Colorado Arlberg Club v. Board of Assessment Appeals
| Decision Date | 13 March 1986 |
| Docket Number | No. 84CA1184,84CA1184 |
| Citation | 719 P.2d 371 |
| Parties | COLORADO ARLBERG CLUB, Petitioner-Appellant, v. BOARD OF ASSESSMENT APPEALS of the State of Colorado, Property Tax Administrator of the State of Colorado, and Grand County Board of Equalization, Respondents-Appellees. . I |
| Court | Colorado Court of Appeals |
Sherman & Howard, Karen M. Zulauf, Raymond J. Turner, Denver, for petitioner-appellant.
Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Larry A. Williams, Asst. Atty. Gen., Denver, for respondents-appellees Board of Assessment Appeals and Property Tax Administrator.
Anthony J. DiCola, Grand Co. Atty., Hot Sulphur Springs, for respondent-appellee Grand County Bd. of Equalization.
Petitioner, the Colorado Arlberg Club, appeals the tax assessment placed upon its land as adjusted by the Grand County assessor and the Board of Equalization (the Board), and as affirmed by the Colorado Board of Assessment Appeals and the district court. We reverse and remand with instructions for a reassessment.
In 1982, the Arlberg Club's land was assessed $95,630 for its 125-acre property. In 1983, the Club was assessed $533,770 for the same property. That assessment was based on 29% of an actual value established to be $1,840,585 for the Club's property. The Club, a non-profit corporation, maintains club facilities on approximately 18 of the acres, leases 28 of the acres to the Winter Park Recreation Association, and retains the remainder in its natural, wooded, mountainous condition. The assessment with respect to the leased 28 acres is not disputed.
The Arlberg property is contained within a "final P.U.D. plan" which was approved by resolution in 1980, and is treated as a special use permit. The P.U.D. (Planned Unit Development) plan designates the 18 acres on which the club facilities are located as a development parcel. The remaining acreage is designated in the P.U.D. plan as open space. The approving resolution also states that the property "shall be taxable for personal and real property tax purposes...."
The Arlberg Club argues that the Board's assessment as to the two parcels in question is not supported by substantial evidence, and it further argues that in determining actual value the Board failed to consider the restrictive zoning in that it failed to find that the land designated as open space is not developable under the P.U.D. We agree.
The taxation statute provides that the "actual value" shall be determined by "appropriate consideration of the cost approach, the market approach, and the income approach to appraisal." Section 39-1-103(5)(a), C.R.S. (1985 Cum.Supp.). It is not disputed that the market approach is appropriate for appraising the land in question and in determining its present market value. See May Stores Shopping Centers, Inc. v. Shoemaker, 151 Colo. 100, 376 P.2d 679 (1962). However, respondents argue that the reasonable future use of a property may be also considered in establishing the present market value for tax assessments. We disagree.
Respondents cite to State Department of Highways v. Ogden, 638 P.2d 832 (Colo.App.1981), which relies in turn on Stark v. Poudre School District R1-1, 192 Colo. 396, 560 P.2d 77 (1977). Both of these cases are condemnation cases concerned with the taking of a property pursuant to the power of eminent domain. In sui generis condemnation proceedings equity entitles the owner to have considered the most advantageous future use to which the land may be reasonably applied. Stark v. Poudre School District R1-1, supra; Wassenich v. Denver, 67 Colo. 456, 186 P. 533 (1919). However, the tax assessor does not suffer a taking of property, and therefore, equity does not afford him the same entitlements as it does an owner of condemned property.
The valuation placed upon a property in a condemnation proceeding represents the highest and best compensation that an owner would receive upon sale of the property. Such is not the situation with valuation of a property for taxation purposes. The tax assessor can periodically reassess the tax on a property, based on changes in the property's use, on new improvements, or on changes in present market value. Therefore, equity dictates that the principles of the law of eminent domain not be transferred to tax assessment situations. Accordingly, an owner may be taxed based only upon the present use of his property, and the resultant present market value, without consideration of future uses.
Here, the Board relied upon testimony which stated that the Arlberg Club property was "two-thirds developable," that the property "could" support a significant number of condominium units, and that the P.U.D. plan "could probably" be amended to allow additional development on the land. These considerations not only reflect improper attention to future uses of the property, but are also highly speculative and are not supported by substantial evidence in the record.
The P.U.D. plan designated for development only the 18 acres on which the clubhouse facilities are located. It further designated a density of 1.7 units per acre for those 18 acres, which amounts to only 31 units that can be built on the land in question. The remaining acreage, according to the final P.U.D. plan, was to be retained as open space. The evidence showed that during the tax year of 1983, the designated open space was used as open space. Thus, the Board improperly relied on appraisals which valued the property on bases of greater development than is possible under the governing P.U.D. plan and on bases of possible amendments to the P.U.D. It should have relied upon the express terms of the P.U.D. plan as it existed in 1983.
Respondents also argue that because the open space within the Arlberg property is not dedicated for public use, it is not restricted. Such an interpretation of open space is not supported by either the commonly understood meaning of the term, nor by the P.U.D. plan. According to the plan, development in the open space included within the Arlberg property is "limited to trails and utility lines."
Respondents' arguments also imply that the Arlberg Club agreed that its open space would be taxed as non-open space. The resolution to which they point, however, establishes only that the Arlberg property shall be "subject to taxation." Thus, the open space must be taxed, but on the basis of its character as open space.
The Arlberg Club next objects to the Board's classification of the 18 acres as commercial, rather than residential, thus applying a 29% tax rate rather than 21%. We find no error in this classification.
The commercial classification includes "hotels and motels" which are defined as "establishments ... primarily engaged in providing lodging, camping, or personal care ... and which are predominantly used on an overnight or weekly basis." Section 39-1-102(5.5), C.R.S. (1985 Cum.Supp.). The testimony demonstrated that the Arlberg clubhouse provided accommodations for sleeping and dining. The evidence also showed that in addition to annual membership dues, there were rental charges for the daily or weekly use of the facilities. Thus, the record substantially supports the Board's application of the commercial tax rate.
Because we are remanding for reassessment based on the record, we address the Arlberg Club's contention of error that the Board improperly refused to accept one of its witnesses as an expert witness. We conclude that the witness should have been accepted as an expert.
Because the Board is governed by the rules of evidence, it has wide discretion in determining whether the requirements...
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