitutional provisions, our starting 

point is the textual language itself.” Univ. of Utah v. Shurtleff, 2006 UT 

51, ¶ 19, 144 P.3d 1109 (cleaned up). There is a “heavy burden placed 

on a party challenging the constitutionality of a statute.” Dennis v. 

Summit Cnty., 933 P.2d 387, 389 (Utah 1997). “When such a challenge 

is made, the statute is presumed valid, and we resolve any 

reasonable doubts in favor of constitutionality.” Id. (cleaned up).

¶16 On its face, the relevant constitutional provision is 

permissive, not mandatory. Section 3 provides, “The Legislature may

by statute exempt . . . up to 45% of the fair market value of 

residential property, as defined by statute.” UTAH CONST. art. XIII, 

§ 3(2)(a)(iv) (emphasis added). Under this provision, residential 

property owners have no constitutional entitlement to a tax 

exemption. Instead, the Utah Constitution merely permits the 

legislature to enact such an exemption if it chooses to do so. If the 

legislature is constitutionally permitted to withhold a tax exemption 
2023 UT 6

Opinion of the Court

5

for all residential property, limiting that exemption to certain types 

of residential property is well within the legislature‟s prerogative, so 

long as those limits do not run afoul of other constitutionally 

protected rights.

¶17 The sole constitutional provision on which Durbano 

Properties relies places only two restraints on the legislature‟s 

discretionary authority to enact a residential property tax exemption: 

the exemption must relate to “residential property, as defined by 

statute,” and the exemption cannot exceed “45% of the fair market 

value” of the property. See id. Thus, the plain language of this 

provision permits the legislature to limit the type of “residential 

property” that qualifies for the exemption, to enact an exemption of 

less than 45%, or to offer no residential property tax exemption at all.

¶18 Here, the legislature exercised its discretion to enact a 45% 

property tax exemption, but it limited the definition of “residential 

property” to property used as a “primary residence.” UTAH CODE

§ 59-2-102(34)(a). Durbano Properties argues that this definition is 

“arbitrary and nonsensical” because “it excludes property used for 

„residential purposes.‟” In other words, because the legislature has 

exempted some but not all property used for residential purposes, 

Durbano Properties contends that the legislature‟s definition “is 

constitutionally flawed.”

¶19 But that argument presupposes that the constitution‟s use of 

the term “residential property” necessarily refers to all property 

used for residential purposes and that this independent meaning 

constrains the legislature‟s ability to define the term by statute. Such 

a reading would be contrary to the constitution‟s text. The relevant 

provision expressly provides that the term “residential property” 

carries only the meaning given to it “by statute.” UTAH CONST. art. 

XIII, § 3(2)(a)(iv).

¶20 This court has previously addressed the legislature‟s 

constitutional authority to statutorily define “residential property” 

for purposes of the property tax exemption. In Dennis, out-of-state 

plaintiffs argued that limiting the definition of “residential property” 

to “any property used for residential purposes as a primary 

residence” violated article III, Second of the Utah Constitution, 

which “requires equal taxation of the „lands‟ of both residents and 

nonresidents of the state of Utah.” 933 P.2d at 389. The plaintiffs 

argued that the statutory definition discriminated on the basis of 

residency because, as nonresidents of Utah with primary residences 

in other states, “they cannot have primary residences in Utah and 

thus can never qualify for the property tax exemption.” Id.
DURBANO PROPERTIES v. TAX COMMISSION

Opinion of the Court

6

¶21 This court rejected that argument because “qualification for 

the exemption is the use to which the property is put, not the 

residency of the owner.” Id. A Utah resident “who owns residential 

property in Utah but does not use that property as a primary 

residence is taxed in the same manner as a nonresident who likewise 

owns residential property that he does not use as a primary 

residence.” Id. Therefore, this court concluded that the statutory 

definition of residential property does not violate article III, Second 

because “[s]imilarly situated residents and nonresidents are treated 

the same for property tax purposes.” Id. at 391.

¶22 In reaching that conclusion, this court specifically addressed 

the taxing authority‟s argument “that the legislature was acting 

within the authority granted it by . . . the Utah Constitution when it 

defined the term „residential property‟ as property used as a 

„primary residence.‟” Id. at 388.

1 This court agreed that the 

legislature had the constitutional authority to enact a residential 

property tax exemption that was limited in that manner: “[T]he Utah 

Constitution gives the legislature the authority to exempt „residential 

property as defined by law‟ partially from taxation. The legislature 

was within that authority when it defined „residential property‟ as 

that property used as a primary residence.” Id. at 391.

¶23 Durbano Properties has not challenged the Dennis decision, 

other than to suggest that the court‟s “comments” that the legislature

acted within its discretion in defining residential property were

“dicta” and “not appropriate grounds” for resolving this case. But 

Durbano Properties has given us no reason to reconsider our 

_____________________________________________________________

1 Since Dennis was decided, the constitutional provision granting 

the legislature authority to enact a residential property tax 

exemption has been moved from article XIII, section 2 to article XIII, 

section 3, but the language remains largely the same. Compare UTAH 

CONST. art. XIII, § 2(8) (1997) (“The Legislature may provide by law 

for the exemption from taxation: of not to exceed 45% of the fair 

market value of residential property as defined by law . . . .”

(emphasis added)) with id. § 3(2)(a) (“The Legislature may by statute 

exempt the following from property tax . . . up to 45% of the fair 

market value of residential property, as defined by statute.” (emphasis 

added)). Further, the relevant statutes have been amended and 

renumbered, but the definition of “residential property” remains 

substantively the same. Compare UTAH CODE § 59-2-102(22) (1996) 

with UTAH CODE § 59-2-102(34)(a).
2023 UT 6

Opinion of the Court

7

conclusion that the legislature acted within its constitutional

authority in defining residential property as property “used for 

residential purposes as a primary residence.” See UTAH CODE § 59-2-

102(34)(a). Because Durbano Properties has identified no

constitutional provision that would prohibit the legislature from

enacting a property tax exemption that applies only to residential 

properties used as primary residences, we reject its constitutional 

challenge. 

CONCLUSION

¶24 Durbano Properties has not provided any legal basis to 

invalidate the legislature‟s definition of “residential property” as 

authorized by article XIII, section 3 of the Utah Constitution. We 

therefore decline Durbano Properties‟ request to “strike as 

unconstitutional the enforcement of the statutory definition of 

residential property to only include property used for „residential 

purposes as a primary residence.‟” Because Durbano Properties has 

not otherwise challenged the finding that the subject property did 

not qualify for the residential property tax exemption, we do not 

disturb the Tax Commission‟s decision.