July 18, 2019

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

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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