I FENNEMORE CRAIG, P.C. Timotþ Berg (lttro. 004170) 2 Kendis Key Muscheid (No. 015212) Kevin M. Green (No. 025506) J 3003 North Central Avenue Suire 2600 4 Phoenix, AZ 85012-2913 Telephone : (602) 9 I 6-5000 5 Email : tberc(ò,fclaw.com Email : kmu-sðhei fô.fclaw. com 6 Email: ksreenlD.fèf aw.com Attorn eyffi I nte rv e nti on 7 Arizona Sports and Tourism Authority I Thomas C. Horne Arizona Attornev General 9 Kimberly Cygan (No. 013977) Assistant Attorney General l0 ArizonaAttorney General's Office, Tax Unit 1275 West Washington St. 11 Phoenix, A285007-1298 Telephone : (602) 542-8391 t2 Email: Tax@azag,.gov Attorney foìÓ e feiã'ant s l3 Arizona Department of Revenue and Gale Garriott t4 l5 SUPERIOR COURT OF THE STATE OF ARIZONA t6 ARIZONA TAX COURT t7 SABAN RENT-A-CAR, LLC; DS Case No. TX2010-001089 18 RENTCO, INC.; and PTNK, individually and in a representative STATEMENT OF FACTS IN SUPPORT t9 capacity, OF DEFENDANTS' MOTION FOR SUMMARY JUDGMENT 20 Plaintiffs, 2t v. (Assigned to the Hon. Dean Fink) 22 ARIZONA DEPARTMENT OF REVENUE, a political subdivision of 23 the State of Arizona; and GALE GARzuOTT, Director of the Arizona 24 Department of Revenue, 25 Defendants 26 {EMORE CRAIG, P.C PuoDNrx 1 and 2 a J TOURISM AND SPORTS AUTHORITY dba THE ARIZONA 4 SPORTS AND TOIIRISM AUTHORITY, a political subdivision 5 of the State of Arizona, 6 Defendant-in- Intervention. 7 I 9 Pursuant to Rules 56(b) and 56(c)(2), Ariz. R. Civ. P., Defendants Arizona 10 Department of Revenue ("ADOR") and Gale Garriott ("Garriott) and Defendant-in- 11 Intervention Tourism and Sports Authority dba The Arizona Sports and Tourism l2 Authority ("AzSTA" and collectively with ADOR and Garriott, "Defendants") submit the 13 following statement of facts in support of their concurrently filed Motion for Summary t4 Judgment. 15 STATEMENT OF UNDISPUTED FACTS t6 L In November 2000, the majority of voters in Maricopa County approved I7 Proposition 302 that would fund, in part, AzSTA's programs and facilities. See A.R.S. l8 $ s-83e(A). t9 2. Passage of Proposition 302 authorized, among other things, a local car 20 rental surcharge that would be used to partially fund AzSTA's activities (herein referred 2t to as the "AzSTA Tax"). ,See A.R.S. $ 5-839(B). 22 3. Plaintiffs' Complaint does not allege that the AzSTA Tax has been 23 applied in any manner inconsistent with the plain terms of A.R.S. $ 5-839(B). See 24 generally Plaintiffs' "Notice of Appeal and Complaint for Declaratory and Injunctive 25 Relief and Refund of Taxes Imposed Under A.R.S. $ 5-839" (the "Complaint"). 26 4. Plaintiffs are Arizona entities that have engaged in the business of *i:,:i'"" 1 I leasing motor vehicles in Maricopa County to third parties. See Complaint, $ II, fl 1; see 2 also December 7, 2010 Answer of ADOR and Garriott ("Answer"), p. 2, n 5; see also I J AzSTA's January 24,2011 Answer in Intervention ("AzSTA Answer"), $ II, T 1. 4 5. Plaintiffs have been subject to transaction privilege taxes in Arizona, at 5 least in part, pursuant to the AzSTA Tax provisions. ,See Complaint, $ II, 1l l; see also 6 Answer, p.2,n 5; see also AzSTA Answer, $ II, T 1. 7 6. Plaintiffs filed an Administrative Class Claim for Refund of Taxes 8 ("Claim") on or about August 19,2009 with ADOR seeking a refund of the AzSTA Tax 9 remitted by their businesses from September 2005 through March 2008. See October 19, t0 2010 Administrative Law Judge Decision, attached hereto as Exhibit l, p. 2,I3 . ll 7 . On October 1,2009, ADOR denied Plaintifß' Claim. See id. atl6. t2 8. Plaintiffs subsequently filed a protest and requested a formal hearing. t3 See id. at3,l7. l4 9. Plaintiffs' request for a formal hearing was forwarded to the Arizona 15 Office of Administrative Hearings, and their protest was scheduled for determination t6 based on written memoranda. See id. t7 10. On October 19, 2010, the Administrative Law Judge issued a written 18 decision upholding ADOR's denial of Plaintiffs' Claim. See generallyExhibitl. t9 11. Among other things, the Administrative Law Judge concluded Plaintiffs 20 failed to establish "that the Tribunal has authority to determine the constitutionality of the 2l [AzSTA Tax]." See id. at 5,n 4. 22 12. On November 16, 2010, Plaintiffs filed their Notice of Appeal and 23 Complaint for Declaratory and Injunctive Relief and Refund of Taxes Imposed Under 24 A.R.S. $ 5-839 (the "Complaint"). See generally, Complaint. 