Hoffner v. Routt

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

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¶ 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.

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¶ 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.

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¶ 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.

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¶ 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

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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

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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

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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

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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.

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¶ 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

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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.

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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

properties in the market. Sampson, 105 P.3d at 203. It reflects

“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.

Tr. Corp. v. Bd. of Cnty. Comm’rs, 860 P.2d 1383, 1386 (Colo. App.

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.”

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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.