C:\Documents and Settings\ctuser\Local Settings\Temp\Zhao v. Montoya-1.wpd

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _____________

Filing Date: March 28, 2012

NO. 30,172

PINGHUA ZHAO,

Plaintiff-Appellant,

KAREN L. MONTOYA,

BERNALILLO COUNTY ASSESSOR,

Defendant-Appellee,

consolidated with

GREGG VANCE FALLICK

and JANET M. FALLICK,

Plaintiffs-Appellants,

KAREN L. MONTOYA,

BERNALILLO COUNTY ASSESSOR,

Defendant-Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY

Theresa Baca, District Judge

Stephanie Dzur

Albuquerque, NM

Tax Estate & Business Law, Ltd.

Clinton W. Marrs

Albuquerque, NM

for Appellant Zhao

Sanders & Westbrook, P.C.

Duff Westbrook

Maureen Sanders

Albuquerque, NM

for Appellee

Greg Vance Fallick

Albuquerque, NM

Pro Se for Appellants Fallicks

OPINION

KENNEDY, Judge.

{1} In this consolidated case, certified to us by the Bernalillo County District Court,

Pinghua Zhao, Gregg Fallick, and Janet Fallick (Homeowners) appeal a significant

increase in the value of their homes for property tax assessment as a result of a

phenomenon commonly called “tax lightning.” This phenomenon occurs when a

home that has been owned by the same taxpayer for more than a year is sold to a new

owner for a price representing a significant increase from its previously assessed

value. The property is then reassessed for its “current and correct” taxable value

which reflects the property’s market value. NMSA 1978, § 7-36-15(B) (2008);

3.6.5.23(C) NMAC. This reassessment can result in a proportionately significant

increase in the property’s assessed value and, hence, the disparity between the former

and the new homeowner’s tax bill. See NMSA 1978, § 7-36-21.2 (2003) (amended

2010). Such was the case with Homeowners. Homeowners maintain that this increase

in taxable value contravenes Article VIII, Section 1 of the New Mexico Constitution,

which mandates that the Legislature limit annual increases in the assessed value of

residential property and states that these limitations may be implemented according

to certain “classes” of taxpayers, including a class based upon “owner-occupancy.”

{2} We disagree with Homeowners, holding that the Property Tax Code’s different

valuation methods under Section 7-36-21.2 for newly sold residential properties and

those owned more than a year do not create a new class of taxpayer not specified by

the New Mexico Constitution. Consequently, the County Assessor correctly operates

within the parameters of the New Mexico Constitution and New Mexico statutes in

resetting the value of residential property in the tax year following its sale at a current

and correct market value.

I. BACKGROUND

{3} The facts in the case are not in dispute. Homeowners bought and occupied new

homes and, in the year following their purchase, Bernalillo County valued their

properties at significantly greater amounts for tax assessment purposes than it had for

the properties’ previous owners. As a result, the property tax assessment for each

home significantly increased. Homeowners appealed to the Bernalillo County

Valuation Protests Board (Board), contending that the statute with which their

properties were assessed was unconstitutional. The Board rejected the appeals and

upheld the assessor’s valuations. Homeowners then appealed to the district court,

which, in light of what it believed to be a slew of similar cases, did not decide the

case. Rather, the district court took judicial notice of two previous cases from the

district with disparate results and certified the cases to this Court. See NMSA 1978,

§ 39-3-1.1(F) (1999); Rule 12-608 NMRA (setting forth the requirements and

procedures for such certification to this Court). The question certified was

[w]hether Subsections (A)(3)(a), Subsection (B), and Subsection (E) of

. . . [Section] 7-36-21.2 . . . violate the New Mexico Constitution, Article

VIII, [Section] 1 (as amended 1998), because the Subsections create a

classification based on when residential property was acquired, not on

the constitutionally permissible classifications of owner-occupancy, age,

or income.

{4} Because this question is one of broad and substantial public interest and likely

to recur, we conclude that the district court properly certified the question to us, and

we accept the certification. See Jicarilla Apache Nation v. Rio Arriba Cnty. Assessor,

2004-NMCA-055, ¶ 13, 135 N.M. 630, 92 P.3d 642, rev’d on other grounds by

Jicarilla Apache Nation v. Rodarte, 2004-NMSC-035, 136 N.M. 630, 103 P.3d 554.

