December 18, 2018

Colorado Court of Appeals: Special District Act Does Not Require Consent of Mineral Estate Owners to Expand Boundaries of District

The Colorado Court of Appeals issued its opinion in Bill Barrett Corp. v. Lembke on Thursday, September 6, 2018.

Preliminary InjunctionSpecial DistrictMineral EstatesPower to TaxSummary Judgment.

In 2009, the Sand Hills Metropolitan District (Sand Hills) included the 70 Ranch within its boundaries and began assessing ad valorem taxes on the oil and gas extracted from the mineral estate. Plaintiffs Bill Barrett Corporation and Bonanza Creek Energy, Inc., and intervenor Noble Energy, Inc. (lessees), challenged these taxes and obtained summary judgment in Weld County District Court. Both sides appealed. In that appeal, the division agreed with the district court that when Sand Hills included the 70 Ranch it was a material departure from its 2004 service plan, which required approval from the Weld County Board of County Commissioners. Because that approval had not been obtained, the division held that Sand Hills lacked taxing authority after 2009.

Following entry of the summary judgment and before the Sand Hills appeal was filed, Lembke and 70 Ranch, LLC (the LLC) (collectively, defendants) petitioned South Beebe Draw Metropolitan District (South Beebe) to include the 70 Ranch. Defendants owned the surface estate where all of lessees’ well heads are located. Lessees were not notified of this action. South Beebe resolved to include the 70 Ranch, and the Adams County District Court approved the inclusion. Lessees filed a motion for a preliminary injunction to prevent South Beebe from taxing oil and gas that lessees produce from the mineral estate underlying the 70 Ranch. The trial court denied the motion and entered summary judgment that under C.R.S. § 32-1-401, the severed mineral estate underlying the 70 Ranch could not be included within South Beebe because all the owners and lessees of that estate did not petition for and consent to inclusion. Lessees obtained a temporary restraining order in the Weld County District Court that prohibited the Weld County Treasurer, who had collected the disputed taxes, from disbursing the monies to South Beebe. Venue was transferred to Adams County and, following an evidentiary hearing on lessees’ motion for a preliminary injunction, the court found lessees had not shown a reasonable probability of success on the merits and denied the motion. Later, the court entered a final judgment against lessees on their C.R.S. § 32-1-401 claim. Lessees appealed and asked that the status quo be preserved by enjoining the treasurer from disbursing taxes collected to South Beebe. A motions division granted the request.

On appeal, lessees argued that without their consent and that of the other mineral estate owners, the 70 Ranch, or at least the underlying mineral estate, could not have been included within South Beebe. South Beebe responded that because the mineral and surface estates were severed, only the surface owners needed to petition for and consent to inclusion, and all of them did. The court of appeals first held that mineral estate owners are “fee owners,” but lessees are not. Next, because the parties agreed and the record supports that not all of the mineral estate owners consented to the 70 Ranch’s inclusion, the court considered whether South Beebe’s services can benefit the mineral estate. Because lessees did not argue that the mineral estate owners would benefit from the inclusion, the court concluded that lack of consent by all mineral estate owners did not preclude South Beebe from taxing lessees. Consequently, the court affirmed the trial court’s entry of summary judgment as to lessee’s C.R.S. § 32-1-401(1)(a) claim.

Lessees also challenged the trial court’s ruling that lessees had not shown a reasonable probability of successfully establishing that South Beebe had violated C.R.S. § 32-1-207(2)(a) by failing to obtain Board of County Commissioners (BOCC) approval for a material change in its service plan, because it had obtained approval from the planning commission. However, the court found that the actions of the planning commission and other officials did not satisfy the requirement that South Beebe had to obtain BOCC approval for a material modification of its service plan. Therefore, lessees have a reasonable probability of success in establishing that South Beebe did not obtain the requisite BOCC approval. Further, the trial court dissolved the temporary restraining order and denied a preliminary injunction on this ground alone, without considering the other factors set forth in Rathke v. MacFarlane, 648 P.2d 648, 651 (Colo. 1982).

Lessees also argued that it was error to conclude that South Beebe’s inclusion of the 70 Ranch was not a material modification. Boundary changes alone are presumptively not material modifications, and the court found that inclusion of the 70 Ranch was just a boundary change. Thus, the trial court acted within its discretion in ruling that lessees had not shown a reasonable probability of success in challenging inclusion of the 70 Ranch as an unapproved material modification.

