FILED COURT OF APPEALS Oil ISIOM Ii
2013 MAR -5 AN 9: 23
STaT TO oiAS
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
CRYSTAL MOUNTAINJNC., No. 42081 3 II - -
Appellant,
V.
STATE OF WASHINGTON, DEPARTMENT OF REVENUE, PUBLISHED OPINION
WORSWICx, C. . — J Crystal Mountain, Inc. appeals a. denying a full refund of judgment
its payment ofthe leasehold excise tax. Crystal Mountain argues that it does not have a taxable
leasehold interest"as the applicable statute defines that term. We affirm.
FACTS
Crystal Mountain, Inc. operates a ski resort located on federal land in the Mt.Baker-
Snoqualmie National Forest. Crystal Mountain runs the resort as a business for profit;it charges
guests fees for the use of services and equipment, and it operates retail stores and restaurants.
The U. .Forest Service has granted Crystal Mountain a special use permit covering S
4, acres, of which 2, acres are skiable terrain. Crystal Mountain pays the Forest Service 350 600
an annual permit fee based on its gross revenues.
The current permit was revised and reissued in 2001 and will expire in 2032. The Forest
Service may revoke the permit for noncompliance with its terms or applicable laws, and for No. 42081 3 II - -
compelling reasons in the public interest. Upon termination of the permit, Crystal Mountain
must remove its facilities.
The permit authorizes Crystal Mountain to " se [the land] for the purposes of u
constructing, operating, and maintaining [a]winter sports resort including food service, retail
sales, and other ancillary facilities."Ex. 4 at 1. The permit's terms and conditions require that
Crystal Mountain's use shall normally be exercised at least 365 days each year." 4 at 3. " Ex.
The permit does not state whether it authorizes Crystal Mountain to " ossess"or " ccupy"the p o
land. In reference to a renewal of the permit on its expiration, the permit states that " new a
special use - authorization to occupy and use the ... land may be granted."Ex. 4 at 2.
Crystal Mountain does not have an exclusive right to use the land. The permit states in
part:
E. Nonexclusive Use This permit is not exclusive. The Forest Service reserves the right to use or permit others to use any part of the permitted area for any purpose, provided such use does not materially interfere with the rights and privileges hereby authorized. F. Area Access Except for any restrictions as the holder and the [ Forest
Service] may agree to be necessary to protect the installation and operation of authorized -structures -and -developments,,the lands and waters -covered by this -- — - - - - - - -- - permit shall remain open to the public for all lawful purposes.
Ex. 4 at 2. Further, the permit allows members of the public to access the area without using .
Crystal Mountain's ski lifts or other facilities.
The permit authorizes Crystal Mountain, with the Forest Service's advance approval, to
construct facilities necessary for operating the ski resort. Crystal Mountain has constructed and
maintains capital improvements, including nine ski lifts,three lodges, four ski patrol duty
stations, a maintenance shop complex, and an employee housing complex. Crystal Mountain
also maintains the roads and provides emergency services and avalanche control.
2 No. 42081 3 II - -
Crystal Mountain has authority over its own facilities, but not as much authority as it
would have if it owned the land. The permit requires Crystal Mountain to identify its upcoming
operations and services in an annual operating plan submitted to the Forest Service for its review
and approval. Crystal Mountain also operates the ski resort subject to the constraints of a master
development plan and accompanying environmental impact statement, an agreement with the
Muckleshoot Indian Tribe, and a consent decree that prohibits new development until a
wastewater treatment plant serves the area.
The Forest Service closely monitors Crystal Mountain's activities on the land,sets
standards for safety and sanitation, and requires Crystal Mountain to maintain improvements and
natural features. The Forest Service does not have any direct operations or offices on the land.
Crystal Mountain pays property tax to Pierce County on the value of the buildings and
improvements it owns or has constructed in the permit area. However,property belonging to
federal, state, or local governments is exempt from the real property tax. WASH. CONST. art. VII,
1; RCW 84. 6. 010. 3
In lieuof the realproperty tax, RCW 82. 9A. 030imposesaleasehold 2
leasehold interests in publicly owned land. Crystal Mountain reported and paid the leasehold
excise tax each year between 2002 and 2006.