II. DISCUSSION

{5} Enacted in 2000 and amended in 2001 and 2003, Section 7-36-21.2 is at issue

in this case and provides in pertinent part:

A. Residential property shall be valued at its current and

correct value in accordance with the provisions of the Property Tax Code

. . . ; provided that for the 2001 and subsequent tax years, the value of a

property in any tax year shall not exceed the higher of one hundred three

percent of the value in the tax year prior to the tax year in which the

property is being valued or one hundred six and one-tenth percent of the

value in the tax year two years prior to the tax year in which the property

is being valued. This limitation on increases in value does not apply to:

. . . .

(3) valuation of a residential property in any tax year in

which:

(a) a change of ownership of the property occurred

in the year immediately prior to the tax year for which the value of the

property for property taxation purposes is being determined[.]

. . . .

B. If a change of ownership of residential property occurred in

the year immediately prior to the tax year for which the value of the

property for property taxation purposes is being determined, the value of

the property shall be its current and correct value as determined pursuant

to the general valuation provisions of the Property Tax Code.

. . . .

E. As used in this section, “change of ownership” means a

transfer to a transferee by a transferor of all or any part of the transferor’s

legal or equitable ownership interest in residential property except for a

transfer[.]

{6} The limitation on property value accorded by Section 7-36-21.2(A) is an

exception to the general provisions of the Property Tax Code governing valuation of

property for taxation purposes. See NMSA 1978, § 7-36-15(B) (1995) (amended

2008) (stating the general provisions for valuation of property); NMSA 1978, § 7-36-

16(A) (2000) (noting the limitations on value imposed by Section 7-36-21.2 as an

exception to the requirement that assessors regularly update the values of property for

property taxation purposes to current and correct levels). Generally, all property is

valued to reflect “current and correct” values, and current and correct values are

In this case, Homeowners have eschewed any argument that the Property Tax14

Code’s distinction between residential properties owned more or less than a year15

implicates the equal protection clause of the United States and New Mexico16

Constitutions. See Nordlinger v. Hahn, 505 U.S. 1 (1992) (rejecting equal protection17

challenge to time-of-acquisition value system of valuing property for taxation as18

having rational basis). 19

updated and maintained regularly. See § 7-36-16; NMSA 1978, § 7-38-7 (1997).

Section 7-36-21.2(A) creates an exception to that rule by limiting the increase in

valuation to three percent a year after the residential property has changed ownership

and been revalued according to “general valuation provisions of the Property Tax

Code.” Section 7-36-21.2(B). Section 7-36-21.2 limits increases in this manner, so

long as the property is not transferred to a new owner. The applicability of this

exception begins anew in the year following the purchase of a home by a new owner.

{7} Homeowners argue that the limitation on taxation created by Section 7-36-21.2

violates Article VIII, Section 1 of the New Mexico Constitution by creating an

unauthorized class of residential property taxpayers based upon the time of

acquisition.

Homeowners also argue that Section 7-36-21.2 is invalid on its face.

For reasons explained in this Opinion, we hold that Section 7-36-21.2 does not violate

the New Mexico Constitution.

A. Standard of Review

{8} Because the facts in this matter are not in dispute, and the issue certified is

solely one of statutory and constitutional interpretation, we review the question

presented to us de novo. Dell Catalog Sales L.P. v. Taxation & Revenue Dep’t, 2009-

NMCA-001, ¶ 17, 145 N.M. 419, 199 P.3d 863. Likewise, we review de novo

whether Section 7-36-21.2 conflicts with Article VIII, Section 1 of the New Mexico

Constitution. See Georgia O’Keeffe Museum v. Cnty. of Santa Fe, 2003-NMCA-

003, ¶ 27, 133 N.M. 297, 62 P.3d 754. “It is presumed that words appearing in [the

C]onstitution have been used according to their plain, natural, and usual signification

and import, and the courts are not at liberty to disregard the plain meaning of words

of [the C]onstitution in order to search for some other conjectured intent.” State ex

rel. Gomez v. Campbell, 75 N.M. 86, 101, 400 P.2d 956, 966 (1965) (alteration

omitted) (internal quotation marks and citation omitted).

