Materials - 44th Annual Conference

44th Annual Taxation Conference
APPRAISAL for AD VALOREM
TAXATION
of Communications, Energy and
Transportation Properties
July 27 – 31, 2014
Anthony Ambriano
Sassoon & Cymrot, Boston, MA
Gregory Fletcher
Baker Donelson Bearman & Caldwell
Memphis, TN
INTERACTIVE LEGAL
UPDATE
You be the Judge. Decide the issues and
find out if the courts agree with you.
2
1
Legal Update: You Be The Judge
• Department of Revenue valued pipeline on
replacement cost new less depreciation
• Pipeline Owners argued for valuation using
the income approach
• Lower court found the pipeline to be a
special-purpose property and a use value
standard was appropriate for valuation
3
Legal Update: You Be The Judge
• Issue No. 1
• “Full and true value” means “fair
market value.”
–
–
 True
 False
4
2
Legal Update: You Be The Judge
• Issue No. 2
• Pipeline excess capacity is a form of
economic obsolescence that should
be deducted from valuation.
–
–
 True
 False
5
BP Pipelines (Alaska) Inc. v.
State, Dep’t of Revenue,
BP --Pipelines
Inc.
v. State,
P.3d ---,(Alaska)
2014 WL
685986
--- P.3d ---, 2014 WL 685986 (Alaska Feb. 19, 2014)
(2014)
6
3
BP PIPELINE (ALASKA) INC v.
STATE
• “Full and true value” is not “fair market
value” for pipeline and production property
• Board correctly applied a use value
standard for the pipeline system
• Tariff regulation is not a form of economic
obsolescence
• Excess capacity is a form of economic
obsolescence
7
Legal Update
8
4
Legal Update: You Be The Judge
• Department of Revenue centrally assessed
property used to provide cable and
telecommunications services
• Following an audit, Department issued 3
years of revised assessments to cable
provider
9
Legal Update: You Be The Judge
• Can a company providing cable, voice and
data service be classified as a
telecommunications provider for property
tax purposes?
–  Yes
–  No
10
5
Bresnan Communications,
LLC v. State, LLC v. State,
Bresnan Communications,
315 P.3d 921 (Mont. 2013)
315 P.3d 921 (Mont. 2013)
11
Bresnan Communications
• Bresnan self reported its property as 3
separate entities providing cable, data and
phone service
• Bresnan used a single transmission line to
deliver all 3 services and the Department
properly classified Bresnan’s property as
centrally assessed telecommunications
service property
12
6
Legal Update
13
Legal Update: You Be The Judge
• Electric power plant owner sought refund of
property taxes and declaratory relief
regarding the proper tax treatment of
emission reduction credits (ERCs)
• State prohibits direct taxation of intangibles
• Plant valued using cost approach and
income approach
14
7
Legal Update: You Be The Judge
• Issue No. 1
• The replacement cost of ERCs cannot
be added to a power plants taxable
value.
–
–
 True
 False
15
Legal Update: You Be The Judge
• Issue No. 2
• In an income approach, should a
portion of the plants income
attributable to ERCs be deducted
from the plant’s income stream?
–
–
 Yes
 No
16
8
Elk Hills Power, LLC v. Bd. Of Equalization,
304 P.3d 1052 (Cal. 2013)
17
Elk Hills Power, LLC v. Bd. Of
Equalization
• The Board directly and improperly taxed the
ERCs by adding the replacement cost of the
ERCs to the taxable value of the plant.
• ERCs are intangible rights that allow the
plant to generate income. The contribution
to the income stream is indirect.
• The Board was not required to deduct value
attributable to ERCs in the income
approach.
18
9
Legal Update
19
Legal Update: You Be The Judge
• State statute exempts intangible property,
and gives examples, including goodwill.
• DOR promulgates rule requiring that
property cannot be exempt unless it can be
sold separately without affecting the unitary
business.
• The rule also defines “goodwill” as “booked
goodwill.”
20
10
Legal Update: You Be The Judge
• Issue No. 1
• An asset can qualify as “property”
eligible for an intangible property
exemption even if it cannot be sold
separately from the unit.
–
–
 True
 False
21
Legal Update: You Be The Judge
• Issue No. 2
• Booked goodwill is a sufficient
definition of goodwill for purposes of an
intangible property
exemption.