Finally, lessees argued that under C.R.S. § 32-1-107(2), South Beebe could not levy and collect taxes to support services if those services are already being provided by another special district (in this case, Sand Hills). The court agreed with the trial court that the statute prohibits overlapping services, not merely overlapping territory. Here, no party asked the court to resolve the factual question of overlapping services, thus the question of whether the services were overlapping was not properly before the court.

The summary judgment on lessees’ C.R.S. § 32-1-401(1)(a) claim was affirmed. The order denying lessees’ motion for a preliminary injunction was vacated. The case was remanded for the trial court to make findings on the remaining Rathke factors and reconsider whether to enter a preliminary injunction. The temporary injunction will remain in effect until the trial court enters its renewed ruling on the motion for preliminary injunction.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Assessor Authorized to Reevaluate Property in Non-Tax Year if Original Assessment Incorrect when Originally Done

The Colorado Court of Appeals issued its opinion in Thibodeau v. Denver County Board of Commissioners on Thursday, August 23, 2018.

Revaluation of Taxes—Incorrect Original Valuation—Equal Protection—Colorado Constitution’s Uniformity Clause.

Thibodeau purchased a residence in 2013. Earlier that year, the property was valued at $803,800 for ad valorem tax purposes. In 2014, it was revalued at $1,169,700. Thibodeau unsuccessfully protested the increase with the City and County of Denver Assessor’s Office before petitioning for abatement from the Denver County Board of Commissioners, sitting as the Denver County Board of Equalization (BOE). He argued that it was error to reassess the property in an intervening year because no unusual condition existed. The BOE rejected his claim and upheld the reassessment.

Thibodeau appealed to the Board of Assessment Appeals (BAA), which concluded that the mischaracterization of the property’s condition as average, rather than good, had led to an incorrect 2013 assessment, and therefore the assessor was permitted to correct the assessment in the intervening year.

On appeal, Thibodeau argued that the BAA erred in upholding the reassessment because C.R.S. § 39-1-104(11)(b)(1) only allows redeterminations in intervening years when unusual conditions exist, and no unusual conditions existed. C.R.S. § 39-1-104(11)(b)(1) authorizes assessors to correct incorrect property assessments in intervening years to set the value at what it would have been set in the assessment year had the mistake not occurred. Further adjustments cannot be made absent proof of an unusual condition. Here, the assessor’s records indicated that the property had not been remodeled since its construction in 1938. But after the assessment was completed in 2013, the property was listed for sale with pictures and a description showing renovations and remodeling. Thibodeau did not present evidence that the BOE’s corrected value was incorrect. Conversely, there was competent evidence that the original assessment was incorrect due to a misidentification of the condition of the property. Accordingly, the assessor was permitted and required to correct the assessment in 2014.

Thibodeau also argued that the BOE’s off-cycle reassessment violated the Equal Protection Clause of the U.S. Constitution. Here, no fundamental right or suspect class was implicated. The assessment was based on discovery of an incorrect determination of the property’s condition, not because of the property’s sale, and similarly situated properties also undergo the sales verification process. The court of appeals found no equal protection concerns.

Thibodeau further argued that the revaluation violated the Colorado Constitution’s Uniformity Clause. The protections of this clause are coextensive with the federal Equal Protection Clause, and because there was no equal protection violation, this argument failed as well.

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Board Correctly Ruled that Contiguous Vacant Parcel Not “Used As a Unit” Within Residential Parcel

The Colorado Court of Appeals issued its opinion in Twilight Ridge, LLC v. Board of County Commissioners on Thursday, July 27, 2018.

Property Tax—C.R.S. § 39-1-102(14.4)(a)Used as a UnitVacant Land.

The Robinsons are the sole members of Twilight Ridge, LLC (Twilight), a Colorado limited liability company. In 2013 Twilight purchased two contiguous platted parcels of land in La Plata County. The first parcel has a home on it (the Residential Parcel). The second parcel is a 0.763 acre buildable but undeveloped lot (the Subject Parcel).

The La Plata County Assessor classified the Subject Parcel as vacant land. Twilight appealed the decision for the 2014 to 2015 tax years to the Board of County Commissioners of La Plata County and it appealed the decision for the 2016 tax year to the Board of Equalization for La Plata County, arguing to both bodies (collectively, the County) that the Subject Parcel should be reclassified as residential land. The County upheld the County Assessor’s classification.

