IN THE

SUPREME COURT OF THE STATE OF ARIZONA

SOLARCITY CORPORATION, ET AL.,

Plaintiffs/Appellants,

v.

ARIZONA DEPARTMENT OF REVENUE,

Defendant/Appellee.

SOLARCITY CORPORATION, ET AL.,

Plaintiffs/Appellees,

v.

ARIZONA DEPARTMENT OF REVENUE,

Defendant/Appellant.

No. CV-17-0231-PR

Filed March 16, 2018

Appeal from the Superior Court in Maricopa County

The Honorable Christopher T. Whitten, Judge

No. TX2014-000129

AFFIRMED IN PART, REVERSED IN PART, REMANDED WITH 

INSTRUCTIONS

Opinion of the Court of Appeals, Division One

242 Ariz. 395 (App. 2017)

VACATED
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

2

COUNSEL:

Mark Brnovich, Arizona Attorney General, Dominic E. Draye, Solicitor 

General, Kenneth J. Love, Jerry A. Fries (argued), Macaen F. Mahoney, 

Assistant Attorneys General, Phoenix, Attorneys for Arizona Department 

of Revenue

Paul J. Mooney (argued), Bart S. Wilhoit, Mooney, Wright & Moore, PLLC, 

Mesa; Mark S. Davies, Rachel G. Shalev, Orrick, Herrington & Sutcliffe, 

LLP, Washington DC; Paul D. Meyer, Orrick, Herrington & Sutcliffe, San 

Francisco, CA, Pro Hac Vice Attorneys for Solarcity Corporation; Court S. 

Rich, Logan V. Elia, Rose Law Group, PC, Scottsdale, Attorneys for Sunrun, 

Inc.

Roberta S. Livesay, Joshua W. Carden, Helm, Livesay, Worthington, LTD, 

Tempe, Attorneys for Amicus Curiae Arizona Association of Counties

Jason Pistiner, Singer Pistiner, P.C., Scottsdale; Michael S. Dicke, Casey 

O’Neill and Nair Diana Chang, Fenwick & West LLP, San Francisco, CA, 

Pro Hac Vice Attorneys for Amicus Curiae Arizona Solar Energy Industries 

Association

Douglas S. John, Frazer Ryan Goldberg & Arnold, LLP, Phoenix, Attorneys 

for Amicus Curiae NRG Energy, Inc.

Maureen Beyers, Beyers Farrell PLLC, Phoenix, Attorneys for Amicus 

Curiae Jewish Community Campus, LLC

JUSTICE TIMMER authored the opinion of the Court, in which CHIEF 

JUSTICE BALES, VICE CHIEF JUSTICE BRUTINEL, and JUSTICES

PELANDER, BOLICK, GOULD, and LOPEZ joined. 

JUSTICE TIMMER, opinion of the Court:

¶1 With exceptions, all property in Arizona is “subject to 

taxation to be ascertained as provided by law.” Ariz. Const. art. 9, § 2(13); 
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

3

A.R.S. § 42-11002.1 Property is valued for tax purposes either “centrally” 

by the Arizona Department of Revenue (“ADOR”) or “locally” by county 

assessors. See A.R.S. §§ 42-13002 to -13501; 42-14001 to -14503. Valuation is 

based on the “full cash value” of the property as directed by statute. Id. 

§ 42-11001(6). Unless a statute prescribes otherwise, full cash value 

corresponds to market value, determined by applying standard appraisal 

methods and techniques set by ADOR. Id. §§ 42-11001(6), -11054(A)(1).

¶2 The issues here are whether ADOR or county assessors are 

authorized to value solar panels owned by SolarCity Corporation and 

Sunrun, Inc. (collectively, “Taxpayers”) and leased to residential and 

commercial property owners; what valuation methodology applies; and, 

assuming a zero-value provision in § 42-11054(C)(2) applies, whether it 

violates the Arizona Constitution’s Exemptions Clause or Uniformity 

Clause. See Ariz. Const. art. 9, §§ 1–2. We hold that ADOR is not authorized 

to value the leased solar panels. We remand to the tax court to decide the 

remaining issues. 

BACKGROUND

¶3 Taxpayers lease solar panels to homeowners and commercial 

property owners. The panels are installed on or around a building (e.g., on 

a rooftop) to capture solar energy, convert it to electricity in a self-contained

“inverter,” and use it to power the property. Although the panels operate 

“behind the . . . meter” — meaning they operate independently of a utility 

company’s power grid — they transfer any excess energy to the utility 

company through the grid for others’ use. The utility company gives the 

lessee property owner credit for the retail value of the excess energy. See

Ariz. Admin. Code R14-2-2306(D).

