May 25, 2013

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SB 13-256: Authorizing Any County or City and County to Use an Alternate Property Tax Protest and Appeal Procedure First Implemented in Denver

April 19, 2013 by Leave a Comment

On Tuesday, April 9, 2013, Sen. Owen Hill introduced SB 13-256 – Concerning Authorization for Any County or City and County to Elect to Use an Alternate Property Tax Valuation Protest and Appeal Procedure Previously Created for the City and County of Denver. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Currently, the county board of equalization receives and hears petitions for appeal regarding the valuation for assessment of taxable property. The county board of equalization process has multiple filing deadlines and addresses multiple valuation appeals in a single year. The board of county commissioners also receives and hears petitions for appeal and has jurisdiction over petitions for abatement or refund of taxes, including assessment of taxable property overvaluation. The board of county commissioners’ process has one filing deadline and can address valuation appeals, abatements, and refunds over multiple years.

House Bill 13-1113 created a pilot program that authorizes the governing body of the city and county of Denver, at the request of the assessor, to elect to use an alternate protest and appeal procedure that combines the multiple steps in the annual valuation dispute process through the county board of equalization into the single hearing and appeal process conducted by the board of county commissioners. House Bill 13-1113 specifies the filing deadlines for tax petitions and for resolving valuation disputes for the city and county of Denver to use the alternate protest and appeal procedure.

The bill expands the pilot program created by House Bill 13-1113 so that any county or city and county in the state may elect to use the alternate protest and appeal procedure.

Introduced on April 9, the bill has been is assigned to the Finance Committee; the bill is scheduled for committee review on April 18, “Upon Adjournment.”

Since this summary, the Finance Committee referred the bill, unamended, to the Senate Committee of the Whole for consideration on Second Reading.

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Colorado Court of Appeals: Board of Assessment Appeals Erred by Not Addressing YMCA’s Declaration of Religious Purposes

April 15, 2013 by Leave a Comment

The Colorado Court of Appeals issued its opinion in Larimer County Board of Commissioners v. Colorado Property Tax Administrator on Thursday, April 11, 2013.

Property Tax Exemption—Charitable Use Exemption—Religious Purpose Exemption—Jurisdiction.

In this property tax exemption case, the Young Men’s Christian Association of the Rockies (YMCA) and the Colorado Property Tax Administrator (Administrator) appealed the Board of Assessment Appeals (BAA) orders. The BAA found that the YMCA was not entitled to a charitable use exemption or a religious purposes exemption from property taxes, except for its chapels and religious activity center. The orders were vacated in part, the appeal was dismissed in part, and the case was remanded.

The YMCA owns and operates facilities in Grand and Larimer Counties. The Counties contended that the Court of Appeals did not have jurisdiction to entertain the Administrator’s appeal. Because the BAA did not recommend that the matter was of statewide concern, the Administrator may not appeal. Accordingly, the Court did not have jurisdiction to hear the Administrator’s appeal and, therefore, dismissed it.

The Counties contended that the Court did not have jurisdiction to entertain the YMCA’s appeal. CRS § 39-2-117(5)(b) gives any owner of taxable property in such county the right to appeal the tax administrator’s determination regarding an application for a property tax exemption. Therefore, the Court of Appeals had jurisdiction to hear the YMCA’s appeal from the BAA’s determination.

The YMCA also argued that the BAA erred when it found that the YMCA did not qualify for a religious purposes exemption. The BAA did not discuss the YMCA’s declared purpose in using the properties, whether the YMCA’s activities are in furtherance of the YMCA’s religious purposes, or whether the activities are an integral part of the YMCA’s religious worship. Further, the BAA did not address the YMCA’s declaration of religious purposes contained in its application, the effect of the declaration’s presumed validity, or whether the presumption had been overcome. Because such declarations are presumptive with regard to the religious purposes for which property is used, the BAA did not apply the proper legal standards and, therefore, erred as a matter of law.

The YMCA further contended that the BAA erred when it found that the YMCA did not qualify for a charitable use exemption. Based on the record, the BAA did not properly consider whether the YMCA used the properties solely and exclusively for charitable purposes. Accordingly, the BAA did not apply the correct legal standards and, therefore, erred as a matter of law.

Summary and full case available here.

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Colorado Court of Appeals: Assessor’s Reference Library of State Property Tax Administrator Correctly Used to Determine Valuation

April 5, 2013 by Leave a Comment

The Colorado Court of Appeals issued its opinion in Bachelor Gulch Operating Co., LLC v. Board of County Commissioners of Eagle County on Thursday, March 28, 2013.

Tax Abatement/Refund—Subdivision of Property During a Tax Year.

Bachelor Gulch Operating Company, LLC (Bachelor Gulch) appealed the order of the Board of Assessment Appeals (BAA) denying its petition for an abatement or refund of taxes for tax year 2007. The order was affirmed.