25 13. The Cactus League, whose facilities are partially funded by the AzSTA 26 Tax, estimates that in 2007, 57Yo of spring training attendees in stadiums were from NNEMORE CRAIC, P,C PHoENt¡_ -J- I another state or country, and more than 50o/o of the attendees at spring training baseball 2 games were out-of-state visitors. See March, 2007 Cactus League Attendee Tracking a J Survey, excerpts of which are attached hereto as Exhibit 2, pp.5-5F; see also A.R.S. $ 5- 4 808. 5 DATED this 18'h day of February,20ll. 6 FENNEMORE CRAIG, P.C. 7 I Timothy Berg 9 ",ØT_Kendis Key Muscheid Kevin M. Green 10 Attorneys for Defendant-Intervenor Arizona Sports and Tourism Authority 11 THOMAS C. HORNE t2 13 t4 Kimberly Cygal Attorneys for Defendants Arizona 15 Department of Revenue and Gale Garriott t6 I7 ORIGINAL FILED and COPIES of the 18 foregoing electronically transmitted this 18th day of February,20lI,to: t9 Shawn K. Aiken 20 Aiken. Schenk- Hawkins & Ricciardi P.C. 4742Ñorth24Û' Street, Suite 100 2l Phoenix, AZ 85016-4859 [email protected] 22 Gregory D. Hanley, admission ,pro hac vice pending 23 KICÍ<I{AM HANLEY PLLC 202Beacon Centre 24 26862 Woodward Avenue Royal Oaks. MI48067 25 ghanley @ki ckh a mh an I ey. c o m 26 By NNEMORE CRAIG, P.C PüoDNrx -4- EXHIBIT 1 I IN THE OFFICE OF ADMINISTRATIVE HEAR¡NGS 2 Saban Rent-A-Car, 3 LLC, No. 1 0C-2010001O9S-REV DS Rentco,lnc. and pTNKr 4 License No.07-404300, ADMINISTRATIVE Petitioners, 5 LAW JUDGE DECISION 6 ONA DEPARTMENT OF REVENUE, 7 ransactlon Privilege and Use Tax Section, I Respondent. I 10 HEARING: 1l Conducted through written memoranda; hearing record concluded 12 as ofAugust 27, 2010. 13 APPEARANCES: Attomey shawn K. Aiken represented petitioners. Tax 14 counsel Robert Ridenour represented the Arizona Department of Revenue, 15 Transaction Privilege Audit. 16 ADMINISTRAT|VE LAW JUDGE: Kay A. Abramsohn 77 Based l8 on review of the written submissions, thè Administrative Law Judge makes the following l9 Findings of Fact, Conclusions of Law and order upholding the 20 Department's denial of a claim for refund. 21 FINDINGS OF FACT Petitioners 22 1' were engaged in the business of leasing motor vehicles to third parties. 23 saban Rent-A-car operated between January 200s and January 31, 2006. DS Rentco 24 operated from February 2006 through June 2002. pTNK operated 2_5 from July 2007 through March 2009.2 26 2. Arizona Revised Statutes ('A.R.S.") 5-839 imposes a car rentalsurcharge on the business 27 of leasing motor vehicles that are leased for less than one year. lmposed through proposition, 28 a to partially fund the Tourism and Sports Authority, the surcharge was approved 29 by voters in November 2000 and the taxes went into effect March 1, 30 2001- The surcharge is three and one-fourth percent of the gross proceeds ' The case caption is amended pursuant to rhe original petitlon flled to Department. Offrce of Adminisbative Hearings 1400 West Washtngtrcn, Suite lOi Phoenlx. Arizone BSffiT (602) s42-9826 from the business of leasing motor vehicles, or 1 two dollars fìfty cents on each rental, whichever is more. The law specifies 2 that when a rental is for purposes of temporary replacement, as defined in statute, the surcharge 3 is lÍmited to $2.50 per vehicle. The surcharge does not apply to leases of vehicles 4 that are made to car dealerships, repair facilities or insurance companies who subsequently provide 5 that vehicle to a person whose own car ís being repaired or servíced. 6 3. Petitioners fìled their Administrative Class Claim 7 for Refund of Taxes ("Claim") on August 19, 2009. See Exhibit petitioners,written I A: see a/so hearing filing of the Claim with attachments. The refund period I claímed was the four years preceding the filing and fon¡vard (through the date the Department ceases f0 to collect the surcharge).t The'Claim argues that the surcharge violates tl the U.S. Constitution by discriminating against out-of-state interests. The Claim argues that the surcharge 12 violates the Arizona Constitution alleging the proceeds are being used for purposes 13 other than pennitted in the Arizona Constitution Article 14, Section 9. ln the Claim, 14 Petítioners indicate that the amount of the refund cannot be determined, but estimate 15 the amount to be approximately ten million dollars per year.a 16 4. By letter dated August 28, 2009, the Department informed Petitioners that 17 the Claim was not a valid claim for the reason that it did not speciff the name, address 18 and tax number of each claimant and did not state an amount requested. The l9 Department requested addítional documentation. see Exhibit B. 20 5- Petitioners clarified the Claim with the requested information in a tetter 21 dated September 28, 2009. See Exhibit C. Petitíoner clarified that the Claim involved 2.