{9} Similarly, “plain language of a statute is the primary indicator of legislative

intent.” High Ridge Hinkle Joint Venture v. City of Albuquerque, 1998-NMSC-050,

¶ 5, 126 N.M. 413, 970 P.2d 599 (internal quotation marks and citation omitted). We

“give the words used in the statute their ordinary meaning unless the [L]egislature

indicates a different intent.” Id. (internal quotation marks and citation omitted). We

do not read additional language into the statute, particularly when it makes sense as

the Legislature wrote it. Id.

{10} In our review, we indulge in a strong presumption that the statute in question

is constitutional, and we will uphold a statutory enactment unless we are satisfied

beyond all reasonable doubt of its unconstitutionality. Bounds v. State,

2011-NMCA-011, ¶ 34, 149 N.M. 484, 252 P.3d 708, cert. granted sub nom. Bounds

v. D’Antonio, 2011-NMCERT-001, 150 N.M. 560, 263 P.3d 902. “[T]he party

attacking the constitutionality of the statute has the burden of proving the statute is

unconstitutional beyond all reasonable doubt.” Wachocki v. Bernalillo Cnty. Sheriff’s

Dep’t, 2010-NMCA-021, ¶ 33, 147 N.M. 720, 228 P.3d 504 (internal quotation marks

and citation omitted), aff’d, 2011-NMSC-039, 150 N.M. 650, 265 P.3d 701. “It is . . .

a fundamental principle that courts will not declare a legislative act unconstitutional

if there is any reasonable basis upon which it can be upheld.” Amador v. State Bd. of

Educ., 80 N.M. 336, 337, 455 P.2d 840, 841 (1969). And where we adjudicate an

attack on a statute’s constitutionality, “we look at whether there exists a set of

circumstances in which the statute can be constitutionally applied.” Bounds,

2011-NMCA-011, ¶ 34.

B. Section 7-36-21.2 Does Not Violate Article VIII, Section 1 of the New

Mexico Constitution

{11} Homeowners contend that Section 7-36-21.2(A)(3)(a), (B), and (E) violate

Article VIII, Section 1 of the New Mexico Constitution by creating an unauthorized

class of residential property taxpayers based upon the time owners acquire the

property. Article VIII, Section 1 of the New Mexico Constitution is composed of two

components, the latter of which mandates the Legislature to impose a limitation on

annual increases in property valuation and states that the limitation may be applied to

certain classes of taxpayers. Homeowners concede that “[t]he dispositive issue is not

whether [Section] 7-36-21.2 levies residential property taxes equally and uniformly

within the same class of taxpayers; undoubtedly it does.” As a result, we will only

discuss Article VIII, Section 1(B) of the New Mexico Constitution in our analysis.

{12} Specifically, Homeowners contend that Section 7-36-21.2 “creates two classes

of taxpayers—older and newer homeowners—defined solely on the basis of whether

a homeowner changed ownership in the year immediately prior to the assessment year

at issue, or in earlier years.” They argue that this classification violates Article VIII,

Section 1(B) of the New Mexico Constitution, which states: “The [L]egislature shall

provide by law for the valuation of residential property for property taxation purposes

in a manner that limits annual increases in valuation of residential property. The

limitation may be applied to classes of residential property taxpayers based on

owner-occupancy, age[,] or income.” Homeowners interpret the second sentence of

Section 1(B) to restrict the Legislature to the classifications of owner-occupancy, age,

or income when creating statutes limiting annual taxable value increases.

Homeowners occupy the residences they own. Because Homeowners believe that

Section 7-36-21.2 classifies residential property owners based on when they acquired

their property, they argue that the statute violates the Constitution as the classification

is not one of the permissible classes provided in Article VIII, Section 1(B) of the New

Mexico Constitution.

