The Colorado Court of Appeals issued its opinion in CTS Investments, LLC v. Garfield County Board of Equalization on Thursday, March 14, 2013.
Property Tax Valuation—Evidentiary Issues before the Board of Assessment Appeals.
In this property tax case, petitioner CTS Investments, LLC (CTS) appealed the order of the Board of Assessment Appeals (BAA) denying its petition challenging the valuation placed on its property by respondent Garfield County Board of Equalization (BOE) for the 2011 tax year. The order was affirmed.
CTS owns two parcels of vacant land in Garfield County. One comprises 10.766 acres, and the other comprises 61.26 acres. Both are located within the 640-acre Castle Valley Ranch Planned Unit Development in the town of New Castle.
For the 2011 tax year, the BOE valued the 10.766 acre property at $307,800 (or roughly $28,500 per acre), and the 61.26 acre property at $1,836,480 (or roughly $30,000 per acre). CTS asserted to the BAA that the property should be valued at approximately $2,200 per acre. Its argument was based in part on the sale of an adjoining property in April 2010. In that transaction, GMAC ResCap sold to CVR Investors, Inc. approximately 120 acres of vacant land and thirteen finished townhome lots for $700,000 (CVR sale). The property had been acquired by GMAC through foreclosure of a loan to Village Homes. Village Homes had purchased the property from CTS in 2007 and 2008 for approximately $8.9 million. The loan to Village Homes at the time of the foreclosure had an outstanding principal balance of more than $10 million.
CTS asserted that the CVR sale was the most comparable sale. The county assessor excluded the sale from her appraisal because it was not an “arm’s length transaction,” due to her opinion that GMAC was under duress when it sold the property. The assessor testified that she looked at four comparable sales and adjusted them as required by statute for time, size, and location. Her comparable sales were completed before the applicable one-and-a-half-year base period. She did this because she concluded there were no comparable sales during the base period. CTS presented its tax consultant, whose valuation included the CVR sale.
The BAA denied CTS’s petition. Its order stated that it found the assessor’s valuation more persuasive and that it agreed with the exclusion of the CVR sale because it did not meet the definition of an arm’s-length transaction. However, the order did not include the BAA’s reasoning for that ruling.
On appeal, the Court of Appeals considered CTS’s objection to the introduction of various articles attached to the assessor’s appraisal discussing the financial status of GMAC. The assessor’s decision not to consider the CVR sale an arm’s-length transaction was based partially on these articles, which came from general and financial news outlets. All but one of the articles included the author’s name, none referenced the CVR sale, and some of the articles made the same or similar assertions. Therefore, the Court inferred that the authors were not biased concerning the parties to the transaction. In addition, CTS had sufficient access to the statements before the BAA hearing, because it had been included in the assessors’ report, which had been issued at least eight months before the BAA hearing began. Furthermore, much of the information contained in the articles already had been admitted without objection through the assessor’s testimony.Given these facts, the Court concluded that the BAA did not abuse its discretion in admitting the articles.
CTS then argued that by not considering the CVR sale, the BAA refused to compile a representative body of comparable sales and therefore erred as a matter of law. The Court first stated that whether the CVR sale was not an arm’s length transaction and therefore appropriately excluded was a matter of fact, not law. Although the record presented conflicting evidence on this issue, there was enough support for the BAA’s finding that the Court would not reverse it on appeal.
CTS asserted that reversal was appropriate because the BAA order did not specify why it credited the assessor’s conclusion that the CVR sale was not an arm’s length transaction. The Court stated that although the better practice is for the BAA to make findings and provide its reasoning for its ruling, its findings may be express or implied and its decision need only be supported by the record.
Finally, CTS asserted there was no competent evidence in the record to support the BAA’s valuation of the property. A reviewing court may set aside a decision of the BAA only if there is no supporting competent evidence or the decision reflects a failure to abide by the statutory scheme for calculating property tax assessments. Here, there was ample competent evidence in the record to support the BAA’s decision.
Summary and full case available here.