In 2007, Crystal Mountain requested that the Department of Revenue fully refund the
amounts it paid as leasehold excise taxes for the years 2002 through 2006. The Department's
1 The leasehold excise tax is assessed as 12. 4 percent of the value of the "taxable rent"paid for 8 the leasehold interest. Clerk's Papers at 184; see RCW 82. 9A. a), 030( 1)( Mountain 2 2). Crystal ( paid leasehold excise taxes of 37, 79 in 2002; 43, 21 in 2003; 43, 87 in 2004; 43, 09 in $ 1 $ 5 $ 9 $ 0 2005; and $ 0, 47 in 2006. 3 1
3 No. 42081 3 II - -
Miscellaneous Tax Section denied this request, and an administrative law judge in the
Department's Appeals Division affirmed this decision on administrative appeal. The
administrative law judge found that the leasehold excise tax applied to Crystal Mountain, even
though the permit did not give Crystal Mountain an exclusive right to use the land.
Crystal Mountain filed a complaint in superior court, seeking a full refund and arguing
that the tax does not apply. After a bench trial,the trial court rejected this argument. The trial
court ruled that the permit grants Crystal Mountain possession of the land, even though its
possession is not exclusive. Crystal Mountain appeals.
ANALYSIS
A. Challenged Finding ofFact
Crystal Mountain assigns error to the trial court's finding that "[ he Permit does not give t]
Crystal Mountain exclusive possession of the 4,50 acre Permit area."Clerk's Papers at 174. 3
Crystal Mountain challenges this finding's implication that the permit creates any possessory
interest. We review a challenged finding of fact for substantial evidence: evidence sufficient to
persuade a fair - - mindedpersonofthe finding's truth or correctness.Hegwine v. - - - Longview Fibr'e
Co., . 162 Wn. d 340, 352 53, 172 P. d 688 (2007). Inc., 2 - 3
Substantial evidence exists for this finding. The permit gives Crystal Mountain some
rights, including the right to use the permit area. As part of its use, Crystal Mountain has
constructed capital improvements, such as buildings and ski lifts,which are constantly present in
the permit area. But the permit explicitly states that Crystal Mountain cannot exclude the general public from the permit area. Further, the general public may access the permit area without
using Crystal Mountain's ski lifts or facilities. Accordingly, substantial evidence supports the
11 No. 42081 3 II - -
factual finding that Crystal Mountain does not have exclusive possession of the permit area.
Whether the permit gives Crystal Mountain a possessory interest is a question of law.
The remaining findings of fact are unchallenged. Unchallenged findings of fact are
verities on appeal. In re Estate ofJones, 152 Wn. d 1, 8,93 P. d 147 (2004). 2 3
B. Statutory Interpretation
Crystal Mountain argues that the permit does not create a taxable "easehold interest" l
under RCW 82. 9A.because the permit does not grant Crystal Mountain a right of 020 2
possession. Crystal Mountain urges us to adopt its interpretation of RCW 82. 9A.by 020 2
considering (1) statute's plain meaning, 2) regulations defining possession for this the ( the
statute, and ( ) rules of construction applicable to.tax statutes. We hold that a plain meaning 3 the analysis resolves the issue in the Department's favor. The interpretation of a statute is a question of law reviewed de novo. Dep't ofEcology V.
Campbell & Gwinn, L. . C.,Wn. d 1, 9,3 P. d 4 (2002).When interpreting a statute, L 146 2 4 3
t] court's fundamental objective is to ascertain and carry out the Legislature's intent, and if he
thestatute's meaningis plain onitsface;thenthecourt mustgive effect to plain meaning as
an expression of legislative intent."Campbell & Gwinn, 146 Wn. d at 9 10. Each word in a 2 -
statute receives its common and ordinary meaning, unless the word is ambiguous or defined in
the statute. HomeStreet, Inc. v. Dep't ofRevenue, 166 Wn. d 444, 451, 210 P. d 297 (2009).If 2 3
2 Crystal Mountain also argues that the trial court " isapplied"the law by drawing an analogy to m criminal law and concluding that possession need not be exclusive. Br. of Appellant at 42. Because our review is de novo,we do not address this argument. See Texaco Ref. & Mktg., Inc. v. Dep't ofRevenue, 131 Wn. App. 385, 400, 27 P. d 771 (2006). 1 3
3 Because we hold that plain meaning analysis resolves the meaning of RCW 82. 9A.we do 020, 2 not reach Crystal Mountain's other arguments. No. 42081 3 II - -
there is any doubt in the meaning of a tax statute, a court must construe the statute against the
taxing power and in favor of the taxpayer. Agrilink Foods, Inc. v. Dep't ofRevenue, 153 Wn. d 2
392, 396 97, 103 P. d 1226 (2005).But where the meaning of a statute is plain,there is no - 3
doubt in its meaning and we do not construe it at all. HomeStreet, 166 Wn. d at 452; see 2
Agrilink, 153 Wn. d at 399 n. . 2 l
Crystal Mountain argues that, according to the statute's plain meaning, a taxable
leasehold interest"exists only when the leaseholder has control over and exclusive possession
of the land. We disagree.