{13} We disagree that a new classification of taxpayer is created based on the time

of acquisition. Section 7-36-21.2 applies the limitation to increases based upon when

a taxpayer acquires ownership of the property and, hence, taxpayer status relative to

that property. An owner of residential property is “the person in whom is vested any

title to property[.]” NMSA 1978, § 7-35-2(G) (1994). “Property taxes imposed are

the personal obligation of the person owning the property on the date on which the

property was subject to valuation for property taxation purposes.” NMSA 1978,

§ 7-38-47 (1973). All property subject to taxation is valued as of January 1 of each

tax year, Section 7-38-7, at its “current and correct value[],” Section 7-36-16(A). The

class of owner-occupants, contained in Article VIII, Section 1, does not include

anyone until they own property. What this means is the classification is based on the

acquisition of taxpayer status. The value limitation in question only commences once

a taxpayer owns the property.

{14} The limitation accrues to owners of property after the initial valuation of their

home during their first year of ownership and limits increases in valuation thereafter

to no more than three percent of the prior year’s value. See § 7-36-21.2(A). That

exception to the general valuation statute conferred by Section 7-36-21.2(A) continues

to benefit the homeowner every year until such time as the property is sold. Thus,

Section 7-36-21.2 establishes a limitation predicated on the property being owned by

the taxpayer, beginning anew with the current and correct value established by the

market when the property was acquired by the new owner. See § 7-36-21.2(B). The

limitation ceases with the end of the owner-occupant’s tenancy after the sale of the

property.

{15} To the extent Homeowners seem to assert that the value limitation carries over

from the previous owner, such a contention is unsupported by the property tax code.

After an owner sells his or her property, he or she is neither the taxpayer for property

tax purposes, nor the owner-occupant of the home who benefits from the limited

valuation conferred by Section 7-36-21.2. The purchaser, not owning the property on

the date it was last subject to valuation pursuant to the limitation, is not entitled to

benefit from that lower taxable value. The statute therefore does not classify newer

owners and older owners in violation of the Constitution. Rather, the difference in

taxable value between the former owner’s tax bill and the new owner’s tax bill is

based upon the fact that the new owner, at the relevant date from which the limited

taxable value was calculated for the former owner, was not an owner of the property.

{16} In this case, Homeowners were not owners of the properties when they were

subject to the previous owners’ entitlement to the value limitation. They consequently

do not obtain the benefit of the limitations until their purchase of the properties are

complete. At which time, they attain membership in the class of owner-occupants to

whom the limitation applies.

C. Section 7-36-21.2 Is Not Invalid On Its Face

{17} Homeowners also contend that Section 7-36-21.2 is invalid on its face.

Homeowners fail to provide us with authority to evaluate this argument, other than

assertions that “taxpayers[’] homes lying side-by-side and receiving identical

governmental services, were assessed using different valuation methods . . . and [the

taxable value of these homes] increased at substantially disparate levels” and that the

statute defines “change of ownership” in an arbitrary way. Homeowners do not

provide authority about how we are to evaluate their claim that this law is “invalid on

its face.” We will not consider propositions that are unsupported by citation to

authority. ITT Educ. Servs., Inc. v. Taxation & Revenue Dep’t, 1998-NMCA-078,

¶ 10, 125 N.M. 244, 959 P.2d 969. And, where a party cites no authority to support

an argument, we assume no such authority exists. In re Adoption of Doe, 100 N.M.

764, 765, 676 P.2d 1329, 1330 (1984). This Court has no duty to review an argument

that is not adequately developed. See Headley v. Morgan Mgmt. Corp.,

2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d 1076 (declining to entertain a

cursory argument that relied on several factual assertions that were made without

citation to the record).

{18} Homeowners urge that Article VII, Section 1(B) of the New Mexico

Constitution permits the Legislature to favor owners who occupy their homes over

residential property owners who do not occupy or who rent out the property. This

might be so, but authority cited by Homeowners as to this proposition directs us to

restrict our reading of the constitutional provision to limit its scope to its own words

and to neither add nor subtract language or concepts from it. Homeowners insist that

“ownership must be linked to ‘occupancy.’” First, we again note that Homeowners

are “owner-occupants.” What they want is to receive the benefit of the statutory

limitation on value as neighbors who became owners before they did. As discussed

above, this constitutionally based benefit is limited by the fact that Section 7-36-21.2

only allows the limitation of assessed valuation increases to someone who has become

an owner, beginning at the moment ownership commences, and the property is valued

so as to establish the new owner’s obligation to pay taxes.

