CT Partners v. Eagle

23CA1249 CT Partners v Eagle 07-18-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA1249

Board of Assessment Appeals

No. 22BAA458

CT Partners, LLC,

Petitioner-Appellee,

v.

Eagle County Board of Equalization,

Respondent-Appellant,

and

Board of Assessment Appeals,

Appellee.

ORDER AFFIRMED

Division VI

Opinion by JUDGE SCHUTZ

Lipinsky and Martinez*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced July 18, 2024

Montgomery Little & Soran, Michael R. McCormick, Greenwood Village,

Colorado, for Petitioner-Appellee

Bryan Treu, County Attorney, Christina Hooper, Deputy County Attorney,

Eagle, Colorado, for Respondent-Appellant

Phillip J. Weiser, Attorney General, John August Lizza, First Assistant Attorney

General, Tanya M. Santillan, 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 The Eagle County Board of Equalization (Eagle County)

appeals the order of the Board of Assessment Appeals (BAA)

classifying a lot in Vail owned by CT Partners, LLC (Subject Lot) as

residential land for property tax purposes. More specifically, Eagle

County alleges that the BAA relied on legally insufficient evidence

and erred as a matter of law when it ruled that the use of unpaved

parking spaces on the Subject Lot satisfied the “related

improvement” and “essential” requirements of section

39-1-102(14.4)(a)(I)(C), C.R.S. 2023. We affirm the BAA’s decision.

I. Background

¶ 2 Land classified as residential property is taxed at a lower rate

than land classified as vacant property. § 39-1-104(1)(a), C.R.S.

2023 (setting the tax rate for nonresidential property at 29%); § 39-

1-104.2(3)(r)(I), C.R.S. 2023 (setting the 2022 tax rate for residential

property other than multi-family property at 6.95%). Thus, the

BAA’s classification of the Subject Lot as residential property

resulted in less property tax revenue for the county than if the

Subject Lot had been reclassified as vacant land.

¶ 3 CT Partners is a limited liability company managed by Thomas

Gargan. In 2020, CT Partners bought the Subject Lot and a

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contiguous lot (Residential Lot) located on a cul-de-sac in Vail. The

Residential Lot was improved with a single-family home, which

Gargan and his wife made their residence. The Subject Lot was

unimproved when CT Partners purchased it. But before the

purchase, commercial vehicles used the Subject Lot during the

construction of surrounding properties, resulting in significant

rutting and erosion.

¶ 4 To improve its appearance and make it viable as an area to

park vehicles, CT Partners began improving the Subject Lot in 2020

by adding rock, dirt, and topsoil; installing an irrigation system;

constructing a stone path between the residence and the Subject

Lot; and sowing wildflower seed. Gargan testified that these

improvements were completed by the summer of 2022.

¶ 5 Until 2022, the Subject Lot was classified as residential. That

year, the legislature amended the requirements for classifying

property as residential. Based on those new standards, an

appraiser for Eagle County classified the Subject Lot as vacant for

tax year 2022. CT Partners appealed to the BAA, which ruled in CT

Partners’ favor and ordered the property reclassified as residential

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property. Eagle County appeals the decision of the BAA, alleging

the BAA’s reclassification was erroneous.

II. Standard of Review and Relevant Law

¶ 6 A classification by a county assessor is presumed to be

correct, but that presumption is rebuttable if the taxpayer shows it

is incorrect by a preponderance of the evidence. Gyurman v. Weld

Cnty. Bd. of Equalization, 851 P.2d 307, 310 (Colo. App. 1993);

Thibodeau v. Denver Cnty. Bd. of Comm’rs, 2018 COA 124, ¶ 7.

¶ 7 The supreme court recently addressed the standards we apply

when reviewing a BAA decision:

It is the BAA’s function, and not that of a

reviewing court, to weigh the evidence and to

resolve conflicts therein. Jefferson Cnty. Bd. of

Cnty. Comm’rs v. S.T. Spano Greenhouses, Inc.,

155 P.3d 422, 424 (Colo. App. 2006). Thus, an

appellate court may overturn an order of the

BAA “only if it finds an abuse of discretion, or

that the order was arbitrary and capricious,

based upon clearly erroneous factual findings,

unsupported by substantial evidence in the

record, or otherwise contrary to law.” Hinsdale

Cnty. Bd. of Equalization v. HDH P’ship, 2019

CO 22, ¶ 19, 438 P.3d 742, 747.