Bachelor Gulch owns a substantial portion of the Ritz Carlton Hotel in Eagle County (hotel). For tax year 2007, the Eagle County Assessor assigned the hotel an actual value of approximately $47 million. As of January 1, 2007, which was the assessment date for tax year 2007, the hotel was a single unit for tax assessment purposes. During that year, two new plats were filed that subdivided the original hotel unit, ultimately creating fifty-one separate “child parcels.” Fifty of these were residential condominiums created out of existing hotel rooms. The other was what remained of the hotel after the subdivision (hotel child parcel).

Following the subdivisions, the Assessor allocated the $47 million among the child parcels in proportion to the square footage of each. Approximately $36 million was allocated to the hotel child parcel. Bachelor Gulch petitioned the Board of County Commissioners of Eagle County for an abatement or refund of taxes, which was rejected. Bachelor Gulch then appealed to the BAA, and the appeal was denied.

The Court of Appeals was confronted with the question of what procedure an assessor should use when a property is subdivided during the course of a particular tax year, after the initial valuation and before the next statutory assessment date or a revaluation due to unusual conditions. Colorado statutes provide for the biennial appraisal and valuation of real and personal property for property tax purposes. Bachelor Gulch argued that CRS § 39-5-125(1) applied and the Assessor was required to determine the actual value of the hotel child parcel for 2007. The Court found that the statute unambiguously allows an assessor to conduct a valuation only when it is discovered the taxable property had been omitted from the assessment roll. Because that was not the case here, CRS 39-5-125(1) does not apply.

The Court found no Colorado statute that addresses the question of what to do when a property is subdivided after the initial valuation but before the next assessment date. The State Property Tax Administrator has provided guidance in the Assessor’s Reference Library (ARL). Specifically, the ARL provides that although subdivision and condominium plats can be processed at any time during the year, “the original parcel value and classification must remain the same as assigned to the property on the January 1 assessment date.” In addition, if a project is subdivided after the notice of valuation deadline, the current actual value as of the assessment date is apportioned to the lots or units in the project. Having found that the ARL governs this situation, the Court held that the BAA correctly found that the Assessor complied with its provisions. The order was affirmed.

Summary and full case available here.

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Colorado Court of Appeals: Board of Assessment Appeals Did Not Abuse Discretion in Accepting Assessor’s Property Valuation

March 19, 2013 by Leave a Comment

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.

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SB 13-146: Modifying Procedures Within the Board of Assessment Appeals

February 28, 2013 by Leave a Comment

On Tuesday, January 29, 2013, Sen. Lois Tochtrop introduced SB 13-146 – Concerning Procedures Governing the Board of Assessment Appeals in the Department of Local Affairs. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

In connection with the board of assessment appeals (board) within the department of local affairs, the bill makes the following modifications:

  • Specifies that appointments to the board shall be as follows: one member shall be appointed for a term of two years, and two members shall be appointed for terms of four years. Thereafter, appointments to the board shall be for terms of four years each. In order to allow for appeals to be heard timely, up to six additional members may be appointed to the board by the governor with the consent of the senate. Such additional members shall be appointed for terms of one state fiscal year each.
  • Eliminates existing statutory provisions requiring decisions on appeals from decisions of county boards of equalization to be rendered within 30 days after the earlier of the date of hearing on the appeal or by the last day of the same calendar year. This section of the bill also eliminates existing statutory provisions requiring the general assembly to provide by appropriation for the appointment of additional board members and the hiring of additional personnel to assist the board in meeting its caseload, as well as authorization for the board to schedule hearings for an extended period in the event that, as the result of an extraordinary work load, the board is unable to complete all its hearings before the last day of the same calendar year. Under current law, all fees collected by the board, after being transmitted to the state treasurer, are credited to the general fund. Under this section of the bill, such moneys collected in the future will be transmitted to the board of assessment appeals cash fund (cash fund), which the bill creates in the state treasury. In making the annual appropriation to the board under the annual general appropriation act, the bill requires the general assembly to consider available revenues and reserve balances in the cash fund.
  • Requires the board to issue a written decision for each appeal it hears. Each such written decision must either be a summary decision or a full decision. A full decision must contain specific findings of fact and conclusions of law. A summary decision need not contain specific findings of fact and conclusions of law. If the board has issued a summary decision, the bill authorizes a party dissatisfied with the summary decision to file a written request with the board for a full decision. The bill specifies requirements applicable to the submission of the request. Timely filing of the written request with the board is a prerequisite to review of the board’s decision by the court of appeals. Upon timely request for a full decision, the board is required to issue a full decision and enter it as the final decision in the appeal subject to judicial review by the court of appeals.
  • The board currently possesses the authority to issue such orders as it deems necessary to ascertain facts and to carry out its decisions. The bill eliminates the existing statutory requirement that any such order directed to a county assessor or a county board of equalization is enforceable upon application of the property tax administrator.