{19} To the extent Homeowners attempt to assert that revaluation at the time of a

“change of ownership” in Section 7-36-21.2 operates to either create an impermissible

temporal statutory exception to Article VIII, Section 1(B) of the New Mexico

Constitution or creates a newly created class of taxpayers defined by the time of

acquisition of their home who are excepted from this favorable scheme, their

argument fails. This part of the statute is quite congruent with the constitutional class

created in Article VIII, Section 1 of the New Mexico Constitution, and Homeowners

are unequivocally members of that class of taxpayer as of the moment they purchased

their homes. The argument that favoring older owners over newer owners is outside

the constitutional classification is misplaced. The act of acquisition of residential

property is what creates an ownership status with regard to that property, not its

timing. Along with the acquisition of residential property goes the conferring of

ownership and taxpayer status as to that property as we noted above. Thus,

Homeowners were not members of the constitutionally protected class to whom a

limitation of valuation would apply until their purchase of the property. The time of

acquisition is the beginning terminus of that status, before which a person has no

status at all. We hold that one cannot be an owner-occupant until after one purchases

residential property and that begins the valuation process as of that date as provided

under the general valuation methods of the Property Tax Code and thereafter limits

increases in the value of the property for assessment purposes. It is not invalid on its

face as to Homeowners.

{20} Homeowners’ assertions that persons who are not “occupants” of residential

properties are also included and mentioned in Section 7-36-21.2 cannot concern us,

as nowhere in this case is it asserted that persons to whom those provisions apply are

parties in this case. Homeowners’ complaint that they are not treated the same as

persons who became owner-occupiers at an earlier date than they did is the basis for

our decision. The statute’s application or non-application to owners of residential

property who do not occupy their premises is a matter we leave to the Legislature to

evaluate.

{21} Moreover, unless a statute violates the Constitution, “[w]e will not question the

wisdom, policy, or justness of legislation enacted by our Legislature.” Madrid v. St.

Joseph Hosp., 1996-NMSC-064, ¶ 10, 122 N.M. 524, 928 P.2d 250. As we have

addressed the specific constitutional claims raised by Homeowners and have

determined that the statute does not violate those parts of the Constitution, we review

this argument no further.

III. CONCLUSION

{22} We hold that Section 7-36-21.2 does not violate the New Mexico Constitution,

as it limits revaluation for taxation purposes based upon owner-occupant status.

Accordingly, we remand these cases to the district court for adjudication of

Homeowners’ claims consistent with the law as determined in this Opinion.

{23} IT IS SO ORDERED.

_______________________________

RODERICK T. KENNEDY, Judge

I CONCUR:

__________________________________

CELIA FOY CASTILLO, Chief Judge

SUTIN, Judge (specially concurring)

SUTIN, Judge (specially concurring).

{24} I concur in the Majority Opinion. I hesitate signing on with no separate

statement only because I have concern about what I consider some imprecise,

inaccurate, or ambiguous wording that might cause problems down the line,

particularly with regard to the propriety of valuation procedure employed under

Section 7-36-21.2. I also hope it is clear that the Majority Opinion is to be narrowly

read as limited to Homeowners’ claim that the valuation under Section 7-36-21.2

violated Article VIII, Section 1(B) in that a new class of taxpayer not specified in

Section 1(B) was created.

{25} Thus, following the letter of the certified question, I concur in affirming the

district court on the very limited ground that Subsections (A)(3)(a), (B), and (E) of

Section 7-36-21.2 do not, as Homeowners contend, unconstitutionally go beyond

owner-occupancy, age, and income by “creat[ing] a classification based on when

residential property was acquired[.]” I am not persuaded by Homeowners’ “fourth

taxpayer classification” theory.

{26} Although not at issue in the appeal before us, I think it useful to write separately

to raise questions in regard to the valuation procedure employed under Section 7-36-

21.2. The Majority Opinion analyzes the issue as follows. The seller has the benefit

of the 3% increase limitation until such time as he sells, at which time he no longer

needs or deserves the benefit of that limitation. The buyer gains the benefit of the 3%

increase limitation until such time as he sells, at which time he, too, no longer needs

or deserves the benefit of that limitation. A new valuation (from which the 3%

increase limitation starts) based on the sale price of the property is properly imposed

on the property purchased. The valuation based on the sale price reflects the current

and correct value and thus the “market value” of the purchased property. Exclusion

of purchased property from a 3% annual increase based on the last valuation of the

property, and starting the 3% annual increase based on a new purchase price valuation,

does not create an unconstitutional fourth taxpayer status classification, that is, a

taxpayer classification in addition to the three allowed in Article VIII, Section 1(B),

namely, “owner-occupancy, age[,] or income.” The Majority Opinion properly does

not delve into whether this valuation and ultimately the taxation process violates or

is a permissible exception to the equal and uniform clause in Article VIII, Section

1(A) of the New Mexico Constitution.

