Board of Assessment Appeals of State of Colo. v. Colorado Arlberg Club

• Decision Date: 19 September 1988
• Docket Number: No. 86SC175,86SC175
• Citation: 762 P.2d 146
• Parties: BOARD OF ASSESSMENT APPEALS OF the STATE OF COLORADO, Property Tax Administrator of the State of Colorado, and Grand County Board of Equalization, Petitioners, v. COLORADO ARLBERG CLUB, Respondent.
• Court: Colorado Supreme Court

Page 146

762 P.2d 146

BOARD OF ASSESSMENT APPEALS OF the STATE OF COLORADO Property Tax Administrator of the State of Colorado, and Grand County Board of Equalization, Petitioners, v. COLORADO ARLBERG CLUB, Respondent.

No. 86SC175.

Supreme Court of Colorado En Banc.

Sept. 19, 1988.

Anthony J. DiCola, Hot Sulphur Springs, for petitioner Grand County Bd. of Equalization.

Duane Woodard, Atty. Gen., Charles B. Howe, Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Larry A. Williams, Asst. Atty. Gen., General Legal Services Section, Denver, for petitioners Bd. of Assessment Appeals of the State of Colo., and the Property Tax Adm'r of the State of Colo.

Karen M. Zulauf, Buchanan, Gray, Purvis & Schuetze, Boulder, for respondent.

MULLARKEY, Justice.

The Colorado Arlberg Club (Club) sought judicial review of the Board of Assessment Appeals' (Board's) final decision holding that its real property had an actual value of $1,840,585.00 and a valuation for assessment of $533,770.00 for the tax year 1983. The district court affirmed and the court of appeals reversed. Colorado Arlberg Club v. Board of Assessment Appeals, 719 P.2d 371 (Colo.Ct.App.1986). We granted the Board's petition for certiorari.

The Board contends that the court of appeals improperly substituted its own findings of fact for those of the Board. The Board also argues that the reasonable future use of real property is relevant to the property's present fair market value for tax purposes, and that condominium development is a reasonable future use of the Club's property. We agree with each of these points. Accordingly, we reverse and remand to the court of appeals with instructions to return the matter to the district court for reinstatement of its judgment affirming the Board's final decision.

I.

Valuation for assessment depends on (1) the actual value of the property (2) in a statutorily-mandated base year and (3) the character of the property, e.g., whether it is commercial, residential, agricultural, or mining property. With exceptions not relevant here, the first element, actual value, is "that value determined by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal." § 39-1-103(5)(a), 16B C.R.S. (1983 Supp.); ¹ see also Colo. Const. art. X, § 3(1)(a). The actual value used in a given tax year is that property's actual value during a previous year specified by statute--the "base year." See §§ 39-1-104(9) to (11), 16B C.R.S. (1982 & 1983 Supp.); see also Carrara Place, Ltd. v. Arapahoe County Bd. of Equalization, 761 P.2d 197 (Colo.1988) (discussing policy reasons for legislative adoption of base year method of appraisal). The third factor, the character of the property, determines the ratio between the property's actual value and its valuation for assessment. See Colo. Const. art. X, § 3(1)(b).

II.

The Club is a nonprofit Colorado corporation which owns 125.47 acres of property near Winter Park ski area, in the Town of Winter Park, Grand County, Colorado. It originally owned the entire 160 acre parcel known as the Mary Jane Placer. In 1980, it sold thirty-five acres to Penobscot Land Corporation. That land has been developed as the Iron Horse Condominiums, which consist of 141 condominium units and approximately fourteen and one-third acres of open space. Of the land still owned by the Club, approximately twenty-eight acres are leased to the Winter Park Recreation Association. Approximately eighteen and one-quarter acres are occupied by the clubhouse facilities, where Club members and their guests sleep and eat. The remaining property, approximately seventy-nine acres, is vacant land which has been left undeveloped to preserve the Club members' privacy. All of the Club's property is subject to a planned unit development (PUD) which also applies to the Iron Horse Condominiums and to ninety acres of land owned by the City and County of Denver and leased to Winter Park Recreation Association. See §§ 24-67-101 to -108, 10 C.R.S. (1982) (the Planned Unit Development Act of 1972).

In tax year 1982, the Club's property had a valuation for assessment of $95,630.00. Two significant legal changes affected the property's 1983 valuation. First, the base year changed from 1973 to 1977. See §§ 39-1-104(9)(a), (10)(a), 16B C.R.S. (1982). Second, the ratio between the valuation for assessment and the actual value of commercial property was decreased from thirty per cent to twenty-nine per cent. See Colo. Const. art. X, § 3(1)(b); § 39-1-104(1), 16B C.R.S. (1982 & 1987 Supp.).

