23CA0944 Hoffner v Routt 07-18-2024
COLORADO COURT OF APPEALS
Court of Appeals No. 23CA0944
Colorado Board of Assessment Appeals
Case No. 22BAA968
Susan Hoffner,
Petitioner-Appellant,
v.
Routt County Board of Equalization,
Respondent-Appellee,
and
Board of Assessment Appeals,
Appellee.
ORDER AFFIRMED
Division IV
Opinion by JUDGE RICHMAN*
Navarro and Pawar, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced July 18, 2024
Susan Hoffner, Pro Se
Erick Knaus, County Attorney, Lynaia South, Assistant County Attorney,
Matthew Frederickson, Assistant County Attorney, Steamboat Springs,
Colorado, for Respondent-Appellee
Philip J. Weiser, Attorney General, John August Lizza, First Assistant Attorney
General, Krista Maher, Senior Assistant Attorney General, Denver, Colorado,
for Appellee
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2023
1
¶ 1 In this property tax case, petitioner, Susan Hoffner appeals an
order by the Board of Assessment Appeals (BAA) following a
hearing. The BAA upheld the denial of her challenge to the
classification and valuation assigned to her real property for the
2022 tax year as assessed by the Routt County Board of
Equalization (BOE). We affirm.
I. Background
¶ 2 Hoffner owns two adjacent parcels of land in Steamboat
Springs, Colorado. One parcel contains a single-family home and is
classified as residential (the residential parcel). The other parcel,
which is the subject of this appeal (the subject parcel), is a forty-
seven-acre lot that is primarily occupied by a dilapidated tennis
court but also contains a paved parking area.
¶ 3 For the 2022 tax year, the Routt County Assessor’s Office
reclassified the subject parcel from “residential” to “recreational,” a
sub-class of commercial, and valued it at $459,570. This proposed
valuation was actually a reduction from the prior tax value of
$473,710. But Hoffner argued the value should be reduced to
$394,070.
2
¶ 4 Hoffner appealed the classification and valuation to the BOE
and requested an administrative denial to advance the appeal to the
BAA. The BOE accepted the assessor’s value and issued an
administrative denial, which Hoffner appealed to the BAA. In her
BAA appeal, Hoffner argued that the subject parcel should still be
classified as residential and that the assessor’s value of the subject
parcel was too high.
¶ 5 The BAA held a hearing in February 2023, and Hoffner’s sole
witness was her husband. In terms of classification, Mr. Hoffner
raised several issues. First, he testified that when his wife
purchased the parcels together in the 1970s, each lot included a
golf membership and required the payment of utility fees. He
continued that in 1981, in order to have the subject parcel be
classified as residential, he agreed with the then assessor to have
the subject parcel assessed together with the residential parcel in
exchange for surrendering both the golf membership and the utility
taps for the subject parcel. According to Mr. Hoffner, the effect of
this agreement was to make the subject parcel unmarketable and
potentially impossible to sell and use independently from the
residential parcel.
3
¶ 6 Mr. Hoffner also testified that the tennis court on the subject
parcel was “essential” to the use of the residential parcel because
the lifestyle of his family revolves around athletics and fitness. This
issue was relevant because in 2021, the General Assembly amended
the property tax statute to allow the residential classification of
unimproved land only if it “contains a related improvement that is
essential to the use of the residential improvement located on the
identically owned contiguous residential land.” § 39-1-
102(14.4)(a)(I)(C), C.R.S. 2023 (emphasis added). Additionally, he
testified that a sewer line located on a utility easement runs from
the house on the residential parcel and then crosses the subject
parcel, connecting the two parcels and suggesting they should be
valued together.
¶ 7 The BOE called Gary Peterson, the Routt County Assessor, as
an expert witness regarding classification. Peterson testified that
although the subject parcel was contiguous with and under the
same ownership as the residential parcel, the tennis court was not
essential to the use of the residential parcel. He further testified
that real property was classified based on use and valued based on
highest and best use.
4
¶ 8 In terms of valuation, Mr. Hoffner testified that the BOE’s
value of the subject parcel should be reduced to $394,070 based on
the surrendered golf membership and tap fees, as well as the
estimated cost of demolishing the tennis court because the court
was “dilapidated and unusable.”