Lodge Props., Inc. v. Eagle Cnty. Bd. of Equalization, 2022 CO 9,

¶ 26.

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¶ 8 We review the BAA’s decision as a mixed question of law and

fact. Aberdeen Invs., Inc. v. Adams Cnty. Bd. of Cnty. Comm’rs, 240

P.3d 398, 400 (Colo. App. 2009). Whether the evidence before the

BAA was legally sufficient to support the BAA’s decision presents an

issue of law. Farny v. Bd. of Equalization, 985 P.2d 106, 109 (Colo.

App. 1999). We review the BAA’s interpretation of a statute de

novo. Sandra K. Morrison Tr. v. Bd. of Cnty. Comm’rs, 2020 COA

74, ¶ 8. We will apply an agency’s interpretation of a statute if “the

interpretation has a reasonable basis in the law and is supported by

the record.” Id. (quoting Marshall v. Civ. Serv. Comm’n, 2016 COA

156, ¶ 9).

¶ 9 When construing a statute, we endeavor to effectuate the

intent of the General Assembly by looking to the plain meaning of

the language it used. Mook v. Bd. of Cnty. Comm’rs, 2020 CO 12,

¶ 24. In the absence of a statutory definition, we construe a

statutory term according to its “ordinary or natural meaning.” Id.

(citation omitted). “In applying the plain meaning of statutory

language, we must ‘give consistent effect to all parts of [the] statute,

and construe each provision in harmony with the overall statutory

design.’” Id. (citation omitted).

5

¶ 10 For purposes of the property tax statute,

“Residential land” means a parcel of land upon

which residential improvements are located.

The term also includes:

. . . .

(C) A parcel of land without a residential

improvement located thereon, if the parcel is

contiguous to a parcel of residential land that

has identical ownership based on the record

title and 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).

¶ 11 The parties agree that the Subject Lot is contiguous to the

Residential Lot and that the same entity owns both lots. Thus, the

only issue before us is whether the Subject Lot contains an

essential related improvement. As relevant here, the statute defines

a “related improvement” as “a driveway, parking space, or

improvement other than a building.” § 39-1-102(14.4)(a)(III)(B).

III. Analysis

¶ 12 Eagle County argues that the BAA erred by concluding that CT

Partners presented sufficient evidence to establish that the

modifications made to the Subject Lot were sufficient to qualify as a

related improvement. It also argues that the BAA erred by

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concluding that CT Partners established that use of the Subject Lot

was essential. We address these contentions in turn.

A. Related Improvement

1. Purpose and Date of the Improvements

¶ 13 First, Eagle County argues that the Subject Lot cannot qualify

as a related improvement because CT Partners failed to provide

evidence by which the BAA could conclude that the addition of

rocks, dirt, and topsoil to, and the leveling and seeding of, the

Subject Lot was for the purpose of creating parking spaces. We do

not agree.

¶ 14 At the BAA hearing, Gargan testified about the improvements

made to the Subject Lot:

The nearest parking from our house is Big

Horn Park, which is almost a mile away. There

is insufficient parking in the area.

. . . .

I had called the Officer in charge of Code

Enforcement, Officer Castillo, who assured me

that what I was doing was fine. That,

moreover, other people in East Vail had used

snowblowers to blow . . . the snow off their

grass and use those as parking. So, I was

under the impression that it was legal.

7

I would not have bought this house if I

couldn’t have purchased the [Subject Lot]. I

made that clear . . . to the Realtor.

But because of all this construction . . . they

were using [the Subject Lot] to turn around.

And so, they damaged the [Subject Lot] where

I, I had to improve it . . . .

¶ 15 According to Gargan, CT Partners engaged a contractor to

bring in “six or seven bucket[s full] of rock and dirt to fill in the

depressions from [the] heavy trucks” and “three or four yards of

topsoil” to level the parking area. Gargan also testified that CT

Partners created a stone pathway to connect the parking area on

the Subject Lot to the entryway of the residence. In total, CT

Partners spent approximately $30,000 to complete the additions to

the Subject Lot. Gargan’s testimony supports the BAA’s conclusion

that the improvements made to the Subject Lot adjacent to the cul-

de-sac were for the purpose of creating parking spaces.