We discern a statute's plain meaning from indicia of legislative intent in the statute.
Campbell & Gwinn, 146 Wn. d at 11. We may also consider related statutes and background 2
facts that were presumably known to the legislature when enacting the statute. Campbell &
Gwinn, 146 Wn. d at 11. 2
The statute defines a "easehold interest"as l
an interest in publicly owned real or personal property which exists by virtue of any lease, permit, license, or any other agreement, written or verbal, between the publicowner of the -property -and a person whowould not - exempt - be - from -- property taxes if that person owned the property in fee, granting possession and use,to a degree less than fee simple ownership.
RCW 82. 9A. Plainly,the adjectival phrase "to a degree less than fee simple 020( 1). 2
ownership"modifies the nouns "possession and use." RCW 82. 9A. Thus, any 020( 1). 2
agreement creating a leasehold interest grants rights of possession and use that are less extensive
than the rights enjoyed by an owner of land in fee simple. See RCW 82. 9A. 020( 1). 2 4 The legislature amended RCW 82. 9A.effective July 1, 2012. LAWS of 2012, 2d Spec. 020, 2 ch. 6, § Sess., 501. The amendment does not affect our analysis; it made technical changes and narrowed "easehold interest"to exclude preferential uses in cargo cranes and docks. l
on No. 42081 3 II - -
Possession is not defined in chapter 82. 9A RCW. Crystal Mountain urges unto adopt 2
Webster's Third New International Dictionary's definition,which equates control with
possession. We decline. A court may consult a dictionary to determine the plain meaning of an undefined term.
HomeStreet, 166 Wn. d at 451. But "[ here a term is not defined in a statute, it is presumed 2 w]
that the Legislature intended it to mean what it did at common law." re Blazier Forest Prods., In
Inc., Wn. d 588, 595, 724 P. d 970 (1986).Thus, a dictionary definition is not appropriate 106 2 2
when the legislature uses a term, such as possession, which is imbued with legal meaning.
Possession does not have a sole meaning applicable in all contexts of legal or common
speech. Boeing Airplane Co. v. Firemen's Fund Indem. Co., Wn. d 488, 496 97,268 P. d 44 2 - 2
654 (1954)quoting Nat'l Safe Deposit Co. v. Stead, 232 U. . 58, 67, 34 S. Ct. 209, 58 L.Ed. ( S
504 ( 914)), 1 abrogated on other grounds by Berg v. Hudesman, 115 Wn. d 657, 666 67, 801 2 -
P. d 222 (1990).When a statute does not define a term and the term's meaning depends on the 2
circumstances in which it is used,the court interpreting the term must examine the subject,
context,and - purpose statute. Retail Store Emps.- Union, — 1001 Wash.Surveying - & - Local
Rating Bureau, 87 Wn. d 887, 897 98,558 P. d 215 (1976)interpreting " 2 - 2 ( ownership ").
The language of chapter 82. 9A RCW discloses the legislature's clear intent in enacting 2
the leasehold excise tax statute. In the statute's findings clause the legislature recognized that
private lessees of publicly owned property] receive substantial benefits from governmental [
services provided by units of govermnent," even though the properties are exempt from the real 5 According to Crystal Mountain,possession is "` the act or condition of having in or taking into one'scontrol[.] "' of Appellant at 19 (quoting WEBSTER's THIRD NEW INTERNATIONAL Br. DICTIONARY 1770 (2002 ed.)). Crystal Mountain considers no other definition.
VA No. 42081 3 II - -
property tax. RCW 82. 9A. The legislature found that private lessees of publicly a). 010( 1)( 2
owned property " re entitled to those same governmental services," it enacted the leasehold a and
excise tax " o fairly compensate governmental units for rendered to such lessees." t
RCW 82. 9A. It is clear from this language that the lessees of public property receive c). 010( 1)( 2
benefits by being in the jurisdiction of a unit of government. The leasehold excise tax ensures
that all occupants of public property contribute to the cost of providing the benefits they are
entitled to receive. See RCW 82. 9A. 010( 1).. 2
The leasehold excise tax is levied " n the act or privilege of occupying or using publicly o
owned real or personal property ... through a leasehold interest."RCW 82. 9A. 030( 1) 2
emphasis added).A leasehold interest is an agreement " ranting possession and use"of g
publicly owned'property. RCW 82. 9A. Thus, the leasehold excise tax statute treats 020( 1). 2
possession and occupancy as interchangeable concepts.
