HDH Partnership v. Hinsdale County Board of Equalization

COLORADO COURT OF APPEALS 2017COA134
Court of Appeals No. 16CA1723
Board of Assessment Appeals, State of Colorado Case Nos. 68337, 68338,
68339 & 68340
HDH Partnership; Lawrence Ausherman; Mark L. Ish; Herb Marchman;
Hondros Family Real Estate, LLC; and Teresa M. Mull Revocable Trust,
Petitioners-Appellants,
v.
Hinsdale County Board of Equalization,
Respondent-Appellee
and
Board of Assessment Appeals, State of Colorado,
Appellee.
ORDER REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division IV
Opinion by JUDGE GRAHAM
Booras and Dunn, JJ., concur
Announced October 19, 2017
Hoskin Farina & Kampf, P.C., Michael J. Russel, Andrew H. Teske, Karoline M.
Henning, Grand Junction, Colorado, for Petitioners-Appellants
Schumacher & O’Loughlin, LLC, Michael P. O’Loughlin, Gunnison, Colorado,
for Respondent-Appellee
Cynthia H. Coffman, Attorney General, Krista Maher, Assistant Attorney
General, Denver, Colorado, for Appellee
¶1 In this case we are tasked with determining whether owners of
fishing and hunting memberships, HDH Partnership, Lawrence
Ausherman, Mark L. Ish, Herb Marchman, Hondros Family Real
Estate, LLC, and Teresa M. Mull Revocable Trust, may be taxed for
the parcels of real estate allocated to them in their membership
agreements.
¶2 The parcels are part of a larger tract of land used as a hunting
and fishing club in southwestern Colorado. Membership in the
club is granted to those who hold a deed to one of the parcels which
collectively comprise the club grounds. Members cannot make
improvements on their parcels or exclude other club members.
Instead, the club retains control over the grounds and grants all
members equal access, regardless of the parcel to which they hold
title. A member’s rights to access the grounds can be revoked if he
or she owes money or violates club rules.
¶3 On these facts, we conclude that the club is the true property
owner because it enjoys the most significant incidents of ownership
while members effectively have a license to use club grounds,
notwithstanding that they hold bare legal title to the parcels.
1
Therefore, the club, not the members should bear the real property
tax burden.
I. Background
A. The Lake Fork Hunting and Fishing Club
¶4 In 1979, the Lake Fork Hunting and Fishing Club (the Club)
was formed. A declaration transferred 1400 acres of land to the
Club, divided into twenty-nine parcels, known as “Ranches.”
Except for a single “Floating Membership” that is not tied to a
Ranch, the only way to obtain membership in the Club is to hold
title to part of a Ranch. Membership cannot be “sold, assigned or
transferred, voluntarily or by will or by operation of law.” Instead,
“[w]henever a member . . . cease[s] to own the interest in the real
property which entitles him to such membership . . . such member
shall automatically be dropped from the membership rolls of the
Club and the membership certificate [is transferred] to the new
ranch owner.” In other words, club membership cannot be severed
from the deed, but instead follows record title to a Ranch.
¶5 The Club reserves the following rights:
2
 “exclusive hunting and fishing rights and privileges
including all rights of ingress and egress upon and
across the entire property, including all Ranches”;
 “exclusive right to construct and maintain over, across
and upon each Ranch . . . utilities, roads, lakes, ditches,
bridges and fences”;
 “exclusive right to pasture livestock on the entire
property, including each individual Ranch”;
 “the right to impound, store, and divert the waters of the
Lake Fork of the Gunnison river over, across and upon
each Ranch”; and
 the rights to “easements and rights of way incident to
and necessary to maintain . . . the existing skeet and trap
field, the existing golf driving range and the existing
airport runway.”
Members are prohibited from
 subdividing the Ranches;
 building within one hundred feet of the river;
 placing trailers or mobile homes on the Ranches; or
3
 conducting any mining or drilling activities.