¶ 16 The motivation for these improvements was the Gargans’

conclusion that the existing parking associated with the residence

was not sufficient to meet their needs. The improvements of the

Subject Lot were thus necessary to permit additional parking on the

Subject Lot for the benefit of the Gargans’ use of the Residential

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Lot. Thus, we reject Eagle County’s argument that the BAA lacked

sufficient evidence to conclude that CT Partners made the

improvements to the Subject Lot for the purpose of creating parking

spaces.

¶ 17 Relatedly, Eagle County argues that CT Partners failed to

prove that the improvements on the Subject Lot were completed by

the assessment date — January 1, 2022 — because Gargan

testified that he wasn’t sure if the improvements were completed in

the summer of 2022 or 2021. But Gargan also testified concerning

photographs taken in October and November of 2021, which were

admitted into evidence and showed that the Subject Lot was filled,

leveled, seeded, and used for parking at that time.

¶ 18 Eagle County relies on Farny in support of its contention that

CT Partners failed to prove that the improvements were completed

by January 1, 2022. But the language it quotes from Farny does

not support its argument — “[T]he primary factor to be considered

in determining the proper classification for property tax purposes is

the actual use of the property on the relevant assessment date.” 985

P.2d at 109 (emphasis added). The relevant assessment date for

2022 taxes is January 1, 2022, § 39-1-105, C.R.S. 2023, and the

9

BAA had evidence before it that the rocks, dirt, and leveling

improvements that were required to allow parking on the Subject

Lot existed by the fall of 2021.

¶ 19 Additionally, Farny was not concerned with questions of

partially completed improvements. There, the county assessor

classified the taxpayers’ land as vacant after reclassifying a small

rustic cabin on the property as a shed. Farny, 985 P.2d at 107.

The BAA rejected that determination, concluding that the structure

was more suitably defined as a cabin because the taxpayers resided

in the cabin for approximately twenty-five days a year. Id. at 108.

Recognizing that there was conflicting evidence on the issue at the

BAA hearing, the division deferred to the findings made by the BAA

and affirmed the residential classification. Id. at 110.

2. Unpaved Parking Spaces

¶ 20 Eagle County argues that the BAA erred by concluding that

the Subject Lot was a related improvement because Vail Code of

Ordinances section 14-3-2 requires that parking spaces be paved.

We reject this argument for multiple reasons. First, the

determination of whether improvements on the Subject Lot qualify

as a related improvement is governed by section 39-1-102(14.4) of

10

the Colorado Revised Statutes, not Vail’s ordinances. And the

statute expressly includes a “parking space” within its definition.

Contrary to Eagle County’s position, the word “paved” does not

appear in the statute, and we cannot insert it. See Mook, ¶ 52.

3. “Use” Versus “Contain”

¶ 21 Lastly, Eagle County argues that the BAA misinterpreted

section 39-1-102(14.4) by relying on evidence that the parking

spaces were “used,” instead of determining whether the Subject Lot

“contains” a statutory related improvement. It asserts that the BAA

ignored the language of section 39-1-102(14.4)(a)(I)(C) that allows

for a parcel of land to be classified as residential “if the parcel . . .

contains a related improvement.” (Emphasis added.) It argues that

the Subject Lot did not contain a parking space simply because it

was used for parking.

¶ 22 CT Partners and the BAA counter that the hearing included

testimony and evidence showing that the Gargans made significant

improvements to the Subject Lot, and that they and their guests

used the improved area for parking. This, they contend, establishes

the existence of parking spaces on the Subject Lot. We agree.

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¶ 23 The definition of a “related improvement” expressly includes

“parking space.” There is no requirement that the parking space be

paved to establish that it is “contained” on the parcel, as that term

is used in section 39-1-102(14.4)(a)(I)(C). While the statute does not

provide a specific definition of the word “contains,” the Merriam-

Webster Dictionary, https://perma.cc/L93K-N329, includes the

following definitions of the word: “to have within” or “hold” or

“include.” The unpaved parking spaces are within the Subject Lot.

Similarly, the Subject Lot includes and holds the unpaved parking

spaces.

¶ 24 Moreover, we fail to see how the addition of pavement on top of

the rocks, dirt, and topsoil would render the parking spaces more

“within” or “included” on the Subject Lot than they already are. In

short, we reject Eagle County’s argument that the parking spaces

are not contained within the Subject Lot simply because they are

not paved. Because the improvements were contained on the

Subject Lot and met the statutorily defined and intended use — as

parking spaces — we conclude that the BAA did not err by finding

that the Subject Lot contained a related improvement.