¶4 For years, Taxpayers’ leased solar panels were neither valued 

nor taxed. That changed when ADOR issued a “notice of value” for tax 

year 2015, which notified Taxpayers that their panels had been assigned full 

cash values, and taxes would be assessed. Taxpayers responded by filing 

this lawsuit. They sought a declaratory judgment that (1) the panels are 

“considered to have no value” pursuant to § 42-11054(C)(2) and therefore 

 

1 Although the legislature has amended some statutes cited in this 

opinion since this lawsuit began, we cite the current versions because the 

amendments do not affect the issues presented.
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

4

are not subject to valuation or assessment for property tax purposes, and 

(2) the panels are not subject to valuation under §§ 42-14151 and -14155, 

which authorize ADOR to value “renewable energy equipment” used by 

taxpayers in the operation of an “electric generation facility.” ADOR 

responded that it properly valued the panels under those statutes. It 

alternately asserted that applying § 42-11054(C)(2)’s “zero value” provision 

to the panels would violate the Exemptions Clause and the Uniformity 

Clause of the Arizona Constitution. See Ariz. Const. art. 9, §§ 1–2.

¶5 On cross-motions for summary judgment, the tax court

agreed in part with each party. The court agreed with Taxpayers that

§§ 42-14151 and -14155 do not authorize ADOR to value leased solar panels. 

Instead, the court ruled that the panels are “general property” that must be 

valued by county assessors pursuant to § 42-13051(A), which concerns real 

property valuation. On the other hand, the court agreed with ADOR that 

the zero-value provision of § 42-11054(C)(2) violates both the Exemptions 

Clause and the Uniformity Clause of the Arizona Constitution. The tax 

court therefore ruled that county assessors must value Taxpayers’ leased 

solar panels and, in doing so, cannot assign a zero value.

¶6 The court of appeals affirmed in part and reversed in part. 

SolarCity Corp. v. Ariz. Dep’t of Revenue, 242 Ariz. 395, 399 ¶ 4 (App. 2017). 

It agreed with the tax court that §§ 42-14151 and -14155 do not authorize 

ADOR to value Taxpayers’ panels. Id. But it found that § 42-11054(A)’s 

directive that ADOR prescribe appraisal guidelines, together with 

§ 42-11054(C)(2)’s zero-value provision, authorizes ADOR, not the 

counties, to value the solar panels. Id. at 408 ¶ 40. Finally, the court 

concluded that § 42-11054(C)(2) violates neither the Exemptions Clause nor 

the Uniformity Clause. Id. at 405–07 ¶¶ 29–39. The court of appeals thus 

decided that ADOR must value Taxpayers’ solar panels but give them a 

zero value.

¶7 We granted review to determine whether ADOR is 

authorized to value Taxpayers’ leased solar panels for taxation purposes, a 

recurring issue of statewide importance. We have jurisdiction pursuant to 

article 6, section 5(3), of the Arizona Constitution and A.R.S. § 12-120.24.
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

5

DISCUSSION

I. ADOR’s authority to value the solar panels

¶8 We review de novo the tax court’s grant of summary 

judgment and its interpretation of Arizona’s tax statutes. See Delgado v. 

Manor Care of Tucson AZ, LLC, 242 Ariz. 309, 312 ¶ 10 (2017). Our goal in 

statutory interpretation is to effectuate the legislature’s intent. State ex rel. 

DES v. Pandola, 243 Ariz. 418, 419 ¶ 6 (2018). The best indicator of that intent 

is the statute’s plain language, which we read in context with other statutes 

relating to the same subject or having the same general purpose, and when 

that language is unambiguous, we apply it without resorting to secondary 

statutory interpretation principles. See id.

A. A.R.S. §§ 42-14151, -14155

¶9 Section 42-14151(A) broadly authorizes ADOR to value

property owned or leased by gas, water, electric, sewer, and wastewater 

utilities, including “all property, owned or leased, and used by taxpayers 

in the following businesses . . . (4) [o]peration of an electric generation 

facility.” ADOR is required to annually determine the full cash values of 

these properties in each taxing district and transmit the valuations to the 

respective county assessor. A.R.S. § 42-14153. The legislature prescribed

valuation methods for the utilities described in § 42-14151(A). See A.R.S. 

§§ 42-14154 to -14159. As relevant here, § 42-14155 provides the method for 

determining the “full cash value of taxable renewable energy equipment,” 

which includes “electric generation facilities” used to generate, store, 

transmit, or distribute solar energy “not intended for self-consumption.” 

Id. § 42-14155(A), (C)(3).