Initially, members were barred from building more than three
residences on any Ranch, but, in 1999, the declaration was
amended to prohibit the construction of any residence on a Ranch.
¶6 The Club’s bylaws limit the number of guests a member may
bring to the Club for hunting or fishing and the number of days an
individual guest may hunt or fish. Members must register
themselves and their guests when using Club grounds, and their
hunting and fishing activities are subject to detailed Club
regulations. The Club is entitled to all revenues from fees charged
for hunting, fishing, shooting, and other activities on the grounds.
¶7 Only “members in good standing” are permitted to access Club
grounds, which are defined as “all property owned by Lake Fork
Hunting and Fishing Club including all ranches by virtue of the
ownership of which persons are entitled to membership in the Lake
Fork Hunting and Fishing Club.” Members who have unpaid
assessments or other outstanding fees “shall not be entitled to the
privileges of the Club.” And the Board of Governors may “censure[],
fine[], or have all privileges suspended . . . for violation of the
Declaration . . . , By-Laws, Rules or Regulations . . . or for any
4
conduct which in the opinion of the Board, is improper or
prejudicial to the welfare of or reputation of the Club.”
B. Procedural History
¶8 Each of the petitioners in this case holds membership in the
Club by virtue of a deed conferring record title to a Ranch or part of
a Ranch. They initiated this action after they disagreed with the
Hinsdale County Assessor’s 2015 assessment of those parcels.
They argued that the Assessor should not have assessed property
taxes to them individually because, although they are the record
title holders, they do not actually enjoy traditional incidents of
ownership, which are instead retained by the Club. The Club, they
said, is the true property owner and therefore it should have
received the property tax assessment. Petitioners also argued that
the Assessor failed to account for the personal property value of the
Ranch deeds. The value of the deeds, they claimed, was not in the
land but in the club membership that the deed granted —
membership which constitutes a personal property interest not
subject to real property taxation.
¶9 The Hinsdale County Board of Equalization (BOE) agreed with
the Assessor that petitioners were the parcel owners and affirmed
5
the Assessor’s valuation. Petitioners appealed to the Board of
Assessment Appeals (BAA), which agreed with the BOE and
affirmed its decision. Petitioners then filed this appeal.
¶ 10 Because we agree with petitioners that the Club is the true
owner of the parcels, we conclude that the BAA erred as a matter of
law in assessing real property taxes to petitioners. We also
conclude that the BAA erred in affirming the Assessor’s valuation,
because it was based on the personal property value of petitioners’
licenses to use Club grounds, rather than the value of the parcels
as real property. Accordingly, we reverse the BAA’s order and
remand for further proceedings consistent with this opinion.
II. To Whom Should the Real Property Taxes be Assessed?
¶ 11 We must first answer the following question: Who is the true
owner of the Ranches who should be assessed taxes for them? We
agree with petitioners that bare legal title is not determinative, and,
instead, we must look beyond the legal form to the substance of the
parties’ respective rights. We also agree that, based on petitioners’
and the Club’s respective rights, petitioners hold mere licenses to
use Club grounds, while the Club retains the most significant
6
traditional incidents of ownership. Therefore, we conclude that the
Club, as the true owner, should have been assessed the taxes.
A. Standard of Review
¶ 12 We review decisions of the BAA as a mixed question of fact and
law. See Cantina Grill, JV v. City & Cty. of Denver Bd. of
Equalization, 2015 CO 15, ¶ 15. We defer to the BAA’s factual
findings unless they are unsupported by competent evidence in the
record, but we interpret the tax statutes de novo, and apply those
interpretations to the facts to reach our own legal conclusions.
Roaring Fork Club, LLC v. Pitkin Cty. Bd. of Equalization, 2013 COA
167, ¶ 21; see also §§ 24-4-106(7), (11), 39-8-108(2), C.R.S. 2017;
Cantina Grill, ¶ 15.
¶ 13 Whether something is “an interest in property that can be
valued and is subject to property tax” is a question of law. Roaring
Fork, ¶ 26.