{27} Concern about the equality and uniformity of this purchase-price-valuation

scheme is raised based on the following hypothetical example. Homeowners A and

B live next door and live in virtually identical residences situated on the same amount

of acreage. Their valuations in 2007 are $100,000. Homeowner A sells his home to

Buyer C in 2007, a bubble housing economy, for $300,000. Buyer C’s 3% limitation

increase starts at $300,000. Homeowner B continues to have a 3% limitation increase

based on $100,000. Homeowner B sells his property to Buyer D in 2012 for

$125,000, the market having sunk dramatically. Buyer D, sitting next door to Buyer

C, has the protective 3% limitation benefit on a $125,000 value; whereas Buyer C has

that benefit on a $300,000 value. One can suppose that, in 2012, Buyer C can attempt

to get a reduction of the 2012 assessed value, but one should not count on it. Buyer

C would have to protest the valuation and prove a lower value by comparable sales.

Comparable sales are likely to be a mixture of low and high prices, depending on

market fluctuations over the period considered for comparable sales. The foregoing

example can be extended to residential homes in a neighborhood or larger area

consisting of like homes.

{28} Article VIII, Section 1(B) gives no inkling of an intent that whatever annual

increase limitation the Legislature might enact could carry the change-of-ownership

exclusion enacted in Section 7-36-21.2(A). An issue may well remain open as to

whether Article VIII, Section 1(A) can be construed as intending its equal and uniform

mandate to permit the purchase-price-valuation process.

{29} Section 1(A) deals with (1) value of classes of property and (2) methods of

valuation of that property, with a percentage tax rate limitation. “[S]o long as the tax

is equal and uniform on all subjects of a class and the classifications for taxation are

reasonable, such legislation does not offend these provisions of the State or Federal

[C]onstitutions.” Gruschus v. Bureau of Revenue, 74 N.M. 775, 777, 399 P.2d 105,

106-07 (1965); see NMSA 1978, § 7-36-2.1(A) (1995) (stating that property is

classified as residential and non-residential). What are we to understand from Article

VIII, Section 1(A)’s “Except as provided in Subsection [(B)] of this section” preface?

Are we to understand that Subsection 1(A) says that Subsection (B) controls even if

taxes are not equal and uniform upon residential property? Do we construe

Subsection (B) to permit use of valuation methods resulting in taxes upon residential

property that are not equal and uniform? Did the Legislature intend such broad

constitutional authority in order to enhance its own plenary authority in taxation?

Were the people who approved the amendment sufficiently advised of the breadth of

such authority, and did they understand what it could bring about?

{30} Article VIII, Section 1(B) requires the Legislature to provide by law for the

valuation of residential property for property taxation purposes “in a manner that

limits annual increases in valuation of residential property.” Subsection (B) then

states that the annual increase limitation “may be applied to classes of residential

property taxpayers based on owner-occupancy, age[,] or income.” Article VIII,

Section 1(A)’s equal and uniform clause relates to subjects of taxation of the same

class. Property is the subject of taxation. Residential property is a subject of taxation

of the same class. Article VIII, Section 1(B)’s mandate to limit increases relates to

valuation of residential property.

{31} Section 7-36-21.2 is the Legislature’s apparent attempt to come within the

constitutional mandates of Article VIII, Sections 1(A) and 1(B). In that apparent

attempt to come within the constitutional mandates, the Legislature created not only

the 3% “manner” of annual valuation increase in Section 7-36-21.2(A), but at the

same time created in Section 7-36-21.2(B) what appears to call for a re-valuation of

the property purchased at the point of ownership change. That is how the valuation

authorities have construed Section 7-36-21.2(B). Under Section 7-36-21.2(B), the

valuation of the new purchaser’s property must be the “current and correct value as

determined pursuant to the general valuation provisions of the Property Tax Code.”

