Arizona Supreme Court Holds Income from Power Purchase Agreement May Be Considered for Property Valuation

The Arizona Supreme Court July 22 held that income from a power purchase agreement may be considered when valuing an electric generation facility using the income approach if the income is relevant to calculating the income derivable from the property itself. The court reversed and remanded a tax court decision that prohibited any consideration of the agreement when valuing the property under the income approach. On remand, the taxpayer will have an opportunity to provide a new valuation under the income approach consistent with the decision. [Mesquite Power, LLC v. Ariz. Dep’t of Revenue, Ariz., No. CV-23-0016-PR, 07/22/24]

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