Court Opinion

ID: 4277528
Source: CourtListenerOpinion
Date Created: 2018-05-22 21:02:45.556253+00
Date Added: 2024-06-11T14:34:10.388317
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                   SUMMARY
                                                                 May 17, 2018

                                2018COA73

No. 17CA0462, Wal-Mart Stores, Inc. v. Pikes Peak Rural
Transportation Authority — Transportation — Regional
Transportation Authority Law; Municipal Law — Home Rule
Cities

     A division of the court of appeals interprets and applies the

Regional Transportation Authority Law, sections 43-4-601 to -621,

C.R.S. 2017, to conclude that a municipality cannot remove

property from the boundaries of a regional transportation authority

simply by annexing the property. The division determines that

section 43-4-605(2), C.R.S. 2017, provides the exclusive means to

remove property from the boundaries of a regional transportation

authority after it is created under section 43-4-603, C.R.S. 2017.

     The division also concludes that article XX, section 6 of the

Colorado Constitution does not preempt a regional transportation

authority’s power to tax within the boundaries of a home-rule city
because state and local taxation schemes, including sales taxes to

fund transportation projects, are matters of mixed state and local

concern that can coexist in a home-rule city without giving rise to a

conflict.

     The division therefore affirms the judgment of the district

court.
COLORADO COURT OF APPEALS                                         2018COA73

Court of Appeals No. 17CA0462
City and County of Denver District Court No. 15CV33347
Honorable Michael A. Martinez, Judge

Wal-Mart Stores, Inc., a Delaware corporation; and Sam’s West, Inc., an
Arkansas corporation,

Plaintiffs-Appellants,

v.

Pikes Peak Rural Transportation Authority and Colorado Department of
Revenue,

Defendants-Appellees.

                            JUDGMENT AFFIRMED

                                  Division VII
                           Opinion by JUDGE VOGT*
                         Berger and Plank*, JJ., concur

                           Announced May 17, 2018

Greenberg Traurig LLP, Brian L. Duffy, Naomi G. Beer, Tyler D. Coombe, John
K. Crisham, Denver, Colorado; Brownstein Hyatt Farber Shreck LLP, Martha L.
Fitzgerald, Denver, Colorado, for Plaintiffs-Appellants

Carver Schwartz McNab Kamper & Forbes, LLC, Peter C. Forbes, Denver,
Colorado; Icenogle Seaver Pogue, PC, Jennifer L. Ivey, Denver, Colorado, for
Defendant-Appellee Pikes Peak Rural Transportation Authority

Cynthia H. Coffman, Attorney General, Scott R. Bauer, Senior Assistant
Attorney General, Benjamin Kapnik, Assistant Attorney General, Denver,
Colorado, for Defendant-Appellee Colorado Department of Revenue

Wynetta P. Massey, City Attorney, Anne H. Turner, Senior Assistant City
Attorney, Colorado Springs, Colorado, for Amicus Curiae City of Colorado
Springs
Troy Johnson, City Attorney, Fountain, Colorado, for Amicus Curiae City of
Fountain

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2017.
¶1    In 2014, the City of Fountain annexed a parcel of vacant land

 (the Property) from unincorporated El Paso County. After the Pikes

 Peak Rural Transportation Authority announced its intention to

 collect a 1% sales tax from recently built retail businesses on the

 Property, the operators of the businesses, WalMart Stores, Inc., and

 Sam’s West, Inc., filed a declaratory judgment action against the

 Authority and the Colorado Department of Revenue (DOR). They

 sought a declaration that defendants could not collect sales and use

 taxes on the Property because the Property was now a part of

 Fountain, which was not a member of the Authority.

¶2    Resolution of the issue presented required answers to two

 questions: first, can a municipality remove property from the

 boundaries of a regional transportation authority simply by

 annexing the property; and second, is such authority’s statutory

 power to tax preempted by article XX, section 6 of the Colorado

 Constitution, which gives home-rule cities the power to collect sales

 taxes within their own borders?

¶3    The district court answered both questions “no,” as do we. We

 therefore affirm the judgment in favor of defendants.

                                   1
                           I.    Background

¶4    Colorado’s Regional Transportation Authority Law (RTA Law),

 sections 43-4-601 to -621, C.R.S. 2017, allows municipalities,

 counties, special districts, and the state to combine to provide

 regional transportation services and to collect sales and use taxes

 to pay for such services. §§ 43-4-602(4), -605(1)(j)(I), C.R.S. 2017.

 The Authority was established in accordance with the RTA Law in

 2004, pursuant to an intergovernmental agreement (IGA) among El

 Paso County and various municipalities in the county. The

 Property at issue here was in unincorporated El Paso County in

 2004 and thus was within the boundaries of the Authority.

¶5    The Authority collects a 1% sales tax on retail sales within its

 boundaries and uses the tax revenues for transportation projects.

 Among other projects, it has spent $25,000,000 on improvements

 to Highway 83, which runs adjacent to the Property.

¶6    Fountain, a home-rule city in El Paso County, has never been

 a member of the Authority. After Fountain annexed the Property in

 2014, defendants opened stores on the previously undeveloped

 Property. As Fountain businesses, the stores were required to

                                    2
 collect and remit to the city a 3% Fountain sales and use tax and a

 .75% Fountain transportation tax.

¶7    The DOR collects sales tax on behalf of both Fountain and the

 Authority.

¶8    Plaintiffs filed a complaint seeking a declaratory judgment that

 the Authority and the DOR could not collect a tax from the stores

 because (1) upon annexation by Fountain, the Property was

 removed from the Authority’s territory and thus was not subject to

 taxation by the Authority; and, (2) as a home-rule city with plenary

 taxation powers, Fountain had the sole authority to levy sales taxes

 on the annexed Property. Defendants counterclaimed, asserting

 that Fountain’s annexation did not remove the Property from the

 Authority’s territory, and that the city’s plenary tax power did not

 preclude additional taxation. Agreeing that there were no disputed

 issues of material fact, the parties filed cross-motions for summary

 judgment. In a detailed written order, the district court denied

 plaintiffs’ motion and entered summary judgment for defendants.

                                   3
                               II.   Analysis

       A.    Standard of Review and Controlling Legal Principles

¶9     This is an appeal of a summary judgment, and it involves

  questions of statutory interpretation. Our review is thus de novo.

  Gibbons v. Ludlow, 2013 CO 49, ¶ 11 (summary judgment);

  Goodman v. Heritage Builders, Inc., 2017 CO 13, ¶ 5 (statutory

  interpretation).

¶ 10   Summary judgment is appropriate when the pleadings and

  supporting documentation show that no genuine issue of material

  fact exists and that the moving party is entitled to judgment as a

  matter of law. C.R.C.P. 56; Andersen v. Lindenbaum, 160 P.3d 237,

  239 (Colo. 2007).

¶ 11   In interpreting a statute, we must ascertain and give effect to

  the legislature’s intent. Colo. Dep’t of Revenue v. Creager Mercantile

  Co., 2017 CO 41M, ¶ 16. We give words and phrases their plain

  and ordinary meanings, and we construe the entire statutory

  scheme to give consistent, harmonious, and sensible effect to all its

  parts. Denver Post Corp. v. Ritter, 255 P.3d 1083, 1089 (Colo.

  2011). If a statute’s language is clear, we apply it as written; but if

                                     4
  the statutory language is ambiguous, we may use other tools of

  statutory interpretation to determine legislative intent. Id.

                   B.    Annexation and the RTA Law

¶ 12   Plaintiffs contend that Fountain’s annexation of the Property

  removed the Property from the Authority’s boundaries, and that the

  Authority’s attempt to tax retail sales outside its boundaries violates

  the RTA Law. We disagree.

                  1.    Effect of Fountain’s Annexation

¶ 13   We first consider whether Fountain’s annexation, without

  more, removed the Property from the Authority’s boundaries.

¶ 14   A municipality, such as Fountain, may annex property from

  unincorporated parts of the county in which it lies in accordance

  with Colorado Constitution article II, section 30 and the Municipal

  Annexation Act of 1965, sections 31-12-101 to -123, C.R.S. 2017.

  See Town of Superior v. Midcities Co., 933 P.2d 596, 600 (Colo.

  1997). Thus, Fountain’s annexation of the Property in 2014 served

  to detach it from unincorporated El Paso County and make it a part

  of Fountain.

¶ 15   However, a municipality’s annexation power does not permit it

  automatically to remove territory from other political subdivisions of

                                     5
  the state (such as regional transportation authorities; see

  § 43-4-602(1.5), C.R.S. 2017), particularly where removal of

  territory from such political subdivisions is governed by other

  statutory provisions. “[A] municipality cannot accomplish by mere

  annexation what is illegal or statutorily impermissible.” Bd. of

  Trustees of Town of Wellington v. Bd. of Trustees of Fort Collins Reg’l

  Library Dist., 216 P.3d 611, 613 (Colo. App. 2009) (city’s annexation

  of property did not automatically remove the property from library

  district; rather, property could be removed only in accordance with

  specific provisions of library law); see also Valley Water Dist. v. City

  of Littleton, 32 Colo. App. 286, 288, 512 P.2d 644, 645 (1973) (city’s

  annexation of portion of territory served by water district did not

  make city responsible for providing water service in the annexed

  area).

¶ 16   We thus conclude that although Fountain’s annexation of the

  Property removed it from unincorporated El Paso County, that

  annexation did not remove the Property from the boundaries of the

  Authority.

                                      6
                            2.    The RTA Law

¶ 17   We next consider whether the Property must nevertheless be

  deemed to be outside the Authority’s boundaries, and thus not

  subject to the Authority’s taxes, under the RTA Law.

¶ 18   The RTA Law gives an authority the power to impose a sales

  tax, use tax, or both, within its boundaries, provided that a majority

  of voters within the area to be taxed approve the proposed tax.

  §§ 43-4-605(1)(j)(I), -612(1), C.R.S. 2017. The Authority’s 1% sales

  tax at issue here was approved by the voters in 2004. As part of

  unincorporated El Paso County, the Property was within the

  Authority’s boundaries at that time and thus subject to the tax,

  although there was then no commercial activity on the Property to

  be taxed.

¶ 19   Plaintiffs contend that, under section 43-4-603(2)(d) of the

  RTA Law, the Property is no longer within the boundaries of the

  Authority since its annexation by Fountain. The subsection on

  which plaintiffs rely, part of a section of the RTA Law captioned

  “Creation of authorities,” states in relevant part that

              (2) Any contract establishing an authority shall
              specify:

                                     7
            ....

            (d) The boundaries of the authority, which may
            not include territory outside of the boundaries of
            the members of the combination, may not
            include territory within the boundaries of a
            municipality that is not a member of the
            combination as the boundaries of the
            municipality exist on the date the authority is
            created without the consent of the governing
            body of such municipality, and may not
            include territory within the unincorporated
            boundaries of a county that is not a member of
            the combination as the unincorporated
            boundaries of the county exist on the date the
            authority is created without the consent of the
            governing body of such county.

  (Emphasis added.)

¶ 20   Plaintiffs read the emphasized portion above as ending the

  analysis because the Property is located in Fountain, and Fountain

  is not a combination member. Defendants respond that the

  subsection defines the territorial restrictions applicable when a

  transportation authority is created, and that the subsection, read

  as a whole, requires a contract creating such an authority to specify

  boundaries that (1) may not include land outside of the

  combination members’ borders; and, (2) if land within a member’s

  (e.g., El Paso County’s) borders is also inside a nonmember

  municipality (e.g., Fountain), may not include such land without

                                    8
  the municipality’s consent. In the latter situation, the relevant

  municipal boundaries are those that “exist on the date the authority

  is created.”

¶ 21   We agree with defendants. Reading subsection 603(2)(d) as a

  whole and in its context, we conclude that the legislature intended

  the subsection to define the boundaries of an authority at its

  creation, not to define requirements for changing those boundaries

  thereafter. We reach this conclusion for several reasons.

¶ 22   First, as noted, section 42-4-603 is captioned “Creation of

  authorities.” See Jefferson Cty. Bd. of Equalization v. Gerganoff,

  241 P.3d 932, 936 (Colo. 2010) (headings in a statute can aid in

  determining legislative intent). Its subsections deal with the

  requirements for contracts creating transportation authorities, not

  with requirements for authorities already in existence.

¶ 23   Second, the language in subsection 603(2)(d) referring to the

  boundaries of a municipality “as [they] exist on the date the

  authority is created” is clear and unambiguous, and it is the same

  language used in other sections of the RTA Law. See

  § 42-4-605(1)(f) (limitations on territory in which regional

  transportation systems may be operated); § 42-4-605(1)(j)(I)

                                     9
  (limitations on territory within which sales or use tax may be

  levied). The legislature’s use of such specific language suggests

  that it was aware that municipal boundaries frequently change, and

  that there needed to be some certainty as to the territory in which a

  regional transportation authority could operate.

¶ 24   Third and most important, the General Assembly included in

  the RTA Law a specific provision addressing how territory may be

  removed from an authority once the authority is established.

  Section 43-4-605(2) spells out how the authority’s board of

  directors may include or exclude property from the boundaries of

  the authority. The statute requires notice and a public hearing,

  after which the board may, by two-thirds vote, adopt a resolution

  including or excluding all or any portion of the property described

  in the notice. § 43-4-605(2)(b)(I), (II). It is undisputed that the

  procedure spelled out in section 43-4-605(2) was not followed in

  this case.

¶ 25   In sum: The Property was within the boundaries of the

  Authority when the Authority was created. Fountain’s annexation

  of the Property did not remove it from the boundaries of the

  Authority. Rather, like the library law in Town of Wellington, the

                                     10
  RTA Law provides a single method to remove property from an

  authority’s boundaries after the authority is formed; but that

  method was not followed. 216 P.3d at 615. Contrary to the

  arguments first advanced by plaintiffs in their reply brief and at oral

  argument, nothing in the IGA creating the Authority warrants a

  contrary conclusion. Thus, the Property remains within the

  Authority’s boundaries and is subject to taxation by the Authority.

       C.     Preemption under Article XX of the Colorado Constitution

¶ 26        Plaintiffs further contend that the Authority’s statutory power

  to tax is preempted by article XX, section 6 of the Colorado

  Constitution, which they say gives home-rule cities “plenary” and

  “sole” authority over local concerns such as municipal taxation and

  supersedes state statutes that conflict with local laws in those

  areas. We again disagree.

                           1.   Additional Background

¶ 27        Colorado Constitution article XX, section 6 states that

  home-rule cities have power over “local and municipal matters,”

  and that their charters and ordinances in such matters “shall

  supersede within the territorial limits [of such cities] any law of the

  state in conflict therewith.” Article XX, section 6(g) states that a

                                        11
  home-rule city’s powers include the power to levy and collect taxes

  on city property for municipal purposes. The Fountain city charter

  authorizes the city council “to levy general sales taxes, selective

  sales taxes, and use taxes, or any combination of said taxes, or any

  other taxes permitted by law.” City of Fountain Charter art. IX,

  § 9.3(d). As stipulated by the parties here, the city council has

  imposed a 3% sales and use tax and a .75% transportation tax on

  businesses operating within Fountain’s borders

¶ 28   Under section 43-4-605(1)(j)(I) of the RTA Law, a regional

  transportation authority is allowed “to levy, in all or any designated

  portion of the members of the combination, a sales or use tax, or

  both, at a rate not to exceed one percent upon every transaction or

  other incident with respect to which a sales or use tax is levied by

  the state. . . . The tax imposed pursuant to this paragraph (j) is in

  addition to any other sales or use tax imposed pursuant to law.”

  The Authority cites this provision as the basis for its right to impose

  a 1% sales tax on transactions within its boundaries, including

  transactions on the Property.

¶ 29   To ensure home-rule cities their constitutionally guaranteed

  independence from state control in their internal affairs, our

                                    12
  supreme court has consistently held that, in matters of local

  concern, a home-rule ordinance supersedes a conflicting state

  statute; but when a home-rule ordinance conflicts with state law in

  a matter of either statewide or mixed state and local concern, the

  state law supersedes that conflicting ordinance. City of Longmont v.

  Colo. Oil & Gas Ass’n, 2016 CO 29, ¶¶ 17-18. In matters of

  statewide or mixed concern, local ordinances may coexist with state

  statutes as long as the local ordinance and the state statute do not

  conflict. Id. at ¶ 18.

                            2.    Application

¶ 30   To prevail on this contention, plaintiffs would need to establish

  that imposition of a sales tax on the Property to pay for

  transportation projects is a matter of purely local concern, and that

  the state statute granting the Authority the right to impose such a

  tax “in addition to any other sales or use tax imposed pursuant to

  law” conflicts with Fountain’s power to impose such a tax. They

  have done neither.

¶ 31   First, Colorado case law has long recognized that

  transportation regulation generally, including the establishment of

  transportation systems, is a matter of mixed local and state

                                    13
concern. See Webb v. City of Black Hawk, 2013 CO 9, ¶¶ 30-31, 42

(both home-rule cities and the state have an interest in traffic

regulation, which is a matter of mixed state and local concern;

thus, state statute preempted city’s conflicting bicycle ordinance);

City of Commerce City v. State, 40 P.3d 1273, 1284 (Colo. 2002) (in

rejecting home-rule city’s argument that traffic enforcement in city

was a matter of purely local concern and that state law regulating

automated vehicle registration systems unconstitutionally infringed

on city’s power, supreme court held that the state law addressed a

matter of mixed state and local concern, and noted that “although

our constitution assigns a power to home-rule municipalities in a

general way, this does not necessarily mean that the matter is a

strictly local issue”); Anema v. Transit Constr. Auth., 788 P.2d 1261,

1266 (Colo. 1990) (state law creating an authority to establish a

rapid transit system in Denver addressed a matter of mixed

statewide and local concern); see also People v. Graham, 107 Colo.
202, 205, 110 P.2d 256, 257 (1941) (rejecting argument that state

could not regulate motor vehicle traffic in home-rule city, and

observing: “As motor vehicle traffic in the state and between

home-rule municipalities becomes more and more integrated it

                                  14
  gradually ceases to be a ‘local’ matter and becomes subject to

  general law.”).

¶ 32   Second, Colorado Constitution article XX, section 6 does not

  give home-rule cities “sole” authority over taxation within their

  boundaries, as plaintiffs contend. Rather, as recognized by our

  supreme court, state and local taxation schemes, including sales

  taxes to fund transportation projects, can coexist in a home-rule

  city without giving rise to a conflict. See Berman v. City & Cty. of

  Denver, 156 Colo. 538, 544, 400 P.2d 434, 438 (1965) (“[C]ases

  decided by this court conclusively establish that . . . state taxation

  in the same field as that of a municipality can co-exist.”); see also

  City of Aurora v. Aurora Sanitation Dist., 112 Colo. 406, 409, 149
P.2d 662, 663 (1944) (in rejecting home-rule city’s challenge to

  creation of sanitation district within city’s boundaries, court

  discussed its previous case law holding that legislature had “right to

  authorize the formation of quasi-municipal districts, with the power

  to tax for their special purposes, which might embrace or include

  cities and towns within their boundaries”); Milheim v. Moffat Tunnel

  Improvement Dist., 72 Colo. 268, 280, 211 P. 649, 654 (1922)

  (Colorado Constitution article XX did not limit power of legislature

                                    15
  to create an improvement district including the City and County of

  Denver and to grant that district the power to levy assessments in

  Denver).

¶ 33   Here, the record shows that at least one transportation project

  funded by the Authority’s sales tax (the $25,000,000 in

  improvements to Highway 83) directly benefits the Property.

  Further, the IGA creating the Authority provides that

  voter-approved sales tax revenues must be spent on roadway

  capital improvements, maintenance and operations, and transit

  service within the Authority’s boundaries, and that “[s]uch projects

  shall be compatible with established state and local transportation

  plans” for the transport of people and goods in or through El Paso

  County.

¶ 34   Plaintiffs do not explain how the Authority’s use of sales tax

  revenues for these purposes conflicts with Fountain’s right to levy

  and collect taxes. Although plaintiffs complain that permitting the

  Authority to impose its sales tax on businesses in the Property will

  force Fountain taxpayers to “divert dollars that would otherwise go

  to a wide variety of areas (including transportation)” in Fountain,

  they do not dispute that Fountain still collects its own sales-and-

                                    16
  use and transportation taxes on all eligible transactions occurring

  in that city.

¶ 35   In these circumstances, we conclude, as did the district court,

  that provision of transportation services to the Property, and

  imposition of taxes to pay for such services, is not a purely local

  concern that, under article XX, section 6, would supersede any

  conflicting state law. Nor have plaintiffs established that there is a

  conflict between Fountain’s right to impose its own taxes and the

  Authority’s imposition of sales tax on the Property in accordance

  with section 43-4-605(1)(j)(I). Thus, the district court did not err in

  rejecting plaintiffs’ preemption argument and concluding that the

  Authority’s sales tax on eligible transactions on the Property was

  valid.

¶ 36   Finally, we reject plaintiffs’ argument that the district court

  erred by failing to address all of the factors frequently considered by

  the courts in determining whether an issue is a matter of local,

  mixed, or state interest. See Ryals v. City of Englewood, 2016 CO 8,

  ¶ 13 (relevant factors include the need for statewide uniformity, the

  extraterritorial impact of the regulation at issue, whether the matter

  has traditionally been regulated at the state or local level, and

                                    17
  whether the Colorado Constitution commits the matter to state or

  local regulation).

¶ 37   First, the district court’s analysis, with which we agree,

  recognizes that imposition of sales taxes to fund transportation

  projects is neither a matter traditionally regulated only at the local

  level nor a matter committed exclusively to either state or local

  regulation by the Colorado Constitution. Plaintiffs have not

  demonstrated that application of the remaining two Ryals factors

  would have warranted a different conclusion. Second, the district

  court found, and we agree, that there was no conflict between

  Fountain’s right of municipal taxation and the Authority’s

  imposition of sales taxes. A division of this court has recognized

  that, in such circumstances, it is unnecessary to decide whether

  the matters at issue are of local, mixed, or state concern. See

  McCarville v. City of Colorado Springs, 2013 COA 169, ¶ 12 (where

  there is no conflict, state and local legislation may coexist, and

  court need not decide whether provisions at issue were matters of

  state, local, or mixed concern).

                             III.    Conclusion

¶ 38   The judgment is affirmed.

                                      18
JUDGE BERGER and JUDGE PLANK concur.

                     19