¶ 14 When interpreting statutes, we give the words their ordinary
and common meanings and interpret the provisions as a whole,
giving effect to all parts. Bd. of Cty. Comm’rs v. Vail Assocs., Inc., 19
P.3d 1263, 1273 (Colo. 2001).
7
B. We Must Look Beyond Bare Legal Title to Determine
Ownership
¶ 15 The BOE insists that the Assessor was obligated to assess
taxes to the record title holders (petitioners) and that we may not
look beyond bare legal title when determining ownership for tax
purposes.1 Petitioners disagree, arguing that the law permits us to
look beyond the title to the substance of the parties’ rights when
determining ownership. We agree with petitioners. Their position
finds support in statute and case law.
1. Record Title is Not Conclusive Under Colorado’s Tax Statutes
¶ 16 First, reading the tax statutes as a whole, we conclude that
record title is not conclusive evidence of property ownership. It is
true that assessors are directed to ascertain real property
ownership “from the records of the county clerk and recorder.”
§ 39-5-102(1), C.R.S. 2017. But those records are merely “prima
facie evidence of all things appearing therein.” § 39-1-115, C.R.S.
2017. Prima facie means “[a]t first sight; on first appearance but
subject to further evidence or information.” Black’s Law Dictionary
1The BAA acknowledges that we may look past the form to the
substance of the parties’ rights but contends that petitioners retain
sufficient rights such that they are the true parcel owners.
8
1382 (10th ed. 2014). And section 39-5-122(2), C.R.S. 2017,
provides that “[i]f any person is of the opinion that . . . property has
been erroneously assessed to such person, he or she may appear
before the assessor and object.” Therefore, while record title is
evidence of property ownership, it merely creates a rebuttable
presumption, not a conclusive determination.
¶ 17 We are also unpersuaded that section 39-5-104, C.R.S. 2017,
required the Assessor to tax the individual deed holders. “Each
tract or parcel of land . . . shall be separately appraised and valued,
except when two or more adjoining tracts, parcels, or lots are owned
by the same person, in which case the same may be appraised and
valued either separately or collectively.” § 39-5-104. The BOE
argues that this requirement for individual parcel valuation
required the Assessor to assess taxes to the individual record title
holders. While this provision requires valuation of individual
owners’ parcels, it is silent on how ownership is determined. Thus,
it does not affect our conclusion that the tax statutes permit us to
look beyond bare legal title.
9
2. Case Law Supports Looking Past Bare Legal Title to Determine
Ownership for Tax Purposes
¶ 18 Furthermore, case law illustrates that property ownership is
not necessarily determined by record title. Instead, we must look
beyond “form[s] and labels” to determine “real ownership.” Mesa
Verde Co. v. Bd. of Cty. Comm’rs, 178 Colo. 49, 54, 495 P.2d 229,
232 (1972); Gunnison Cty. v. Bd. of Assessment Appeals, 693 P.2d
400, 404 (Colo. App. 1984) (“Record title alone . . . is not
determinative.”).
“[T]axation is not so much concerned with the
refinements of title as it is with actual
command over the property taxed . . . .” In a
number of cases, the Court has refused to
permit the transfer of formal legal title to shift
the incidence of taxation attributable to
ownership of property where the transferor
continues to retain significant control over the
property transferred. In applying this doctrine
of substance over form, the Court has looked
to the objective economic realities of a
transaction rather than to the particular form
the parties employed. The Court has never
regarded “the simple expedient of drawing up
papers,” as controlling for tax purposes when
the objective economic realities are to the
contrary. “In the field of taxation,
administrators of the laws and the courts are
concerned with substance and realities, and
formal written documents are not rigidly
binding.”
10
City of Golden v. Aramark Educ. Servs., LLC, 2013 COA 45, ¶ 31
(alteration in original) (quoting Frank Lyon Co. v. United States, 435
U.S. 561, 572-73 (1978)).