¶ 9 The BOE called Jordan Larsen, a real property appraiser, to
testify about the valuation of the subject parcel. Larsen testified
that she prepared a real property appraisal report on the subject
parcel, which the BOE submitted into evidence. The report
presents a comparison of the subject parcel with six comparable
land sales from the two years leading up to the date that the parcel
was valued. The six sales ranged in price from $390,000 to
$700,500 and were qualitatively adjusted for differences in physical
characteristics. Larsen opined that the subject parcel should be
valued above comparable sale #3, which was priced at $409,000
and was inferior to the subject parcel, but below comparable sale
#2, which was priced at $600,000 and was superior to the subject
parcel. Moreover, she testified that comparable sales #1 and #2
were the most similar to the subject parcel, and though she
considered all of the comparable sales, she placed the most weight
5
on sale #1. Larsen further clarified that none of the comparable
sales included golf memberships or prepaid tap fees, and that the
local utility company indicated that once a tap fee was paid, it could
not be surrendered.
¶ 10 Larsen testified that she initially determined the value of the
subject parcel to be $575,000. After considering the tennis court,
however, she concluded that the court had no useful remaining life
and that the highest and best use of the subject parcel was as a
vacant lot. Therefore, she estimated the cost of demolition of the
tennis court to be $15,000 and deducted that amount from her
original figure, resulting in a final value of $560,000 for the subject
parcel.
¶ 11 In a written decision, the BAA denied Hoffner’s appeal,
specifically rejecting Hoffner’s contention that the property is
residential and concluding that the tennis court was not essential
to the use of the adjacent property. The BAA also concluded that
the presence of the utility easement did not compel a residential
classification. The BAA modified the classification from
“recreational” to “vacant” and ordered that the value of the subject
parcel be raised to $482,548 based on Larsen’s appraisal. Because
6
section 39-8-108(5)(a.5), C.R.S. 2023, limits the increase in the
value of property to 5% over the “valuation set by the county board
of equalization,” a 5% increase over $459,570 resulted in a
maximum value of $482,548 for the subject parcel for the 2022 tax
year.
¶ 12 On appeal, Hoffner contends that the BAA erroneously
classified and valued the subject parcel.
II. Standard of Review
¶ 13 The BAA (or the district court) reviews BOE decisions de novo,
and a hearing operates as a “new trial of an entire controversy.”
Bd. of Assessment Appeals v. Sampson, 105 P.3d 198, 203 (Colo.
2005) (quoting Gilpin Cnty. Bd. of Equalization v. Russell, 941 P.2d
257, 263 (Colo. 1997)). The taxpayer bears the burden of proof and,
to prevail, must show by a preponderance of the evidence that the
assessment is incorrect. Id. at 204.
¶ 14 We review BAA orders under the Administrative Procedure Act.
Id. at 208; §§ 24-4-106(11), 39-8-108(2), C.R.S. 2023. In doing so,
we review questions of law, including interpretation of applicable
constitutional and statutory provisions, de novo. Ziegler v. Park
Cnty. Bd. of Cnty. Comm’rs, 2020 CO 13, ¶ 11. But “[i]t is the BAA’s
7
function, and not that of a reviewing court, to weigh the evidence
and to resolve conflicts therein.” Lodge Props., Inc. v. Eagle Cnty.
Bd. of Equalization, 2022 CO 9, ¶ 26. Thus, we defer to the BAA’s
factual findings and will set aside its order only if we conclude that
it abused its discretion or that its order is arbitrary and capricious,
based upon clearly erroneous factual findings, unsupported by
substantial evidence in the record, or otherwise contrary to law.
Ziegler, ¶ 11.
III. Classification of Subject Parcel
¶ 15 Hoffner argues that the BAA should have classified the subject
parcel as residential. We disagree.
A. Applicable Law
¶ 16 Section 39-1-102(14.4)(a)(I) defines “[r]esidential land” as “a
parcel of land upon which residential improvements are located.”