¶10 ADOR argues that Taxpayers use their solar panels to operate 

an “electric generation facility,” and § 42-14151(A)(4) therefore authorizes 

ADOR to value the solar panels. And because Taxpayers do not use the 

solar energy generated from the panels for “self-consumption,” the panels 

must be valued using the method prescribed by § 42-14155(A) for 

“renewable energy equipment.”

¶11 ADOR’s authority to value Taxpayers’ solar panels depends 

on whether Taxpayers operate electric generation facilities under 

§ 42-14151(A). A facility generates electricity if it “tak[es] a source of 
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

6

energy . . . and convert[s] the energy into electricity to be delivered to 

customers through a transmission and distribution system.” See A.R.S. 

§ 42-14151(B) (defining “generation of electricity”); see also id. § 42-

14156(B)(1) (defining “electric generation facility” for use in applying 

valuation methodologies as “all land, buildings and personal property . . . 

used or useful for the generation of electric power”). ADOR argues that 

because Taxpayers’ solar panels convert solar energy into electricity, and 

excess energy is transmitted on a utility’s power grid for use by the utility’s

customers, § 42-14151(A)(4) applies. We disagree.

¶12 ADOR ignores that § 42-14151(A)(4) applies to businesses that 

operate an electric generation facility. Taxpayers are in the business of 

leasing solar panels. They themselves do not operate a facility to convert 

solar energy into electricity. See id. § 42-14151(B). Nor do they deliver 

electricity to their customers “through a transmission and distribution

system.” See id. Instead, they lease panels to customers to enable those 

customers to generate electricity for self-use. Although utilities take excess 

electricity to transmit it to their customers, Taxpayers have no part in these

transmissions and receive no benefit from them.

¶13 Because Taxpayers do not operate electric generation 

facilities, ADOR lacks authority under § 42-14151(A) to value the solar 

panels. And because § 42-14151(A) does not apply, the valuation method 

set forth in § 42-14155(A) for renewable energy equipment is likewise 

inapplicable. Thus, we affirm the tax court’s ruling that neither § 42-14151 

nor § 42-14155 authorizes ADOR to centrally assess and tax Taxpayers’ 

leased solar panels.

B. A.R.S. § 42-11054

¶14 The court of appeals concluded that § 42-11054 authorizes 

ADOR to value Taxpayers’ leased solar panels because subsection (A)

charges ADOR with prescribing guidelines for applying standard appraisal 

methods and techniques and subsection (C)(2) provides that “[i]n applying 

prescribed standard appraisal methods and techniques,” solar energy 

devices and systems designed “primarily for on-site consumption” must be 

given a zero value. See SolarCity, 242 Ariz. at 400 ¶ 40. “Thus, the statute 

provides a method for [ADOR], not the counties, to value the solar panels.” 

Id. (ADOR does not press § 42-11054 as a basis of authority to value 

Taxpayers’ solar panels.)
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

7

¶15 The court of appeals misconstrued § 42-11054. That provision

does not authorize ADOR to value any property but instead addresses 

standard appraisal methods and techniques prescribed by ADOR. And 

while the statute gives ADOR sole authority to “prescribe guidelines for 

applying standard appraisal methods and techniques,” it also provides that 

these methods “shall be used by [ADOR] and county assessors in 

determining the valuation of property.” A.R.S. § 42-11054(A)(1) (emphasis 

added). Thus, § 42-11054(C)(2) does not apply exclusively to ADOR and 

does not authorize it to value Taxpayers’ solar panels.

II. County assessors’ authority to value solar panels 

¶16 The legislature established classes of property for the 

common tax treatment of real and personal property. See A.R.S. 

§ 42-12010(A). Whether Taxpayers’ leased solar panels constitute real or 

personal property impacts whether § 42-11054(C)(2)’s zero-value provision 

applies.

A. Valuation as real property

¶17 The tax court ruled without explanation that Taxpayers’ 

leased solar panels must be locally assessed pursuant to § 42-13051(A), 

which provides that “each year the county assessor shall identify by 

diligent inquiry and examination all real property in the county that is 

subject to taxation and that is not otherwise valued by [ADOR] as provided 

by law.” Under this provision, the assessor then determines the full cash 

value of this property “using the manuals furnished and procedures 

prescribed by [ADOR].” Id. § 42-13051(B)(2). Thus, if the leased panels are 

“real property,” the assessor would determine their value by applying 

ADOR’s standard appraisal methods and techniques, which are 

constrained by § 42-11054(C)(2)’s zero-value provision. See id. 

§§ 42-11001(6), -11054(A).