To ascertain a statute's meaning, we may also look to related statutes. Campbell &
Gwinn, 146 Wn. d at 11. The legislature enacted the leasehold excise tax together with an 2
exemptionfrom the real property tax;thus these two statutes are related. - - LAwsoF 1975 =1976, - -
2d Ex. Sess.,ch. 61 (codified at chapter 82. 9A RCW and RCW 84. 6. The exemption 2 451). 3
ensures that the leasehold excise tax will apply only where the real property tax does not. See
Duwamish Warehouse Co. v. Hoppe, 102 Wn. d 249, 254, 684 P. d 703 (1984).For this reason, 2 2
we must interpret chapter 82. 9A RCW in harmony with RCW 84. 6. Wash. Mut. Say. 2 451. 3
Bank v. Dep'ofRevenue, 77 Wn. App. 669, 677, 893 P. d 654 (1995).RCW 84. 6. t 2 451( 1 3 )
provides a real property tax exemption for rights to occupy or use"publicly owned property. "
RCW 82. 9A.imposes the leasehold excise tax on rights created by agreements " ranting 020( 1) 2 g
8 No. 42081 3 II - -
possession and use"of publicly owned property. In a harmonious interpretation of the two
statutes, possession and occupancy are the same. This interpretation is reinforced by the context in which " ossession"appears in RCW p
020( 82. 9A.because the subsection that defines leasehold interests also uses possession and 1), 2
occupancy interchangeably. The subsection generally defines a leasehold interest as the interest
created by an agreement granting possession and use of publicly owned property. RCW
020( 82. 9A. The subsection then. entions two specific kinds of agreements; in doing so, the 1). 2 m
subsection uses "occupancy"in the place of possession."First, the subsection states that the "
term "easehold interest"includes all agreements granting " he rights of use or occupancy"of l t
historical sites owned by public corporations and authorities. RCW 82. 9A.emphasis 020( 1) ( 2
added).Second, the subsection states that "easehold interest"excludes agreements granting l
rights of access, occupancy, or use"solely for the purpose of a) ( removing materials or
products purchased from the owner of public property or ( ) b exploring natural energy resources.
RCW 82. 9A.emphasis added).Thus, the subsection defining "easehold interest"treats 020( 1) ( 2 l
possession and occupancy ast e same thing.
6 We note that, in at least one case, our Supreme Court has refused to consider related statutes in a plain meaning analysis. HomeStreet, 166 Wn. d at 451 55 ( ajority opinion), 58 2 - m 456 - Madsen, J., dissenting).But HomeStreet does not tell us when this refusal is appropriate. Moreover, our Supreme Court's more recent cases reaffirm the place of related statutes in a plain meaning analysis. E. ., re Estate ofBracken, 175 Wn. d 549, 580 -81, 90 P. d 99 (2012) g In 2 2 3 Madsen, C. ., J concurring and dissenting);Flight Options, LLC v. Dep't ofRevenue, 172 Wn. d 2 487, 500 01,259 P. d 234 ( 011); - 3 2 TracFone Wireless, Inc. v. Dep't ofRevenue, 170 Wn. d 273, 2 281, 242 P. d 810 (2010).Here, related statutes, including other provisions of chapter 82. 9A 3 2 RCW and RCW 84. 6.shed light on the plain meaning of RCW 82. 9A. 451, 3 020( 1). 2
6 No. 42081 3 II - -
In support of its contrary interpretation, Crystal Mountain asserts that the statutory
purpose is to tax "nterests in land that carry with them the substantive rights of a leaseholder" i
without regard to whether the interests are labeled as leases, licenses, or permits. Br. of
Appellant at 5. Crystal Mountain then argues that a leasehold interest at common law grants the
tenant the power to possess the land to the exclusion of everyone including the landlord.
Although this may be true,the statutory definition of l" easehold interest"controls our analysis in
this case. See Neilson ex rel. Crump v. Blanchette, 149 Wn. App. 111, 117, 201 P. d 1089 3
2009).RCW 82. 9A.give[ " ` 020( 1) s] 2 leasehold' a meaning not ordinarily contemplated by that
term," the statutory meaning encompasses agreements that the common law would not. Mac and
Amusement Co. v. Dep't ofRevenue, 95 Wn. d 963, 971, 633 P. d 68 (1981).Thus the common 2 2
law definition of leasehold interest is not controlling.