The initial notice which the Club received from the Grand County Assessor's Office for tax year 1983 stated that the Club's real property had a valuation for assessment of $647,300.00. The Club protested pursuant to section 39-5-122(2), 16B C.R.S. (1982), and as a result of a property value review the assessor decreased the valuation for assessment to $545,790.00. The Club then petitioned the Grand County Board of Equalization, ² see sections 39-5-122(3) and 39-8-106, 16B C.R.S. (1982 & 1983 Supp.), which decreased the valuation for assessment to $533,700.00.

Still dissatisfied, the Club appealed to the Board of Assessment Appeals (the petitioner in this court) pursuant to section 39-8-108(1), 16B C.R.S. (1982). At the hearing before the Board, both the Club and the Grand County Board of Equalization presented evidence regarding the property's topography, its current zoning and use under the PUD, and its potential for use as a condominium development. The Board concluded that the testimony showed that the PUD "could probably be amended to allow additional development on the vacant land" and that the "vacant land could support a significant number of condominium units." After reviewing the appraisals and other evidence presented by each side, it affirmed the Board of Equalization's actions.

Having exhausted its administrative remedies, the Club sought judicial review in the district court pursuant to section 39-8-108(2), 16B C.R.S. (1983 Supp.). Judicial review of the Board's actions is governed by the standards set forth in the Administrative Procedure Act, section 24-4-106, 10 C.R.S. (1982). See § 39-8-108(2), 16B C.R.S. (1983 Supp.). The Club asserted that its clubhouse was residential property subject to assessment at twenty-one per cent of actual value; the seventy-nine acres of vacant land should have been valued as "open space"; and the Board had erred by failing to accept the Club's appraiser, John Kendall, as an expert. The district court concluded that the Board's findings that the property was commercial in nature and was not limited exclusively to use as open space were supported by substantial evidence. Because the Board had allowed Kendall to testify and had considered his testimony in reaching its result, the court reasoned that its refusal to accept him as an expert was, at most, harmless error. Accordingly, the district court affirmed the Board's final decision in all respects.

The Club raised the same arguments before the court of appeals. Although the court of appeals concluded that the evidence supported the Board's classification of the property as commercial, it agreed with the Club's other contentions. Therefore, it reversed and remanded for a new hearing.

We granted the Board's petition for certiorari. The Club has not contested the valuation of the buildings on its property and the parties agree that the twenty-eight acres which the Club leases to the Winter Park Recreation Association have an actual value of $400,000.00 (or a valuation for assessment of $116,000.00). The Club no longer challenges the Board's classification of its property as commercial. Therefore, the issues before us relate only to the valuation of the remaining ninety-seven acres (the eighteen acres on which the clubhouse is located and the seventy-nine acres of vacant land). Specifically, the parties disagree about whether that land is "open space," whether reasonable future use of that land can be considered, and whether condominium development is a reasonable future use.

III.

We first consider the Board's assertion that the court of appeals improperly substituted its finding that the Club's vacant land was open space under the PUD for the Board's finding that it was not. ³ We agree that the court of appeals erred in this respect.

The Board's findings and conclusions stated in pertinent part that:

Testimony showed that the [Club] and the Winter Park Recreation Association negotiated a schematic PUD plan which was approved by Grand County officials in November 1975. The plan reserved 25 percent of the affected property as open space, but did not designate specific areas to be so reserved. The plan also included a provision under which the entire property would be subject to taxation at its fair market value. The open space owned by the [Club] is not included in the PUD.

....

... Evidence and testimony were offered to show that the PUD plan, as amended and now governing, does not designate a maximum number of units which may be built on the property. Testimony also showed that the PUD could probably be amended to allow additional development on the vacant land.

(Emphasis added.) Although these findings are not a model of clarity, an agency's findings may be express or implied. See Colorado Mun. League v. Mountain States Tel. & Tel. Co., 759 P.2d 40 (Colo.1988) (citing Aspen Airways, Inc. v. Public Utils. Comm'n, 169 Colo. 56, 62-63, 453 P.2d 789, 792 (1969)). The underlined portions of the Board's findings and conclusions imply that (1) the vacant land was located geographically within the PUD and was subject to the PUD's restrictions, but (2) it was not included in the twenty-five per cent of the property in the PUD that was reserved for common open space. If the Board had found that the Club's vacant land was not geographically within and governed by the PUD, it obviously would not have concluded that amendments to...