On February 22, the Appropriations Committee amended the bill and sent it to the full Senate for consideration on the 2nd Reading Consent Calendar.

Since this summary, the bill passed 2nd Reading in the Senate with amendments, and passed 3rd Reading unamended. It was introduced in the House and assigned to the Local Government Committee.

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HB 13-1113: Creating a Pilot Project for Alternate Property Tax and Valuation Appeal Processes

February 28, 2013 by Leave a Comment

On January 18, 2013, Rep. Lois Court and Sen. Michael Johnston introduced HB 13-1113 - Concerning the Creation of a Pilot Alternate Property Tax Valuation Protest and Appeal Procedure for the City and County of Denver. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Currently, the county board of equalization receives and hears petitions for appeal regarding the valuation for assessment of taxable property. The county board of equalization process has multiple filing deadlines and addresses valuation appeals in a single year. The board of county commissioners also receives and hears petitions for appeal and has jurisdiction over petitions for abatement or refund of taxes, including assessment of taxable property overvaluation. The board of county commissioners process has one filing deadline and can address valuation appeals, abatements, and refunds over multiple years.

The bill creates a pilot program that authorizes the governing body of the city and county of Denver, at the request of the assessor, to elect to use an alternate protest and appeal procedure that combines the multiple steps in the annual valuation dispute process through the county board of equalization into the single hearing and appeal process conducted by the board of county commissioners. The filing deadlines for tax petitions and for resolving valuation disputes are specified for the city and county of Denver to use the alternate protest and appeal procedure.

The bill also authorizes the city and county of Denver board of equalization and the board of county commissioners to request that the taxpayer that filed a petition, or the taxpayer’s representative, be present at the hearing and requires each board to dismiss the petition with no right to appeal if the taxpayer or the taxpayer’s representative fails to be present at the hearing absent good cause. On Feb. 21, the Senate Finance Committee approved the bill and sent it to the full Senate for consideration on the 2nd Reading Consent Calendar.

Since this summary, the bill passed Third Reading in the Senate and is on its way to the governor’s desk.

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Colorado Court of Appeals: Lot With No Residential Improvements Can Still Qualify as Residential Land for Property Taxation

November 14, 2012 by Leave a Comment

The Colorado Court of Appeals issued its opinion in Fifield v. Pitkin County Board of Commissioners on Thursday, November 8, 2012.

Nonresidential Classification for Tax Purposes—CRS § 39-1-102(14.4)(a).

Petitioners James and Betsy Fifield (taxpayers) appealed from an order of the Board of Assessment Appeals (BAA) denying their petition challenging the nonresidential classification of their property for the 2008 and 2009 tax years. The order was vacated and the case was remanded for further proceedings.

In 2007, taxpayers divided their Pitkin County property into two contiguous residential lots, both of which they own. Lot 1 contains their home. Lot 2 has no buildings or structures, but has a paved road and utility line. The road is the only access to taxpayers’ home and also serves a neighboring subdivision.

The assessor classified Lot 2 as vacant land for tax years 2008 and 2009. Taxpayers petitioned the BAA to reclassify Lot 2 as residential land for those tax years. The BAA denied the petition, holding that there was no residential improvement on Lot 2 and thus it was not residential land.

The Court of Appeals held that it was error for the BAA to require that Lot 2 contain a residential improvement to qualify as residential land. CRS §39-1-102(14.4)(a) defines “residential land” as “a parcel or contiguous parcels of land under common ownership upon which residential improvements are located and that is used as a unit in conjunction with the residential improvements located thereon.” Based on this plain language, the Court concluded that residential land must contain a residential dwelling unit and be used as a unit in conjunction with the residential improvements on the residential land. Here, taxpayers’ residential land consists of those portions of Lot 1 and Lot 2 that were used as a unit in conjunction with the home on Lot 1. The case was remanded to the BAA to determine what portions of Lot 1 and Lot 2 were used as a unit in conjunction with a residential improvement for tax years 2008 and 2009, and thus were entitled to residential classification.

Summary and full case available here.

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Colorado Court of Appeals: Property Taxation Based on Possessory Interest of Tax-Exempt Property Not Unconstitutional

September 18, 2012 by Leave a Comment

The Colorado Court of Appeals issued its opinion in Cantina Grill, JV v. City & County of Denver County Board of Equalization on September 13, 2012.

 Ad Valorem Property Tax—Possessory Interests—CRS § 39-1-103—Constitutionality—Valuation.

In this property tax case, plaintiffs, food and beverage concessionaires at Denver International Airport (DIA) and holders of possessory interests in real property owned by the City and County of Denver (City), appealed the trial court’s judgment affirming the valuation of those possessory interests as assessed by defendants, the City and County of Denver County Board of Equalization (Board) and the County Assessor. The judgment was affirmed.

