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

Court of Appeals of Colorado, Seventh Division

May 17, 2018

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.

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

          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

          OPINION

          VOGT JUDGE.

         ¶ 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.

         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 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.

         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 ...


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