Twilight appealed to the Board of Assessment Appeals (BAA). At a consolidated hearing, Mr. Robinson testified that he and his wife bought the two parcels together so that the Subject Parcel would give them privacy, serve as a buffer to prevent any potential house built on the subject property from impeding their views, and provide a place for their grandchildren to play when they visited. Further, although he was currently offering only the Residential Parcel for sale, Robinson intended to sell both parcels together.

Twilight also offered testimony by the Colorado Division of Property Taxation’s deputy director, who was designated by the Property Tax Administrator (PTA) to testify regarding the Division’s policies as embodied in the PTA’s Assessors’ Reference Library (ARL). The County provided the testimony of its appraisers, who had visited the parcels and seen no activity or evidence of use on the Subject Parcel when she visited. The La Plata County Assessor also testified that using the Subject Parcel as a place for children to play and protect a view were “incidental” uses and not the “integral” use of the Subject Parcel in conjunction with the residential improvements that would warrant classifying it as residential. The BAA upheld the County’s classification.

On appeal, Twilight argued that the BAA misconstrued the “used as a unit” element of C.R.S. § 39-1-102(14.4)(a) and made clearly erroneous findings of fact. The BAA’s conclusion that Twilight did not satisfy its burden of proving that the Subject Parcel was used as a unit with the residential parcel is consistent with the ARL and the testimony at the hearing that “used as a unit” contemplates integral, not merely incidental, use.

The orders were affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Child Care Center Not Eligible for Property Tax Exemptions

The Colorado Court of Appeals issued its opinion in Children’s Hospital Colorado v. Property Tax Administrator on Thursday, June 28, 2018.

Child Care Center—Property Tax—Exemption—Sliding Scale—Charitable Purpose.

Children’s Hospital Colorado (the Hospital) owns and operates a child care facility (the Center) on the University of Colorado Anschutz Medical School (CU Anschutz) campus. The Center provides child care to constituents of the Hospital and CU Anschutz as an employee benefit. The Center has a written tuition assistance policy that gives all families with an income below 150% of the federal poverty level a flat 10% discount. It also provides a flat 5% discount for siblings of enrolled children, regardless of the family’s income. The Hospital filed an application for exemption from property tax for the Center, which the Division of Property Tax considered under the charitable purposes exemption, C.R.S. § 39-3-108(1)(a), and an exemption for qualified child care centers, C.R.S. § 39-3-110. The Property Tax Administrator denied the application, and the Board of Assessment Appeals (BAA) upheld the order.

On appeal, the Hospital argued that the BAA exceeded its authority in interpreting C.R.S. § 39-3-110(1)(e) to conclude that the Center’s tuition discount policy did not qualify the Center for an exemption under that section. It argued that the BAA misinterpreted the rule regarding the definition of “charges on the basis of ability to pay.” C.R.S. § 39-3-110(1)(e) requires that the Center charge for its services based on the recipient’s ability to pay. Here, the family tuition reduction policy was based solely on whether a family’s income falls above or below the federal poverty line; it was not a scale that provides a range of tuition options, and it did not account for more than one factor in determining a family’s ability to pay. Similarly, the sibling discount is provided regardless of income or another factor indicating ability to pay. The BAA properly interpreted C.R.S. § 39-3-110(1)(e) to conclude that the Center’s tuition discount policy did not qualify as offering services “on the basis of ability to pay.”

The Hospital also contended that the BAA erred by finding that the Center is not operated for strictly charitable purposes. Here, the Center was operating for a business purpose—providing an employee benefit and recruitment tool—and not for a charitable purpose. Additionally, the Center did not benefit an indefinite number of persons and did not lessen the burdens of government. Therefore, it was not operated strictly for charitable purposes, as required by C.R.S. § 39-3-108(1).

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Landowner’s Potential Future Sale of Lot Irrelevant to Determination of Whether Property Residential

The Colorado Court of Appeals issued its opinion in Hogan v. Board of County Commissioners on Thursday, June 14, 2018.

Property Tax—Residential Property.