¶ 19 This principle has been applied to tax cases in Colorado in the
following situations:
 evaluating disputes over whether property is taxable, see
Cantina Grill, ¶¶ 5-73 (looking past form to determine
that Denver International Airport concessionaires’
possessory property interests were not tax exempt even
though city held legal title); Mesa Verde, 178 Colo. at 53-
57, 495 P.2d at 231-33 (looking beyond bare legal title to
determine that concessionaire on national park property
owned improvements thereon); Gunnison Cty., 693 P.2d
at 404 (applying substance over form doctrine to
determine that jail which county sold and leased back
from a private entity was tax exempt county property);
 deciding if a contract conveyed a real property interest,
see Vill. at Treehouse, Inc. v. Prop. Tax Adm’r, 2014 COA
6, ¶¶ 8-30 (holding that assignment of rights to develop
condominium units constituted taxable real property
11
rights, notwithstanding that transferor retained rights in
the common elements); Bernhardt v. Hemphill, 878 P.2d
107, 112-13 (Colo. App. 1994) (holding that time share
contract did not create real property interest);
 analyzing whether a contract created tax exempt or
taxable sales, cf. Aramark, ¶¶ 31-35 (explaining that
substance over form doctrine supported argument that
contract created retail sales but ultimately deciding case
based on presumption against tax exemption) (citing
Frank Lyon, 435 U.S. at 572-73); and
 determining whether a golf club membership, nominally
a personal property interest, was actually taxable as real
property, Roaring Fork, ¶¶ 31-46 (holding that
memberships were merely licenses, not leaseholds
taxable as real property).
¶ 20 Nothing in the law suggests that this doctrine cannot also be
applied to the question of who is the true owner of real property and
should therefore be assessed taxes. In fact, there is strong support
for applying the doctrine here. See Frank Lyon, 435 U.S. at 573;
Mesa Verde, 178 Colo. at 57, 495 P.2d at 233 (“[W]here a party has
12
the right to possession, use, enjoyment, and profits of the property,
that party should not be permitted to use the bare legal title . . . to
avoid his fair and just share of state taxation.”); Gunnison Cty., 693
P.2d at 404 (“The nature of a transaction is not controlled by its
legal characterization; rather, it is the intention of the parties which
determines the essence of the transaction, and the facts of each
case demonstrate the parties’ intention.”).
C. Applying the Substance Over Form Doctrine Reveals That the
Club is the True Owner
¶ 21 Having concluded that we may look past bare legal title to
determine ownership, we must now examine the substance of
petitioners’ and the Club’s rights to decide who is the true owner of
the real property. Because the Club has a high degree of control
over the grounds, and petitioners may only use the grounds equally
with other club members and subject to the Club’s control and
regulation, we conclude that the Club is the true owner while
petitioners’ rights are akin to a mere license.
¶ 22 “Property rights in a physical thing have been described as the
rights ‘to possess, use and dispose of it.’” Loretto v. Teleprompter
Manhatten CATV Corp., 458 U.S. 419, 435 (1982) (quoting United
13
States v. Gen. Motors Corp., 323 U.S. 373, 378 (1945)). The right to
possess property connotes the right to control it. See Cantina Grill,
¶ 1 n.1 (Possessory interest is defined as “[t]he present right to
control property, including the right to exclude others”[;] “a physical
relation to the land of a kind which gives a certain degree of
physical control over the land, and an intent so to exercise such
control as to exclude other members of society in general from any
present occupation of the land.” (first quoting Black’s Law
Dictionary 1353 (10th ed. 2014); then quoting Restatement (First) of
Property § 7 (1936))). The power “to exclude others . . . has
‘traditionally been considered one of the most treasured strands in
an owner’s bundle of property rights.’” Aspen Springs Metro. Dist. v.
Keno, 2015 COA 97, ¶ 9 (quoting Loretto, 458 U.S. at 435). Other
real property ownership rights include the right to develop the
property, see Vill. at Treehouse, ¶ 22, and the right to income from
the property, McDonald v. McDonald, 150 Colo. 492, 494, 374 P.2d
690, 691 (1962); see also Mesa Verde, 178 Colo. at 57, 495 P.2d at
233.