{32} Section 7-36-15(B) of the Property Tax Code sets out the methods of valuation

for property taxation purposes for residential and other property not covered under

other specific statutory provisions. Market value is to be “determined by application

of the sales of comparable property, income or cost methods of valuation[,] or any

combination of these methods.” Id. And the valuation authority must “apply

generally accepted appraisal techniques[.]” Section 7-36-15(B)(1). Yet, when a

The valuation authorities refer to this methodology for determining property

value as an “acquisition value system.” See Dzur v. Bernalillo Cnty. Protests Bd., No.

CV-2008-12410, ¶ 23 (2d Jud. Dist. Ct.).

residential property is sold, the valuation authorities are employing a valuation method

that determines value based solely on the purchase price of the property.

{33} This purchase-price method of valuation is not a valuation method based on

comparable sales, although comparable sales appears to be the primary if not only

method of valuation contained in the Property Tax Code for valuation of purely

residential property. See § 7-36-15(B). Furthermore, it is not readily apparent that

using the purchase price of the property being valued as the sole valuation determinant

is a generally accepted appraisal technique. In addition, according to Property Tax

Department Regulation 3.6.5.22(G)(6) NMAC, “[e]vidence of the sale price of the

property being valued is not sufficient to establish a market value under Section 7-36-

15 . . . if the evidence of the sales of comparable property indicates the sales price was

not the market value.” Also, Department Regulation 3.6.5.23(C)(1) and (2) NMAC

define “current and correct values of property” in terms of market value, and “market

value” is determined based on the market value method of valuation set out in

3.6.5.22(G)(1) NMAC as “a process of analyzing sales of similar recently sold

properties in order to derive an indication of the most probable sales price of the

property being appraised.” Nothing in Article VIII, Section 1 indicates an intent that

what should be an equal and uniform annual increase limitation gives rise to use of

purchase price as the exclusive method of re-valuing a particular residential property

that happens to be sold, where all similar properties remain undervalued.

{34} In the attempt to construe Article VIII, Sections 1(A) and 1(B) and Section 7-

36-21.2 in tandem and harmony, one must at least question whether the Constitution

permits the Legislature to enact legislation that results in apparent non-uniform and

unequal valuation and taxation of properties of the same class. Were Plaintiffs to have

raised whether the manner in which valuation authorities have applied Section 7-36-

21.2 violates the equal and uniform clause or constitutional equal protection, it is not

all that clear that Nordlinger, 505 U.S. 1, would control rather than Allegheny

Pittsburgh Coal Co. v. Cnty. Comm’n of Webster Cnty., 488 U.S. 336 (1989).

{35} It would at least seem arguable that Section 7-36-21.2 violates Article VIII,

Section 1. The argument would be that, as the statute reads, as well as in the manner

in which it has been interpreted and applied by the valuation authorities, Section 7-36-

21.2 goes beyond simply providing for valuation in a manner that uniformly limits

annual increases in valuation of residential property during valuation cycles. This

view may very well have been how the electorate saw the benefit of constitutional

amendment when they voted in favor of its adoption. It would seem arguable that

Section 7-36-21.2 has created an impermissible offspring through application of a

method of valuation that results in what amounts to unequal and non-uniform

checkerboard and patchwork valuation and taxation of the same class of property.

The argument would be based on singling out one property for a currently higher

valuation while leaving all unsold similar, comparable properties in perhaps lesser or

under market value status. We have no evidence here of public benefit from long-

term home ownership or even of a weighing of any such benefit against any

detrimental effect resulting from discouragement and disincentive with regard to

alienation of property when purchase of a new property is contemplated. How

persuasive these arguments might be must be left for any future proceedings that may

arise. Plaintiffs did not raise and argue any of this.

{36} As I indicated earlier, what I have discussed here does not specifically reside

within the letter of the limited question certified to this Court. But nothing I have

discussed should, if legitimately arguable, be considered precluded by anything

written in the Majority Opinion from contention and argument in any other pending

or future case.

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JONATHAN B. SUTIN, Judge