The Hogans own three connected and contiguous parcels of land in Summit County (the County). Lot 1 has a home built on it. The Hogans built a deck extending from their home across the boundary line onto Lot 2. Lot 3 is located in a subdivision and has an underground sewer line and an unpaved driveway installed by the original developer of the subdivision, but otherwise remains undeveloped. The Summit County Assessor denied the Hogans’ request to reclassify Lot 3 as residential, determining it to be vacant land for purposes of taxation. The Hogans appealed, and the Board of County Commissioners of Summit County (Board) upheld the Assessor’s classification. The Hogans appealed to the Board of Assessment Appeals (BAA), which upheld the Assessor’s classification.

On appeal, the Hogans asserted that the BAA erred in determining that Lot 3 was not “used as a unit in conjunction with the residential improvements.” The primary factor for determining property classification for property tax purposes is the property’s actual use on the relevant assessment date. Here, the BAA considered the likelihood of the parcel being conveyed separately, whether the parcel’s use was necessary or essential to qualify as integral, and whether the use of the parcel was active as opposed to passive. The BAA misapplied the law by relying on the possible future conveyance of Lot 3 as a separate unit without reference to how that possibility related to the Hogans’ current use of the parcel. The BAA further erred in interpreting the statute to require that the parcel’s use be a necessary or essential part of the residence. Finally, the use of the contiguous parcel need not be “active” as opposed to “passive.” Here, there is no evidence in the record that Lot 3 was used for a nonresidential purpose.

Lastly, the court of appeals rejected the BAA’s and the County’s arguments that the case could be affirmed on different grounds.

The BAA’s order was reversed and the case was remanded.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Determining Ownership Requires Examining Right to Possess, Use, and Control Property

The Colorado Court of Appeals issued its opinion in Kelly v. Board of County Commissioners on Thursday, May 31, 2018.

Property Tax—Residential Land—Common Ownership—Vacant Land—C.R.S. § 39-1-102(14.4)(a).

Kelly purchased two adjacent parcels of land in Summit County. She built a home on one parcel and left the subject parcel vacant. Sometime later, Kelly placed the residential parcel in an irrevocable trust and the subject parcel in a revocable family trust. Kelly was the settlor, trustee, and beneficiary of both trusts.

For tax purposes, the Summit County Assessor classified the residential parcel as residential land but the subject parcel as vacant land, which is taxed at a higher rate. In 2016, Kelly appealed the subject parcel’s classification to the Summit County Board of County Commissioners, requesting that it be reclassified as residential under C.R.S. § 39-1-102(14.4)(a), and sought a tax abatement for the tax years 2014 and 2015. The County denied the petition. The Board of Assessment Appeals (BAA) affirmed, finding that because the two parcels were owned by two separate trusts, they were not commonly owned and therefore the subject parcel did not qualify under the statutory section.

On appeal, Kelly contended that the BAA erred in concluding that the subject parcel was not residential land. She argued that the BAA misconstrued the “common ownership” element of C.R.S. § 39-1-102(14.4)(a). The statute does not define common ownership, and the Property Tax Administrator has neither defined nor offered guidance to assessors on determining whether parcels are under common ownership. The BAA and the County interpreted “common ownership” to mean the same record titleholder. The court of appeals focused its analysis on the meaning of “ownership,” noting that ownership goes beyond mere record title and focuses on who has the power to possess, use, enjoy, and profit from the property. It concluded that ownership of contiguous parcels for purposes of C.R.S. § 39-1-102(14.4)(a) depends on a person’s or entity’s right to possess, use, and control the contiguous parcels. Here, the unchallenged testimony that Kelly was the beneficiary, trustee, and settler of both trusts established that Kelly held legal title to and was the equitable owner of both parcels. Further, Kelly testified that she only placed the parcels in the trusts on the advice of counsel for tax and estate planning purposes and that she possessed, controlled, and used the parcels before and after they were placed in trust. The Assessor testified that she considered the parcels separate simply because the names on the trusts were different. The court of appeals concluded that the parcels were under common ownership for tax years 2014 and 2015 and the BAA erred in denying the request to reclassify the subject property.

Kelly also argued that the BAA abused its discretion when it rejected the parties’ stipulation that the contiguous parcels element was not at issue. The BAA’s decision to reject the signed stipulation two months after the close of evidence and without notice to the parties was manifestly unfair.