¶ 17 In Mook v. Board of County Commissioners, 2020 CO 12, ¶ 4,
our supreme court held that in order to receive residential
classification for tax assessment purposes under section 39-1-
102(14.4)(a), parcels of land with no residential improvements (like
the subject parcel) have to be (1) contiguous with residential land;
(2) used as a unit with residential land; and (3) under common
8
ownership with residential land. The court interpreted the “used as
a unit” element as requiring that a landowner “us[e] multiple
parcels of land together as a collective unit of residential property.”
Mook, ¶ 5.
¶ 18 In response to Mook, the General Assembly in 2021 amended
the statute to allow the residential classification of such land only if
it “contains a related improvement that is essential to the use of the
residential improvement located on the identically owned contiguous
residential land.” § 39-1-102(14.4)(a)(I)(C) (emphasis added); Ch.
63, sec. 1, § 39-1-102, 2021 Colo. Sess. Laws 252-53.
B. Analysis
¶ 19 We begin by noting that Hoffner challenges the BOE’s
ultimately unsuccessful argument below that the subject property
be classified as “commercial.” Because the scope of an appeal of
the BAA’s classification of property for property tax purposes “is
limited to review of the propriety of the BAA’s classification
determination,” Andrew v. Teller Cnty. Bd. of Equalization, 2012
COA 104, ¶ 9, we do not address Hoffner’s challenge, and instead
explain why the BAA’s classification of the subject parcel as vacant
was correct.
9
¶ 20 For property tax purposes, “vacant land” means “any lot,
parcel, site, or tract of land upon which no buildings or fixtures,
other than minor structures, are located. ‘Vacant land’ may include
land with site improvements.” § 39-1-103(14)(c)(I), C.R.S. 2023.
“‘Minor structures’ means improvements that do not add value to
the land on which they are located and that are not suitable to be
used for and are not actually used for any commercial, residential
or agricultural purpose.” § 39-1-103(14)(c)(II)(A) (emphasis added).
“‘Site improvements’ means streets with curbs and gutters, culverts
and other sewage and drainage facilities, and utility easements and
hookups for individual lots or parcels.” § 39-1-103(14)(c)(II)(B)
(emphasis added).
¶ 21 The BAA classified the subject parcel as vacant land on two
bases. First, despite Hoffner’s argument that the subject parcel
should be classified as residential because the presence of a utility
easement containing a sewer line running across the corner of the
subject parcel showed that the parcels were connected, that type of
easement is a feature of vacant land. This finding is explicitly
permitted by the statutory definition of “vacant land.” § 39-1-
103(14)(c)(I), (14)(c)(II)(B). Second, the tennis court contributed no
10
value to the parcel, as evidenced by both parties’ testimony that no
one uses the tennis court and by both parties agreeing that “the
highest and best use of the subject parcel is to raze the tennis court
and sell the property as a vacant residential building site.” Because
Hoffner has failed to provide us with a transcript of the hearing
before the BAA, we may presume the record supports the BAA’s
finding. See EnCana Oil & Gas (USA), Inc. v. Miller, 2017 COA 112,
¶ 16 n.4 (When an appellant fails to provide a copy of the
transcript, an appellate court may “presume the record supports
the district court’s decision.”).
¶ 22 To the extent Hoffner argues that once a classification is
made, it cannot be changed regardless of whether the law changes,
we reject this argument, as article X, section 3 of the Colorado
Constitution grants authority to the General Assembly to define
residential real property. Colo. Const. art. X, § 3(1)(b); Jensen v.
City & Cnty. of Denver, 806 P.2d 381, 384 (Colo. 1991).
¶ 23 Hoffner also argues that under the new definition of residential
property, the BAA should have still classified the subject parcel as
residential because the tennis court was essential to the use of the
11
single-family home on the residential parcel. Again, we reject this
argument.
¶ 24 As the BAA noted in relation to section 39-1-102(14.4)(a)(I)(C),
both parties agree that the subject parcel is contiguous to the
residential parcel, the parcels have identical ownership, and the
subject parcel is improved by a tennis court. What they disagree on
is whether the tennis court is “a related improvement that is
essential to the use of” the home on the residential parcel. Id.
¶ 25 In finding that the tennis court was not essential to the use of
the home, the BAA reasoned that the court was in “disrepair” and
had not been used for an extensive period of time, and that
Hoffner’s own valuation of the subject parcel “is premised in part on
tearing down the tennis court.” This finding is supported by
photographs illustrating that the court was unsafe for use on
account of multiple cracks in the foundation, as well as Hoffner’s
own acknowledgment that the court was “in disrepair” and that the
family’s use of the court “diminished.”