¶ 23 By contrast, “[a] license is a personal privilege to do some act
or series of acts upon the land of another not involving possession
14
of an estate or interest therein.” Roaring Fork, ¶ 41 (quoting Welsch
v. Smith, 113 P.3d 1284, 1289 (Colo. App. 2005)).
¶ 24 In applying these rules to the facts here, Roaring Fork is
instructive. In that case, a division of this court concluded that a
golf club membership was not a leasehold but a license. Id. at
¶¶ 36-37. The club’s members had “a personal privilege to perform
any of a series of acts on the club’s property, including playing golf,
fishing, dining, or working out at the fitness facility.” Id. at ¶ 41.
But, members were not entitled to “possession of the property . . .
[or] exclusive use or occupation of it,” could not receive rents or
profits from the club’s property, and could not “exclude any others
from the club’s property who would use it in the same way.” Id. at
¶¶ 37, 40 (citation omitted). Furthermore, “memberships can be
revoked for . . . nonpayment of dues or violation of the club’s rules
and regulations.” Id. at ¶ 41.
¶ 25 Although the memberships here are conveyed by deed, the
rights they convey are strikingly similar to those in Roaring Fork.
Members do not have possessory rights to the parcels for which
they hold record title; they can only access them equally with other
club members. They have no power to exclude other club members
15
from the parcels to which they hold title and are limited in the
number of guests they may bring onto the grounds. Members
cannot profit from mining, drilling, or pasturing livestock on their
parcels and are not entitled to revenues collected by the Club from
use of the property. Members also lack control over improvements
to the property. And members’ rights to access Club grounds may
be revoked if they do not pay their assessments and fees or if they
violate Club rules.
¶ 26 Meanwhile, the Club enjoys most of the traditional benefits of
real property ownership, including the rights to exclude
nonmembers or members not in good standing, to erect or remove
improvements, to control the river and its waters, and to profit from
the land by pasturing livestock, conducting mining or drilling
activities, and charging fees to members. Given the extent of the
Club’s control over the property, we conclude that, while the
members hold bare legal title to the parcels, the Club is the true
owner. See Frank Lyon, 435 U.S. at 573; Mesa Verde, 178 Colo. at
57, 495 P.2d at 233 (“[W]here all the evidence indicate[d] that the
most significant incidents of ownership [were] possessed by [a
private party], it would be an especially unjust result to allow [that
16
party] to escape state taxation.”); Gunnison Cty., 693 P.2d at 404(The county “retained sufficient control of the property to render it
tax exempt” where it “occupie[d] and control[led] the property,
control[led] construction and improvements of the property, [and]
maintain[ed] and insure[d] the property.”).
¶ 27 Accordingly, we agree with petitioners that the BAA erred as a
matter of law in holding that petitioners were the real property
owners.
D. Appellees’ Other Arguments Regarding Ownership Are
Unavailing
¶ 28 We find the BOE’s and BAA’s remaining arguments on this
issue unpersuasive for the following reasons.
1. Petitioners Benefit From Holding Restrictive Deeds
¶ 29 The BOE argues that the substance over form doctrine is
inapplicable here because “[petitioners’] statements throughout
their Opening Brief make it sound like the Club’s owners have no
rights or privileges by having an ownership interest in a [Ranch] . . .
[but] the owners enjoy many outdoor recreational benefits by
owning a parcel.” Relatedly, the BOE and BAA argue that the
limitations on petitioners’ property rights are merely restrictive
17
covenants from which they benefit through the preservation of the
Club as an undeveloped hunting and fishing area for use by all
members.