–
–
 True
 False
22
11
Gold Creek Cellular & AT&T Mobility v.
Department of Revenue,
310 P.3d 533 (Mont. 2013)
Gold Creek Cellular & AT&T Mobility v.
Department of Revenue,
310 P.3d 533
23
Gold Creek
• There is no basis for restricting the
exemption to property that can be sold
separately from the unit, or to exclude
property that is necessary for the operation
of the unit.
• Goodwill is a form of property beyond what
is reflected on the balance sheet, and so a
booked goodwill limitation is improper.
24
12
Legal Update
25
Legal Update: You Be The Judge
•Are Alligators classified as;
–  Functional Obsolescence or
–  Economic Obsolescence
26
13
Christmas v. Exxon Mobil Corp.
138 So. 3d 123 (Miss. 2014)
27
28
14
WICHITA LEGAL UPDATE
Appraisal for Ad Valorem Taxation of
Communications, Energy and
Transportation Properties
THE 44TH ANNUAL PROGRAM
WICHITA STATE UNIVERSITY
JULY 27 - 31, 2014
GREGORY G. FLETCHER
BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.
165 MADISON AVENUE, SUITE 2000
MEMPHIS, TENNESSEE 38103
Telephone: (901) 577-2294
Facsimile: (901) 577-0728
Email: [email protected]
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Table of Contents
Index of Ad Valorem Tax Cases for Public Utilities Since May 2013 ........................................... 1
Summary of Classification Cases ................................................................................................... 2
1. Cable One, Inc. v. Arizona Dep't of Revenue, 304 P.3d 1098 (Ct. App. 2013). ................... 2
2. S. LNG, Inc. v. MacGinnitie, 755 S.E.2d 683 (Ga. 2014). .................................................... 2
3. Bresnan Commc'ns, L.L.C. v. State, 315 P.3d 921 (Mont. 2013). ........................................ 3
4. Atlantic City Electric Co. v. Twp., No. 004998-2005, 005647-2006
(N.J. Tax Ct. Jan. 10, 2014). ................................................................................................. 3
Summary of Valuation Cases.......................................................................................................... 3
1. BP Pipelines (Alaska) Inc. v. State, No. S-14095, 2014 WL 685986
(Alaska Feb. 19, 2014). ......................................................................................................... 3
2. Elk Hills Power, L.L.C. v. Bd. of Equalization, 304 P.3d 1052 (Cal. 2013). ........................ 4
3. Gold Creek Cellular of Montana, a limited partnership d/b/a Verizon
Wireless and AT&T Mobility, LLC v. State of Montana, Department of
Revenues, 372 Mont. 71, 310 P.3d 533 (Lnt. 2013) .............................................................. 4
4. KeySpan Generation, L.L.C. v. Nassau Cnty., 982 N.Y.S.2d 157
(N.Y. App. Div. 2014)........................................................................................................... 5
5. New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 162 (N.Y. App. Div. 2014). ...................... 5
6. New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 492 (N.Y. App. Div. 2014). ....................... 5
7. Verizon New York, Inc. v. Supervisor, 982 N.Y.S.2d 381 (N.Y. App. Div. 2014). .............. 5
8. Key Energy Servs., L.L.C. v. Shelby Cnty. Appraisal Dist.,
No. 12-13-00075-CV, 2014 WL 130547 (Tex. App. Jan. 15, 2014). ................................... 5
Summary of Cases with Equalization and Classification Claims ................................................... 6
1. Qwest Corp. v. Colorado Div. of Prop. Taxation, 304 P.3d 217 (Colo. 2013). .................... 6
2. In re Appeals of Various Applicants from a Decision of Div. of Prop.
Valuation of State for Tax Year 2009 Pursuant to K.S.A. 74–2438,
313 P.3d 789 (Kan. 2013). .................................................................................................... 6
3. City of Seattle by & through City Light Dep't v. Dep't of Revenue,
TC 4946, 2013 WL 4847125 (Or. T.C. Sept. 11, 2013). ...................................................... 6 i
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Index of Ad Valorem Tax Cases for Public Utilities Since May 2013
Classification Cases
1. Cable One, Inc. v. Arizona Dep't of Revenue, 304 P.3d 1098 (Ariz. Ct. App. 2013).
2. S. LNG, Inc. v. MacGinnitie, 755 S.E.2d 683 (Ga. 2014).
3. Bresnan Commc'ns, L.L.C. v. State, 315 P.3d 921 (Mont. 2013).
4. Atlantic City Electric Co. v. Twp., No. 004998-2005, 005647-2006 (N.J. Tax Ct. Jan. 10,
2014).