The BAA’s order was reversed and the case was remanded with directions for the BAA to reclassify the subject parcel as residential land.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: BAA Properly Determined that Vacant Land Could Not Be Reclassified as Residential

The Colorado Court of Appeals issued its opinion in Rust v. Board of County Commissioners on Thursday, May 17, 2018.

Vacant Land Tax Assessment—C.R.S. § 39-1-102(14.4)(a)—Residential Property—“Used as a Unit” Element—Assessor’s Reference Library.

Rust bought residential property in Summit County and a year later bought the adjacent undeveloped parcel (the subject property). He and his family have used the two parcels for decades. The county assessor classified the subject property as vacant land for the years 2013 through 2015, subjecting it to a tax rate almost triple the rate for residential property. Rust sought reclassification, asserting that both properties should be classified as residential under C.R.S. § 39-1-102(14.4)(a). The Board of Assessment Appeals (BAA) affirmed the decision of the Board of County Commissioners of Summit County denying reclassification.

On appeal, Rust contended that the BAA misconstrued the “used as a unit” element in C.R.S. § 39-1-102(14.4)(a), which defines residential land. County assessors use the Assessor’s Reference Library (ARL) for guidance in classifying land under this statute. The ARL further defines “used as a unit” as contiguous parcels of land that are under common ownership and are “used as an integral part of a residence.” Assessors use four guidelines when applying this definition. Here, the parties stipulated that the parcels are commonly owned and contiguous; the only issue was whether the subject property was “used as a unit” with the residential parcel. The assessor found no evidence that the subject property was an integral part of the residence, and the use of the subject property failed to support its reclassification as residential property. There was no error in the BAA’s decision.

The BAA’s order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Taxpayer Entitled to File Statutory Claim for Relief After Expiration of Protest Period

The Colorado Supreme Court issued its opinion in OXY USA, Inc. v. Mesa County Board of Commissioners on Monday, November 13, 2017.

Tax Law—Taxpayer Error—Overvaluation

The supreme court holds that section 39-10-114(1)(a)(I)(A), C.R.S. (2017), allows abatement and refund for illegally or erroneously levied taxes based on overvaluation caused by taxpayer error. This result follows from the statute’s plain text that allows abatement for “overvaluation” without making a distinction between government- and taxpayer-caused overvaluations. The court rejects the court of appeals’ holding that Coquina Oil Corp. v. Larimer County Board of Equalization, 770 P.2d 1196 (Colo. 1989), and Boulder County Board of Commissioners v. HealthSouth Corp., 246 P.3d 948 (Colo. 2011), require a different result. Coquina was superseded by the 1991 legislative amendment that added “overvaluation” as a ground for abatement, and HealthSouth’s holding was limited to intentional taxpayer overvaluations. The supreme court reverses the judgment of the court of appeals and remands for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: County Assessor Authorized to Retroactively Assess Property Taxes on Oil and Gas Leaseholds

The Colorado Supreme Court issued its opinion in Kinder Morgan CO2 Co., L.P. v. Montezuma County Board of Commissioners on Monday, June 19, 2017.

Oil and Gas—Property Taxation—Statutory Construction.

The supreme court reviewed the court of appeals’ conclusion that the Montezuma County Assessor had statutory authority to retroactively assess property taxes on oil and gas leaseholds operated by Kinder Morgan, after the assessor determined that Kinder Morgan had underreported the wellhead selling price of CO2 gas produced at the leaseholds. The court considered whether this assessment was authorized under the statute permitting retroactive property tax assessments when, pursuant to C.R.S. § 39-5-125(1), “taxable property has been omitted from the assessment roll.” Given Colorado’s self-reporting scheme for property taxation of oil and gas leaseholds and the legislature’s amendments to that scheme—which describe the “underreporting of the selling price or the quantity of oil and gas sold [from a leasehold]” as a form of omitted property, C.R.S. §§ 29-1-301(1) and 39-10-107(1)—the court concluded that the assessor had statutory authority to issue the assessment in this case. The court further concluded that the Board of Assessment Appeals did not err in determining that Kinder Morgan had underreported the wellhead selling price of CO2. The court therefore affirmed the judgment of the court of appeals.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Property Used as Vacation Home and Listed on VRBO Properly Classified as Residential

The Colorado Court of Appeals issued its opinion in O’Neil v. Conejos County Board of Commissioners on Thursday, March 9, 2017.

Real Property—Residential—Commercial—Ad Valorem Taxes—Burden of Proof.

James and Mary Ellen O’Neil purchased the subject property and built a log house on it for their use as a vacation home and as an inheritance for their sons. The house was initially classified for tax purposes as residential. After the O’Neils listed the property as available for short-term, overnight rental, the Conejos County Assessor (Assessor) reclassified the property, for ad valorem tax purposes, from residential to commercial. The O’Neils filed a petition for abatement with the Conejos County Board of Commissioners (County), which was denied, and then appealed to the Board of Assessment Appeals (Board), which overturned the Assessor’s action and returned the property’s classification to residential for the relevant years.

On appeal, the County contended that the Board improperly classified the O’Neils’ property as residential. The County asserted as a procedural error that that the Board failed to apply the presumption in favor of the Assessor’s property classification. The Board’s order demonstrated that it implicitly applied the presumption in favor of the County, and the O’Neils met their burden of proof to overcome that presumption. On the merits, the Board determined that the proper classification of the property was “residential” because its “predominant and actual use was as a second home.” The Board’s determination had a reasonable basis in law and was supported by substantial evidence in the record.

The order was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Lessee of Real Property Lacks Standing to Challenge Property Tax Determination

The Colorado Court of Appeals issued its opinion in Traer Creek-EXWMT LLC v. Eagle County Board of Equalization on Thursday, February 9, 2017.

Traer Creek-EXWMT (Traer) has been a lessee of property in Eagle County since 2002. Traer has reimbursed the property owner for property taxes each year since assuming the lease. On May 1, 2015, the Eagle County Assessor mailed a notice of valuation to the property owner. Traer initiated the statutory protest and adjustment process to challenge the 2015 valuation. The assessor declined to adjust the valuation, and Traer appealed to the Board, which also upheld the valuation. Traer appealed to district court.

The Board moved to dismiss under C.R.C.P. 12(b)(1) on the theory that a mere lessee does not have standing to challenge a property tax valuation of the sort issued by the assessor. The district court agreed and dismissed the case.

On appeal, Traer argued that because it “owns” a leasehold interest in the subject property, it has standing to protest the valuation. The Colorado Court of Appeals disagreed, finding that the relevant statutes convey standing only to the property owner/taxpayer. The court similarly rejected Traer’s argument that C.R.S. §§ 39-1-102(16) and (14) could be read to grant authority to a lessee to challenge a property valuation. The court concluded that the county assessor did not value Traer’s “property” — i.e., its leasehold interest — instead, the assessor valued the fee interest in the property. Therefore, Traer was not a “person” whose “property has been valued too high.”

Traer also argued it had common law standing because it pays taxes on the property and because the owner had granted it agency authority to challenge the valuation. The court noted that Traer’s argument failed at the outset because when a statute limits standing, the court may not disregard the statute by employing common law notions.

The district court judgment was affirmed.

Colorado Court of Appeals: Property Need Not be Used Exclusively for Religious Purposes for Tax Exemption

The Colorado Court of Appeals issued its opinion in Grand County Board of Commissioners v. Colorado Property Tax Administrator on Thursday, January 14, 2016.

This appeal after remand concerned a religious exemption from property taxes. The YMCA owns properties in Grand County and Larimer County for which it applied for property tax exemptions based on religious purposes and charitable use. The state property tax administrator determined the properties were being used for religious purposes and granted an exemption. The Grand and Larimer County Boards of County Commissioners appealed, contending the YMCA’s use was not sufficiently religious to justify an exemption. The Board of Assessment Appeals held a hearing and found the properties were not used exclusively for religious purposes, reversing the property tax administrator’s determination. The YMCA appealed to the court of appeals and a division reversed the Board’s findings, concluding the Board failed to apply the proper legal standard and setting forth the statutory and constitutional framework for religious exemptions.

On remand, the Board found the YMCA properties qualified for the exemption because the properties furthered the YMCA’s stated religious mission and purposes and the properties were not being used for private gain or corporate profit. The counties appealed, arguing that because the use of the properties was not inherently religious, they should not qualify for the exemption. The court of appeals disagreed, finding the Board applied the correct legal framework on remand.

The court of appeals affirmed the Board’s decision to grant the YMCA properties tax exemptions.