¶18 But leased solar panels are not “real property,” and neither 

ADOR nor Taxpayers assert otherwise. Although § 42-13051(A) uses the 

term “real property,” the term is synonymous with “real estate” because,

for tax purposes, property is either “real estate” or “personal property.” 

“Real estate” is “the ownership of, claim to, possession of or right of 

possession to lands or patented mines,” while “personal property” is every 

other kind of tangible and intangible property “not included in the term 
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

8

real estate.” A.R.S. § 42-11001(10), (13); see also Sw. Airlines Co. v. Ariz. Dep’t. 

of Revenue, 217 Ariz. 451, 455 ¶ 23 (App. 2008) (noting that it is an 

“unassailable proposition” under Arizona law that personal property is 

anything other than what is included in the term “real estate”). Solar panels 

are neither land nor mines, and no one contends that the panels, which 

remain the Taxpayers’ and not the homeowners’ property, are fixtures, 

taxable as part of the real property. Thus, the panels must be “personal 

property.” Section 42-13051(A) is inapplicable here, and we reverse the tax 

court’s ruling concluding otherwise.

B. Valuation as personal property

¶19 ADOR maintains that Taxpayers’ leased solar panels fall 

within the tax code’s business personal property classification. As such, 

ADOR asserts that county assessors are authorized to assess value pursuant 

to § 42-13054. Section 42-13054(A) provides that “[t]he taxable value of 

personal property that is valued by the county assessor is the result of 

acquisition cost less any appropriate depreciation as prescribed by tables

adopted by [ADOR]. The taxable value shall not exceed the market value.” 

Because § 42-13054(A) provides a valuation methodology, ADOR argues 

that county assessors would not use standard appraisal methods and

techniques, and therefore § 42-11054(C)(2)’s zero-value provision would 

not apply. Taxpayers urge us to refrain from deciding the counties’ 

authority to value the leased solar panels and attendant issues because the 

counties have not sought to tax the panels, the counties are not parties, and 

Taxpayers sought relief only against ADOR.

¶20 The solar panels are business personal property under 

§ 42-12001(13). That provision includes within class one property 

“[p]ersonal property that is devoted to any other commercial or industrial 

use, other than property that is specifically included in another class 

described in this article, and that is valued at full cash value.” By leasing 

the solar panels to its customers for a profit, Taxpayers use them for a 

commercial purpose.

¶21 The remaining issues before us concern whether § 42-13054 

authorizes county assessors to value Taxpayers’ solar panels and, if so, 

whether § 42-11054(C)(2) nevertheless applies to mandate a zero-value 

assessment. Also, if § 42-11054(C)(2) applies, we are asked to decide 
SOLARCITY CORPORATION ET AL. V. ADOR

Opinion of the Court

9

whether its application to the leased solar panels would violate the Arizona 

Constitution’s Exemptions Clause or Uniformity Clause.

¶22 We agree with Taxpayers that we should refrain from 

deciding these issues and instead remand for the tax court to address them

in the first instance. Neither the tax court nor the court of appeals decided 

the statutory issues as now framed. See supra ¶ 21. Although the tax court 

has decided the constitutional issues, if it determines that § 42-11054(C)(2) 

is inapplicable, those issues would be rendered moot.

¶23 We are also mindful that as this case has progressed, the 

arguments have become untethered from the questions originally 

presented to the tax court. Specifically, Taxpayers’ complaint sought 

declaratory relief concerning ADOR’s assessment authority, not the 

counties’ authority. Because we have determined that ADOR is not 

authorized to centrally value and tax the leased solar panels, the counties, 

which are not parties to this lawsuit, have a substantial interest in arguing 

their authority to value the solar panels. Remanding to the tax court will 

permit the counties an opportunity to join the case. Cf. Bennett v. Brownlow, 

211 Ariz. 193, 196 ¶ 16 (2005) (noting in the context of standing the 

desirability that “issues be fully developed between true adversaries”).

CONCLUSION

¶24 We affirm the tax court’s judgment to the extent it concludes 

that ADOR lacks statutory authority to value Taxpayers’ leased solar 

panels. We reverse the remainder of the judgment. We remand for the tax 

court to determine whether § 42-13054 authorizes county assessors to value 

the solar panels and, if so, whether § 42-11054(C)(2) nevertheless requires a 

zero valuation. If the court determines that § 42-11054(C)(2) applies, then 

it should determine whether that provision violates the Arizona 

Constitution’s Exemptions Clause or Uniformity Clause as applied here. 

We vacate the court of appeals’ opinion. Finally, we deny Taxpayers’ 

request for an award of attorney fees pursuant to § 12-348(B), without 

prejudice to their reasserting the request if they prevail before the tax court.