Valuation Cases
1. BP Pipelines (Alaska) Inc. v. State, No. S-14095, 2014 WL 685986 (Alaska Feb. 19, 2014).
2. Elk Hills Power, L.L.C. v. Bd. of Equalization, 304 P.3d 1052 (Cal. 2013).
3. Gold Creek Cellular of Montana, a limited partnership d/b/a Verizon Wireless and AT&T
Mobility, LLC v. State of Montana, Department of Revenues, 372 Mont. 71, 310 P.3d 533
(Lnt. 2013)
4. KeySpan Generation, L.L.C. v. Nassau Cnty., 982 N.Y.S.2d 157 (N.Y. App. Div. 2014).
5. New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 162 (N.Y. App. Div. 2014).
6. New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 492 (N.Y. App. Div. 2014).
7. Verizon New York, Inc. v. Supervisor, 982 N.Y.S.2d 381 (N.Y. App. Div. 2014).
8. Key Energy Servs., L.L.C. v. Shelby Cnty. Appraisal Dist., No. 12-13-00075-CV, 2014 WL
130547 (Tex. App. Jan. 15, 2014).
Equalization and Classification Cases
1. Qwest Corp. v. Colorado Div. of Prop. Taxation, 304 P.3d 217 (Colo. 2013).
2. In re Appeals of Various Applicants from a Decision of Div. of Prop. Valuation of State for
Tax Year 2009 Pursuant to K.S.A. 74-2438, 313 P.3d 789 (Kan. 2013).
3. City of Seattle by & through City Light Dep't v. Dep't of Revenue, TC 4946, 2013 WL
4847125 (Or. T.C. Sept. 11, 2013).
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Summary of Classification Cases
1.
Cable One, Inc. v. Arizona Dep't of Revenue, 304 P.3d 1098 (Ct. App. 2013).
Under Arizona Revenue Statute § 42-14401, telecommunications companies are centrally
assessed by the Arizona Department of Revenue. See Ariz. Rev. Stat. § 42-14401; see also Ariz.
Rev. Stat. § 42-14001 (directing the Arizona Department of Revenue to value centrally assessed
property). Furthermore, the definition of a telecommunications company includes a person that
"owns communications transmission facilities" and "provides public telephone or
telecommunications exchange or interexchange access" in Arizona. Ariz. Rev. Stat. § 42-14401.
Cable One argued that it should not be centrally assessed because it is not a
telecommunications company as defined by the Arizona statute. Cable One argued the
definitional terms referred to a form of telephone service that allowed customers to receive calls
from, and place calls to, the traditional, circuit-switched telephone network ("PSTN"). Cable
One, Inc. v. Arizona Dep't of Revenue, 304 P.3d 1098, 1100–02 (Ct. App. 2013). But the court
determined that Cable One's owned "communications transmission facilities," as defined under
Ariz. Rev. Stat. § 42-14401, because Cable One had equipment in its facilities that included a
cable modem termination system used to transmit telecommunications. See id. at 1106.
Furthermore, the court determined that Cable One's Voice over Internet Protocol service, which
used an "Internet protocol ('IP') to transmit voice communications over a broadband Internet
connection," provided customers with "telecommunications exchange or interexchange access"
as defined under Ariz. Rev. Stat. § 42-14401. See id. at 1100, 1107. Thus, the court held that
Cable One fits the category of a telecommunications company under Ariz. Rev. Stat. § 42-14401
and is "therefore subject to being central assessment by the Department." Id. at 1109.
2.
S. LNG, Inc. v. MacGinnitie, 755 S.E.2d 683 (Ga. 2014).
Under the Official Code of Georgia Annotated ("OCGA") § 48-1-2(21), a gas company is
a public utility that must file its ad valorem tax returns with the State Revenue Commissioner
rather than the county pursuant to OCGA § 48-5-511(a). See OCGA § 48-1-2(21); see also
OCGA § 48-5-511(a). Southern LNG ("Southern") argued that it is a gas company and thus a
public utility under OCGA § 48-1-2(21), because it owns a facility in Georgia where liquefied
natural gas is unloaded from ships, re-gasified, and then placed into interstate pipelines. See S.
LNG, Inc. v. MacGinnitie, 755 S.E.2d 683, 686 (Ga. 2014). Therefore, Southern filed a
complaint for declaratory judgment and mandamus, seeking to compel the State Revenue
Commissioner to recognize Southern as a "public utility" and accept Southern's ad valorem
property tax returns. Id. A lower court held that Southern had no standing for the mandamus
claim because an adequate alternative remedy was available in the form of tax appeals brought
under Official Code of Georgia Annotated ("OCGA") § 48-5-311. Id. at 685. However, the
state's supreme court reversed and remanded holding that Southern had standing to seek
mandamus relief because of the lack of an adequate alternative remedy. Id. at 687.
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3.
Bresnan Commc'ns, L.L.C. v. State, 315 P.3d 921 (Mont. 2013).
"Class eight" property under Montana Code Annotated ("MCA"), which includes the
property of "cable television systems," is not centrally assessed. See Bresnan Commc'ns, L.L.C.
v. State, 315 P.3d 921, 926 (Mont. 2013) (quoting MCA § 15–6–138(3) and § 15–6–138(1)(k)
(2007)). However, "class thirteen" property, which includes the property of "telecommunications
services companies," is centrally assessed. Id. (quoting MCA § 15–6–156(1)(d)).
The
Department of Revenue in Montana ("Department") centrally assessed Bresnan's property in
2010 after classifying its property as class thirteen property. Id. at 925. Bresnan filed a suit
seeking a declaration that its property should not have been centrally assessed as class thirteen
property because its property is used for a cable television system, which is class eight property.
Id. However, the court held, inter alia, that Bresnan was properly assessed centrally and
classified as class thirteen because Bresnan provides a Voice over Internet Protocol service that
classifies as a telecommunications service. Id. at 926–28.
4.
Atlantic City Electric Co. v. Twp., No. 004998-2005, 005647-2006 (N.J. Tax Ct. Jan. 10,
2014).
Atlantic City Electric Co. ("ACE") challenged the municipality's valuation method.
Atlantic City Electric Co. v. Twp., No. 004998-2005, 005647-2006 at 1 (N.J. Tax Ct. Jan. 10,
2014). The municipality assessed ACE's land by examining five comparable land sales and
assessed ACE's buildings by finding the replacement cost using Marshall Valuation Service. Id.
at 4. The municipality concluded that the total value of ACE's land and buildings was $27
million in 2005 and $29 million in 2006. Id. at 6. But ACE argued for the assessment done by
its expert that valued the land and buildings at $11.9 million in 2005 and $13.9 million in 2006.
Id. ACE's assessment differed significantly from the municipality's because ACE took into
account various adjustments, such as adjustments for location and remediation costs. See id. at
9. The court concluded that ACE's assessment was "inadmissible" because its adjustments were
"not quantified or supported by data." Id. The court also concluded that the municipality's
assessments lacked credibility because the township relied heavily on a transaction that was not a
consummated sale and on the parties' Memorandum of Understanding that was not fully
executed. Id. at 10. But the court upheld the municipality's assessment because ACE failed to
meet its burden by not providing sufficient evidence to determine the land value. Id. at 12.
Summary of Valuation Cases
1.
BP Pipelines (Alaska) Inc. v. State, No. S-14095, 2014 WL 685986 (Alaska Feb. 19,
2014).
BP challenged the valuation of its Trans-Alaska Pipeline System. BP Pipelines (Alaska)
Inc. v. State, No. S-14095, 2014 WL 685986, at *2 (Alaska Feb. 19, 2014). Alaska valued the
system based on the replacement cost method. Id. BP argued that it should have been assessed
at fair market value as measured by tariff income. Id. The superior court rejected BP's
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argument, holding that the replacement cost method was appropriate because there was no
market from which to calculate fair market value. Id. The state's supreme court affirmed the
superior court's holding. Id. at *7.
BP also argued that the superior court did not deduct enough for depreciation when the
court made depreciation adjustments. Id. at *8. But the state's supreme court affirmed the
superior court's valuation. Id. at *17.
2.
Elk Hills Power, L.L.C. v. Bd. of Equalization, 304 P.3d 1052 (Cal. 2013).
State Board of Equalization ("Board") used a replacement cost method for assessing Elk
Hills Power's ("Elk") electrical power plant that included emission reduction credits ("ERCs").
Elk Hills Power, L.L.C. v. Bd. of Equalization, 304 P.3d 1052, 1056 (Cal. 2013). Elk argued that
the inclusion of ERCs was improper because California Revenue and Taxation Code ("Cal. Rev.
and Tax Code") § 110(d) "prohibit[s] the direct taxation of certain intangible assets and rights,
including ERCs in this case." See id. The court agreed and held, inter alia, that Board
improperly taxed Elk's ERCs when it added the replacement cost of ERCs to Elk's taxable value
under the cost approach. See id. The court reached this conclusion after determining that, even
though Cal. Rev. and Tax Code § 110(e) provides for the taxation of intangible assets necessary
to put a property to beneficial use, "section 110(d)(1) and (2) prevents the direct taxation of
intangible rights and assets when assessors use methods of unit valuation." Id. at 1060. The
court declined, however, to endorse the exemption of intangible assets if such assets contribute
only "indirectly" to the income of the enterprise. Although the decision unequivocally allows an
exemption for intangible property under the cost approach, it creates some ambiguity as to the
circumstances under which an exemption might be allowable under an income approach.
3.
Gold Creek Cellular of Montana, a limited partnership d/b/a Verizon Wireless and AT&T
Mobility, LLC v. State of Montana, Department of Revenues, 372 Mont. 71, 310 P.3d 533
(Lnt. 2013)
A Montana Statute, § 15-6-218, MCA, exempts intangible personal property from ad
valorem tax and defines intangible personal property as property that is not tangible and (a) has
no intrinsic value but is representative of value, or (b) property that lacks physical existence.
The statute contains an non-exhaustive list of common intangible personal property items,
including goodwill. The statute is applicable to property valued and assessed under the unitary
method.
In 2010, the Montana Department of Revenue (Department) amended the regulations that
implement § 15-6-218. The amendments imposed certain limitations on the definition of
intangible personal property and required that intangible personal property: (1) be separable from
the other assets in the unit and be capable of being held under separate title or ownership; (2) be
able to be bought and sold separate from the operating assets and be capable of generating
income as a standalone entity; and (3) that the value of goodwill be calculated through the
purchase price accounting method. Cellular telecommunications companies brought a
declaratory judgment action alleging that the Department's amendments were internally
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inconsistent, were contradicted by the statutory definition of intangible personal property, and
were invalid and unlawful. A Montana District Court, and the Supreme Court of Montana on
appeal, sided with the taxpayers and concluded: (1) the Department's regulation limiting exempt
goodwill to "book goodwill," determinable only under the purchase price accounting method,
impermissibly restricted goodwill to calculation by only one method and was inconsistent with
the legislature's intent to broadly exempt all intangible personal property, including valuable
goodwill; (2) the Department's regulation defining exempt intangible personal property in terms
of separateness and marketability "directly contradict the statute's non-exhaustive list of
intangible personal property;" and (3) the Department's adoption of NCUVS and WSATA
handbooks was invalid, to the extent these handbooks conflict with the state statute and are used
to enforce the challenged regulations.
4.
KeySpan Generation, L.L.C. v. Nassau Cnty., 982 N.Y.S.2d 157 (N.Y. App. Div. 2014).
5.
New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 162 (N.Y. App. Div. 2014).
6.
New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 492 (N.Y. App. Div. 2014).
7.
Verizon New York, Inc. v. Supervisor, 982 N.Y.S.2d 381 (N.Y. App. Div. 2014).
Telecommunication companies challenged the imposition of special ad valorem taxes for
garbage and refuse collection services on the companies' mass properties. See KeySpan
Generation, L.L.C. v. Nassau Cnty., 982 N.Y.S.2d 157, 158–59 (N.Y. App. Div. 2014); see also
New York Tel. Co. v. Supervisor, 982 N.Y.S.2d 162, 163 (N.Y. App. Div. 2014); New York Tel.
Co. v. Supervisor, 982 N.Y.S.2d 492, 495 (N.Y. App. Div. 2014); Verizon New York, Inc. v.
Supervisor, 982 N.Y.S.2d 381, 382 (N.Y. App. Div. 2014).
The court held, inter alia, that these taxes for garbage and refuse collection were "illegal
and void" pursuant to RPTL 102(14) because the utility properties were, by their nature,
incapable of generating garbage. See New York Tel. Co., 982 N.Y.S.2d at 164. The court also
held that the town that imposed the tax may be held liable for reimbursing the
telecommunication companies. See id.
8.
Key Energy Servs., L.L.C. v. Shelby Cnty. Appraisal Dist., No. 12-13-00075-CV, 2014
WL 130547 (Tex. App. Jan. 15, 2014).
Key Energy Services ("Key"), a lessee of saltwater disposal wells, argued, inter alia, that
it was excessively taxed. Key Energy Servs., L.L.C. v. Shelby Cnty. Appraisal Dist., No. 12-1300075-CV, 2014 WL 130547, at *1 (Tex. App. Jan. 15, 2014). However, the court disagreed
because Key failed to meet its burden. Id. at *13.
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Summary of Cases with Equalization and Classification Claims
1.
Qwest Corp. v. Colorado Div. of Prop. Taxation, 304 P.3d 217 (Colo. 2013).
Qwest Corporation ("Qwest"), a telecommunications company, brought an equalization
suit against Colorado Division of Property Taxation seeking to have Qwest's property taxed
using the same valuation method applied locally to cable companies. Qwest Corp. v. Colorado
Div. of Prop. Taxation, 304 P.3d 217, 220 (Colo. 2013). This local taxation method included an
intangible property exemption and a cost cap valuation. Id. But the court held that Qwest, as a
public utility, is valued centrally and therefore not entitled to the intangible property exemption
or the cost cap valuation method. Id. at 219–22.
2.
In re Appeals of Various Applicants from a Decision of Div. of Prop. Valuation of State
for Tax Year 2009 Pursuant to K.S.A. 74–2438, 313 P.3d 789 (Kan. 2013).
The taxpayers in the suit represented 40 business entities that belong to one of the
following three categories: out-of-state natural gas marketing companies, out-of-state local
distribution companies certified as public utilities in their states, and out-of-state municipalities.
In re Appeals of Various Applicants from a Decision of Div. of Prop. Valuation of State for Tax
Year 2009 Pursuant to K.S.A. 74–2438, 313 P.3d 789, 791 (Kan. 2013). Each taxpayer
purchased natural gas from producers or marketers and then decided when and where that gas
would be delivered to one of four interstate pipelines going through Kansas. Id. at 793. The
taxpayers claimed to be exempt from taxation under the Kansas Constitution, Article 11, § 1,
which exempts merchants' inventory from taxation but does not exempt tangible personal
property owned by a public utility. Id. at 792. The court held that natural gas distributors are not
exempt since the Kansas Court of Tax Appeals determined that a natural gas distribution
company is a public utility under K.S.A. Supp. 79–5a01. Id. Furthermore the court held that
taxing out-of-state local distribution companies was constitutional. However, the court held that
it was unconstitutional to tax out-of-state natural gas marketing companies and out-of-state
municipalities. Id. The court reversed and remanded to determine which holding applied to each
of the 40 taxpayers in the suit. Id.
3.
City of Seattle by & through City Light Dep't v. Dep't of Revenue, TC 4946, 2013 WL
4847125 (Or. T.C. Sept. 11, 2013).
Under Oregon Revenue Statute 307.090, public or municipal corporations in Oregon are
exempt from Oregon property tax. City of Seattle by & through City Light Dep't v. Dep't of
Revenue, TC 4946, 2013 WL 4847125, at *1 (Or. T.C. Sept. 11, 2013). A Washington
municipal corporation that transmitted power in Oregon argued that it was exempt from property
tax under Oregon statute. Id. at *2. However, the court held that it was not exempt. Id. The
court based its ruling on a previous holding that municipalities and public utility districts formed
in the state of Washington are not public or municipal corporations exempt from property
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taxation in Oregon under ORS 307.090. See id.; see also Public Utility District No. 1 of
Snohomish Cty. v. Dep't. of Revenue, 17 OTR 290 (Or. T.C. 2004).
The Washington municipal corporation then argued that the tax scheme was
unconstitutional under the Commerce Clause because it treats out-of-state commercial actors less
favorably than in-state commercial actors. 2013 WL 4847125, at *3. But the court held that
favorable treatment for in-state interests is permitted when the state is a market participant. Id.
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