¶ 30 We are unpersuaded by these contentions because they
conflate any benefit with benefits incident to ownership. See Radke
v. Union Pac. Ry. Co., 138 Colo. 189, 198-99, 334 P.2d 1077, 1082
(1959) (explaining the difference between language granting title to
mineral reserves and language granting mere license to remove
minerals from land). While it is undoubtedly true that petitioners
benefit from holding deeds to Club Ranches, and that they even
benefit from the deed restrictions, which protect their ability to
access the whole undeveloped grounds for hunting and fishing,
those rights nevertheless amount to mere license to use Club
property, not fee ownership.
2. Petitioners Control Their Properties Through the Club
¶ 31 The BOE and BAA also argue that petitioners retain sufficient
control to remain fee owners through the Board of Governors (the
Board). We find no legal support for this contention.
¶ 32 An association that represents a group of individuals is not
equivalent to each individual exercising control over his or her
18
property. See Clubhouse at Fairway Pines, L.L.C. v. Fairway Pines
Estates Owners Ass’n, 214 P.3d 451, 456-57 (Colo. App. 2008)
(holding that common interest community association did not
adequately represent the interests of individual owners, who may
hold differing opinions from one another and from the association
itself); Dunne v. Shenandoah Homeowners Ass’n, Inc., 12 P.3d 340,
344-45 (Colo. App. 2000) (same). While petitioners have some
ability to participate in management of the land by exercising their
voting rights or running for a seat on the Board, this is hardly the
same as exercising exclusive control over one’s own property.
¶ 33 This argument would also require us to disregard the Club’s
corporate form. Governance through a separate corporate entity is
not merely a legal nicety; it is substantively different than individual
control over property or even collective governance under a different
ownership structure. For example, in Reishus v. Bullmasters, LLC,
2016 COA 82, a division of this court considered a claim related to
a piece of land similarly designated for hunting purposes. See id. at
¶ 12. But in that case, the structure of the ownership was a
tenancy in common, and the individual owners governed by a
simple majority vote. Id. at ¶¶ 3-12. The practical effect was that
19
those owners had a greater degree of control over the collective use
of the property than these club members, who only vote for
representatives to govern the property on behalf of the Club.2
¶ 34 Ultimately, the influence petitioners have over Club
governance of the land is simply not sufficient control to say that
they retain any significant incidents of fee ownership.
3. Possibility of Future Changes to the Declaration
¶ 35 Next, to the extent the BOE and BAA suggest that the Club
could change the declaration, bylaws, and other regulations that
deprive petitioners of significant incidents of ownership, we decide
assessment controversies based on current realities, not future
possibilities. See Padre Resort, Inc. v. Jefferson Cty. Bd. of
Equalization, 30 P.3d 813, 815-16 (Colo. App. 2001) (holding that
assessor was correct to disregard hotel rooms under construction
when valuing property because “economic conditions existing
outside the base period may not be considered in arriving at the
taxable value of property”); see also Vail Assocs., 19 P.3d at 1280
(holding that ski resort held taxable possessory property interest,
2 The members can engage in direct governance only by amending
the Club declaration by a vote of 75% of members.
20
notwithstanding that its interest only extended to the year 2031);
Mesa Verde, 178 Colo. at 57, 495 P.2d at 233 (“It would be a very
harsh doctrine that would deny the right of the states to tax lands
because of a mere possibility that they might lapse to the United
States (for failure to fulfill certain contractual obligations).” (quoting
Balt. Shipbuilding & Dry Dock Co. v. City of Baltimore, 195 U.S. 375,
382 (1904))). Thus, whether petitioners might be accorded more
control of the parcels in the future does not change our present
analysis.
4. Petitioners Retain the Right to Sell Their Interests
¶ 36 The BOE and BAA also assert that petitioners are the real
property owners because they retain the right to sell their parcels.
We disagree. The right to sell is not dispositive. See Loretto, 458
U.S. at 436 (“[E]ven though the owner may retain the bare legal
right to dispose of the occupied space by transfer or sale, the
permanent occupation of that space by a stranger will ordinarily
empty the right of any value, since the purchaser will also be
unable to make any use of the property.”). And while petitioners
retain the right to sell the deeds to their parcels, the substance of
21
the rights bought and sold is merely license to use the Club
grounds, not interest in the land.
¶ 37 To be sure, the alienability of these deeds is unusual.
Licenses are typically revocable, unassignable personal privileges
that terminate upon transfer of the land. See Radke, 138 Colo. at
207-08, 334 P.2d at 1086-87; Vill. at Treehouse, ¶ 19; Lehman v.
Williamson, 35 Colo. App. 372, 375, 533 P.2d 63, 65 (1975). But
those characteristics are not necessary for a license. See Radke,
138 Colo. at 208-09, 334 P.2d at 1087; Roaring Fork, ¶ 11. So,
while the use of a deed to convey these licenses is unusual, it does
not change the substance of the rights bought and sold. See Dep’t
of Commerce v. Carriage House Assocs., 585 P.2d 1337, 1339 (Nev.
1978) (observing that “vacation licenses,” which gave holders the
right to occupy resort units for a short time, were “an anomaly [that
do not] fit neatly into any nice legal terminology,” but concluding
that they were more akin to contract rights than real property
interests).
¶ 38 Accordingly, we reject the contention that the ability to sell a
Ranch deed means that the deed conveys a real property interest in
the parcel.
22
5. CCIOA
¶ 39 The BOE also argues that the Colorado Common Interest
Ownership Act (CCIOA) required the Assessor to assess the parcels
individually. We need not address this contention because the
provision on which the BOE relies does not apply to the Club.
Section 38-33.3-105(2), C.R.S. 2017, applies only to common
interest communities created after June 30, 1992, unless they have
elected CCIOA treatment. §§ 38-33.3-115, -117, -118, C.R.S. 2017.
The Club was created in 1979 and has not elected CCIOA
treatment.
6. Unit Assessment Rule
¶ 40 The BOE and BAA next contend that the unit assessment rule
requires taxes to be assessed to the individual members. We do not
perceive the unit assessment rule as applicable here.
¶ 41 “The unit assessment rule requires that all estates in a unit of
real property be assessed together, and that the real estate as an
entirety be assessed to the owner of the fee free of the ownerships of
lesser estates such as leasehold interests.” Vill. at Treehouse, ¶ 32
(citing City & Cty. of Denver v. Bd. of Assessment Appeals, 848 P.2d
355, 358 (Colo. 1993)).
23
¶ 42 The unit assessment rule is not implicated in this case
because petitioners are not asking for the taxes to be split between
them and the Club. See City & Cty. of Denver, 848 P.2d at 359 (The
unit assessment rule “prohibits multiple assessments on multiple
taxpayers holding disparate interests in a single piece of property.”).
Instead, they ask us to recognize the Club as the true property
owner, despite the legal form. Looking beyond the form to the
substance of the parties’ rights does not require us to divide the tax
allocation.
7. Absent Members
¶ 43 The BOE and BAA further contend that petitioners’ arguments
were properly rejected because all club members were not joined in
the action. We disagree.
¶ 44 First, we are not convinced that the members’ owners were
necessary or indispensable parties under C.R.C.P. 19. A party is
indispensable if the absent “person’s interest in the subject matter
of the litigation [is] such that no decree can be entered in the case
which will do justice between the parties actually before the court
without injuriously affecting the right of such person[.]” Woodco v.
Lindahl, 152 Colo. 49, 54-55, 380 P.2d 234, 238 (1963). Here,
24
petitioners challenge the tax assessments on four parcels of land to
which they hold bare legal title. Other club members’ assessments
are not at issue. Hence, we fail to see how a decision will
injuriously affect the absent members.
¶ 45 But, even if the absent club members were indispensable
parties, affirming the order would not be the appropriate remedy.
The BOE and BAA did not move to join the absent owners or to
dismiss the action for failure to join indispensable parties. Instead,
they argue that relief should be denied to petitioners on the merits
because the other members were not party to the suit. This is not
how C.R.C.P. 19 works. See Fairway Pines, 214 P.3d at 454 (The
indispensable party rule “does not mean that ‘a party with the
necessary information to make a motion for joinder of an
indispensable party at his disposal can sit back and raise it at any
time in the proceedings, when the only effect . . . would be to
protect himself.’”) (alteration in original) (citation omitted); see also
Durango & Silverton Narrow Gauge R.R. Co. v. Wolf, 2013 COA 118,
¶ 26 (The trial court did not err in issuing summary judgment for
plaintiff “where [the defendant] did not move for joinder [of parties
he argued were indispensable], but simply raised the issue in his
25
summary judgment motion.”). If the absent club members were
indispensable, their absence would require a remand for joinder or
dismissal, not affirmation of the order on the merits. See Fairway
Pines, 214 P.3d at 457 (explaining that proper remedy for failure to
join an indispensable party is to join the absent party); Frazier v.
Carter, 166 P.3d 193, 196 (Colo. App. 2007) (holding that
indispensable party’s absence “prevent[ed] final resolution of the
issues raised” on appeal, and remedy was remand to trial court
where the plaintiff would have opportunity to join the absent party).
III. How Should the Property Value Be Calculated?
¶ 46 Finally, we agree with petitioners that the Assessor improperly
valued the parcels, and that the BAA abused its discretion in
affirming that valuation.
A. Standard of Review and Applicable Law
¶ 47 “An assessor’s valuation of property for taxation is presumed
to be correct.” Cantina Grill, ¶ 15. The taxpayer bears the burden
of rebutting that presumption by a preponderance of the evidence.
Roaring Fork, ¶ 20. We will set aside a decision by the BAA only if
there is no competent evidence in the record to support the decision
or “the decision reflects a failure to abide by the statutory scheme
26
for calculating property tax assessments.” CTS Invs., LLC v.
Garfield Cty. Bd. of Equalization, 2013 COA 30, ¶ 59.
¶ 48 Assessors are directed to value property “by appropriate
consideration of the cost approach, the market approach, and the
income approach to appraisal.” Id. at ¶ 27 (quoting § 39-1-
103(5)(a), C.R.S. 2017). “The market approach, or comparable sales
method, involves an analysis of sales of comparable properties in
the market.” City & Cty. of Denver, 848 P.2d at 357 n.3. “The
assessor is required to use sales of real property only in the
valuation process.” 3 Div. of Prop. Taxation, Dep’t of Local Affairs,
Assessor’s Reference Library § 3, at 3.4 (rev. July 2017) (citing § 39-
1-103, C.R.S. 2017).
B. Analysis
¶ 49 Because we have concluded that the Club is the true property
owner and individual members hold only a license to use Club
grounds, we are compelled to conclude that the Assessor’s valuation
violated the statutory scheme for calculating property tax
assessments. Specifically, the Assessor improperly valued the
parcels based on sales of personal property (the members’ licenses),
not comparable real properties.
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¶ 50 The Assessor calculated the value of the individual Ranches by
using sales of deeds to other Club parcels in the past few years.
But, as we have explained, those deeds conveyed only a license to
use the Club grounds — a personal property interest. Because the
value of those sales reflected the value of the personal property
conveyed rather than land, the Assessor should not have used them
as “comparable sales” in determining the value of the parcels, and
the BOE and BAA should not have affirmed that valuation.
IV. Conclusion
¶ 51 We reverse the order of the BAA. On remand, petitioners’
parcels3 should be reassessed as fractions of the Club grounds as a
whole, rather than based on the personal property value of the
members’ licenses to use the Club. The new assessments should be
issued to the Club, not to the individual record holders.
JUDGE BOORAS and JUDGE DUNN concur.
3 Because the BOE and BAA raised the issue of absent Club
members, we clarify that only petitioners’ parcels need to be
reassessed. Resolution of petitioners’ challenges to their own 2015
assessments does not require us to address the assessments of any
other club ranches.
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