¶ 26 Because the BAA’s findings as to the subject parcel’s
classification have record support, we will not “substitute[] [our]
own factual finding[s] for th[ose] of the BAA.” Lodge Props., ¶ 44.
12
IV. Valuation of Subject Parcel
¶ 27 Hoffner contends that the BOE’s valuation overvalued the
subject parcel. We disagree.
A. Applicable Law
¶ 28 When valuing vacant land for property tax purposes, the
county assessor must determine the property’s actual value with
appropriate consideration given to the market approach, cost
approach, and income approach. §§ 39-1-103(5)(a), (14)(b).
¶ 29 The market approach involves analyzing sales of comparable
“what a willing buyer would pay a willing seller under normal
economic conditions.” Bd. of Assessment Appeals v. Colo. Arlberg
Club, 762 P.2d 146, 151 (Colo. 1988) (quoting May Stores Shopping
Ctrs., Inc. v. Shoemaker, 151 Colo. 100, 110, 376 P.2d 679, 683
(1962)). When using the market approach in these circumstances,
an assessor must take into account the “anticipated market
absorption rate, the size and location of [the subject parcel], the
direct costs of development, any amenities, any site improvements,
access, and use.” § 39-1-103(14)(b).
13
¶ 30 The cost approach involves estimating the cost of replacing the
improvements to the property, less accrued depreciation. Bd. of
Assessment Appeals v. E.E. Sonnenberg & Sons, Inc., 797 P.2d 27,
30 n.9 (Colo. 1990). And the income approach “generally involves
calculating the income stream (rent) the property is capable of
generating, capitalized to value at a rate typical within the relevant
market.” Lodge Props., ¶ 32 (quoting E.E. Sonnenberg & Sons, 797
P.2d at 30 n.8).
¶ 31 If the nature of the property rules them out, inapplicable
approaches to value need not be considered or documented. Resol.
1993). In cases involving vacant land, the cost or the income
approach may not be appropriate. Id.
B. Analysis
¶ 32 In its order, the BAA found that, in contrast to Hoffner, who
provided no market data or analysis in defense of her assertion of
the subject parcel’s value, Larsen “provided an appraisal report with
six good comparable sales, considering the appropriate [section 39-
1-103(14)(b)] factors, from within an appropriate time frame. To
these sales, she made reasonable qualitative adjustments and
14
presented an adequate analysis.” Accordingly, the BAA adopted
Larsen’s analysis. It ordered, based on section 39-8-108(5)(a.5),
which limits the increase in the value of property to 5% over the
“valuation set by the county board of equalization,” that the value of
the subject parcel for the 2022 tax year be $482,548.
¶ 33 The BAA’s finding is supported by the record. In her appraisal
report, Larsen considered, as mandated by the statute, both the
cost approach and the income approach but rejected them.
1
Instead, she employed the market approach by using six
comparable land sales from the area and analyzing these sales in
relation to the subject parcel based on characteristics including
acreage, zoning, topography, location, and views. Because Hoffner
did not provide alternative comparable properties to refute Larsen’s
analysis, or otherwise develop an argument addressing flaws in the
appraisal report, we are not persuaded that Hoffner has met her
1
Larsen ultimately decided that these approaches were not
appropriate for valuing the subject parcel. See Resol. Tr. Corp. v.
Bd. of Cnty. Comm’rs, 860 P.2d 1383, 1386 (Colo. App. 1993). In
terms of the income approach specifically, she noted, “There is no
market for income-producing residential lots. The current condition
of the tennis court improvement makes the court inoperable. No
market income data is available for this configuration of a single
tennis court on private residential lot.”
15
burden in proving that it was more likely than not that the BAA’s
valuation was incorrect. See Sampson, 105 P.3d at 204.
¶ 34 Since the BAA’s decision enjoys record support, we conclude
that the BAA did not abuse its discretion by denying Hoffner’s
appeal.
V. Disposition
¶ 35 The order is affirmed.
JUDGE NAVARRO and JUDGE PAWAR concur.