Plaintiffs serve food and beverages to the traveling public at DIA. The City is the owner of the real estate and improvements at DIA and operates the airport through its Department of Aviation. In May 2010, plaintiffs received notices of valuation for ad valorem property tax purposes for their respective spaces. Plaintiffs contested the valuations by unsuccessfully petitioning the Board. Plaintiffs then sought review in the trial court, which rejected their claims. Plaintiffs appealed that judgment.

Plaintiffs contended that CRS § 39-1-103(17)(a)(II)(A) and (B) is unconstitutional both on its face and as applied to them, because the Colorado Constitution, not the statute, imposes the tax. The statute merely creates a methodology for valuing a taxable possessory interest in tax exempt property—for ad valorem tax purposes—by the use of the rents and fees paid by the occupier to the owner; therefore, the statute is not facially unconstitutional. Further, plaintiffs’ possessory interests are made taxable by the Colorado Constitution under the test announced by the Colorado Supreme Court in Board of County Commissioners v. Vail Associates, Inc., 19 P.3d 1263 (Colo. 2001). Therefore, the statute, a set of procedures for tax valuation, was not applied to plaintiffs’ properly taxable possessory interests in an unconstitutional manner. Additionally, because the statute’s tax valuation provisions do not infringe on any constitutionally protected right, the statute is not unconstitutionally overbroad.

Plaintiffs also contended that the trial court abused its discretion in concluding that their possessory interests are taxable under the first two prongs of the Vail Associates analysis. To be taxable, the possessory interest must be such that (1) it provides a revenue-generating capability to the private possessor independent of the government property owner; (2) the private owner is able to exclude others from making the same use of the interest; and (3) the private ownership is of sufficient duration to realize a private benefit. Although the City has imposed operational restrictions on plaintiffs relating to the price of their products, hours of operation, and menus, and requires that employees be cleared by security, the record is clear that all, or virtually all, of plaintiffs’ revenue is generated from the traveling public. Thus, the trial court did not abuse its discretion in concluding that plaintiffs’ possessory interests are capable of generating revenue independent of the City. Further, although competition is permissible pursuant to their contract, others may not make the same physical use of the possessory interest as that of plaintiffs. Therefore, the second prong is satisfied.

Plaintiffs further contended that the trial court erred in approving the City’s valuation of their possessory interests. Pursuant to the agreement, plaintiffs must pay to the City rents and fees that are the greater of either a minimum monthly guaranteed rent or a percentage of their monthly gross revenues. The minimum monthly guaranteed rent is the minimum rent for the premises occupied by the plaintiffs, which, presumably, benefits the plaintiff. The trial court properly accepted the City’s valuation of the plaintiffs’ possessory interests, which was the minimum monthly guaranteed rent, reduced for the value of the use of the common area for those plaintiffs with such use, as the reasonably estimated future annual rents or fees.

Summary and full case available here.

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Colorado Court of Appeals: Parcel of Property Does Not Qualify as Agricultural Because it Is Too Small and Has a Residential Improvement

June 25, 2012 by Leave a Comment

The Colorado Court of Appeals issued its decision in Andrew v. Teller County Board of Equalization on June 21, 2012.

Property Taxes—Nonagricultural Classification.

Respondent Teller County Board of Equalization (BOE) placed a nonagricultural classification on petitioner’s (taxpayer) land. Petitioner appealed the Board of Assessment Appeals’ (BAA) denial of her challenges. The Court of Appeals affirmed the BAA’s ruling.

The subject property is a thirty-five-acre parcel that taxpayer purchased in 1998. It is in a subdivision containing other thirty-five- and twenty-acre parcels. By 2010, nineteen of the parcels had improvements and seventeen were vacant. All the parcels are subject to a conservation easement established in 1990 for the preservation of wildlife habitat. The easement permits building areas of up to two acres on each parcel for residential purposes.

Taxpayer constructed a residence and received a certificate of occupancy in August 2009. Through the 2009 tax year, based on the conservation easement, the parcel was classified as agricultural land. Based on the completion of the residence, the county assessor changed the classification for the 2010 tax year to residential land.

Taxpayer challenged the reclassification before the BAA. She relied on the conservation easement, as well as farming and forestry uses on the land. The BOE asserted that the parcel is less than eighty acres and contains a residence, and that the other bases for agricultural classification had not been established. The BAA denied the petition and upheld the BOE’s classification.

Taxpayer had the burden of proof in the BAA proceedings to show any qualifying basis for classifying the subject parcel as agricultural. The Court looked to CRS § 39-1-102(1. 6)(a)(III), which governs the classification of land as agricultural for property tax purposes based on a perpetual conservation easement. Under this section, the parcel clearly does not qualify, because it is too small and has a residential improvement.

Summary and full case available here.

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