Finally, Crystal Mountain argues that possession, as used in RCW 82. 9A.means 020( 1), 2
exclusive possession of and control over the land. This argument ignores the clause stating that a
taxable leasehold interest may grant " ossession and use,to a degree less than fee simple p
ownership. " RCW82: 9A.020( Thestatutedoesnot define thesmallestdegree of possession - - - -- 2 1) — -
that can create a leasehold interest, and we do not decide that here. Crystal Mountain's
occupancy of the land suffices to establish possession within the statute's plain meaning.
When a statute's plain meaning is clear, our inquiry ends without resort to other methods
of statutory construction. HomeStreet, 166 Wn. d at 451 52. Accordingly, we do not consider 2 -
Crystal Mountain's remaining arguments about the statute's meaning.
10 No. 42081 3 II - -
C. The Mac Amusement Rule
Relying on Mac Amusement, 95 Wn. d 963, Crystal Mountain argues that it is entitled to 2
a refund of paid leasehold excise taxes because the permit does not create a taxable leasehold
interest but, rather, gives Crystal Mountain only a nontaxable franchise or monopoly right. We
disagree.
The leasehold excise tax is assessed as a percentage of the " axable rent"paid under an t
agreement creating a leasehold interest. RCW 82. 9A. If an agreement (1) a). creates a 030( 1)( 2
leasehold interest and (2)also grants franchise or monopoly rights,then the calculation of
taxable rent"must exclude the portion of the total rent representing the value of franchise or
monopoly rights. Mac Amusement, 95 Wn. d at 967, 970; see RCW 82. 9A. 2 a). 020( 2)( 2
In Mac Amusement, the lessee operated a " un Forest amusement facility"on publicly F
owned land at Seattle Center. 95 Wn. d at 965. In addition to granting the lessee the right to use 2
a certain amount of space, the agreement conferred three other rights: the right to a favorable
location with high pedestrian traffic, the exclusive right to operate rides and games at Seattle
Center,and theexclusive rightto food the FunForest - 95 Wn: d at 965. - 2 However,t e
agreement required a lump sum payment of rent, without attributing portions of the rent to the -
different rights under the agreement. 95 Wn. d at 965. After paying the leasehold excise tax on 2
its entire rent payment, the lessee sued for a partial refund, contending that a portion of the " ent" r
payment was actually consideration for the three other rights. 95 Wn. d at 965 66. Taxable 2 - "
rent"under the statute includes only the consideration given for the leasehold interest; taxable rent does not include any consideration for "` concession or other rights. "' 95 Wn. d at 967 2
quoting RCW 82. 9A.Our Supreme Court held that the lessee's favorable location a)). 020( 2)( 2
was part of its leasehold interest, but the exclusive rights to. operate games and sell food were
nontaxable franchise or monopoly rights. 95 Wn. d at 968, 970. Therefore the lessee was 2
entitled to a partial refund. 95 Wn. d at 965, 973. 2
Crystal Mountain misapprehends the import of Mac Amusement, which decided that
taxable rent"must exclude the value of franchise or monopoly rights, assuming that a leasehold
interest exists in the first place. 95 Wn. d at 970. The lessee in Mac Amusement conceded that a 2
leasehold interest existed but sued for a partial refund, contending that the lease also granted
franchise or monopoly rights. 95 Wn. d at 965 66. Unlike the lessee in Mac Amusement, 2 -
Crystal Mountain seeks afull refund, contending that the permit grants no leasehold interest but
only franchise or monopoly rights. But, as Mac Amusement shows, an agreement can create both
a leasehold interest and franchise or monopoly rights, even if the agreement's individual
elements constitute either one or the other. 95 Wn. d at 972 73. If the permit gives Crystal 2 -
Mountain a leasehold interest, then Crystal Mountain must pay the leasehold excise tax whether
or not it also has a franchise or monopoly right. See 95 Wn. d at 972 73. Crystal Mountain has 2 -
a leasehold -interest within the statute's meaning;thus itsargument - - fails.. -- - -- _ - - - --
7 We do not decide whether Crystal Mountain also has franchise or monopoly rights under the permit because that question is not before us.
12 No. 42081 - II 3 -
We hold that,under the statute's plain meaning, Crystal Mountain has possession of the
permit area, and thus it has a taxable leasehold interest under RCW 82. 9A. 020( 1). 2
Accordingly, Crystal Mountain is not entitled to a full refund of its leasehold excise tax
payments.
Affirmed.
WorswA.C. . J We concur: