Wal-Mart Stores, Inc. v. Pikes Peak Rural Transportation Authority

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.
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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
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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.
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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
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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
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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.
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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:
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....
(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
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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
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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
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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.
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JUDGE BERGER and JUDGE PLANK concur.
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