12

B. Essential

¶ 25 Eagle County argues that, even if the evidence was sufficient

to show that the parking spaces were a related improvement, the

BAA nonetheless erred by concluding that the parking spaces were

essential to the use of the Residential Lot.

¶ 26 First, Eagle County alleges that the BAA erroneously relied on

Mission Viejo Co. v. Douglas County Board of Equalization, 881 P.2d

462, 465 (Colo. App. 1994), because it only applied the first factor

— actual use of a structure — that the division identified in that

case. As Eagle County notes, Mission Viejo also referred to two

other factors: the zoning and any other applicable use restrictions

on the property and the probable use thereof. Id.

¶ 27 Eagle County points to the use of the word “structure” in

support of its argument that an unpaved parking space is

insufficient to qualify as a related improvement. But Mission Viejo

used this term in the context of reviewing a zoning reclassification

of a mansion, after its conversion from a historical residence to a

community center. Id. at 463. Thus, Eagle County’s argument

about the word “structure” is unavailing because this case involves

parking spaces, and the definition of a related improvement

13

includes a parking space without any use of the word “structure.”

§ 39-1-102(14.4)(a)(III)(B).

¶ 28 Eagle County makes no argument based on the third Mission

Viejo factor — probable use. And with respect to the second factor

— zoning and land use restrictions — Eagle County largely

rehashes the arguments about zoning requirements that we reject

above. Moreover, the BAA heard and considered testimony that a

Vail ordinance prohibits parking on unpaved property, but it also

received testimony that such ordinance is not enforced. Thus, the

BAA considered the applicable restrictions on use of the Subject

Lot. Therefore, we discern no error in the BAA’s reference to the

first Mission Viejo factor.

¶ 29 Next, Eagle County argues that the use of the Subject Lot for

parking was not essential because the residence contained ample

parking. The evidence introduced at the hearing demonstrated that

the residence has two garages and as many as eleven parking

spaces along the driveway. Gargan testified that he has undergone

multiple spinal fusions, that one of his legs is partially paralyzed,

and that he sometimes needs a wheelchair. He also testified that

his wife had a brain tumor and has limited mobility.

14

¶ 30 To accommodate these needs, Gargan stated that the

residence is Americans with Disabilities Act certified and includes

an elevator. He also testified that he and his wife park in front of

the house and that they need to keep the driveway clear so they can

readily access their front door. Given these considerations, Gargan

testified that the additional parking spaces on the Subject Lot are

“absolutely essential” and that he “would not have bought the

house if [he] couldn’t have secured the [Subject Lot].”

¶ 31 Eagle County asserts that the unpaved spaces are not

essential because the Gargans park on the Residential Lot, and not

on the Subject Lot. It also argues that any lack of parking on the

Residential Lot is due to the Gargans’ use of the garages for

purposes other than parking. Lastly, it cites the supreme court’s

definition of “essential” in a similar context as “of the utmost

importance.” Mook, ¶ 52 (quoting Merriam-Webster Dictionary,

https://perma.cc/5LKP-CD7A). Applying this definition, Eagle

County argues that parking for nonresidents is not of the utmost

importance.

¶ 32 Eagle County’s arguments are belied by the testimony of its

own expert, Mark Chapin, the Eagle County Assessor. Chapin

15

testified that he authored the original language of H.B. 21-1061,

which added the definition of “related improvement” to the statutory

subsection defining “residential land.” Ch. 63, sec. 1, § 39-1-

102(14.4)(a)(III)(B), 2021 Colo. Sess. Laws 252-53.

¶ 33 After his initial examination, a member of the BAA asked

Chapin if the term “essential” is viewed from the subjective

perspective of the property owner or from a more objective market-

based perspective. The inquiry led to the following exchange:

[BAA Member] So, when you’re defining

essential, what is the barometer for what

essential is? Is it essential to the, to the

normal buyer, to the existing owner?

I mean . . . everyone has their own definition of

what they need to function in their own

property. So, Mr. Garg[a]n has a different set

of rules for his — what creates an essential

living environment for himself than maybe I

do, or you do.

What, what do [you] use as a barometer?

What do you consider essential in just what

the normal market would be, or what?

[Chapin] I, I mean, it’s, it’s buyer’s discretion,

really, as, as to what they want, or owner’s

discretion. If, you know, I as a, a property

owner want to buy the adjoining lot and want

to use it in conjunction with my residence,

then, pursuant to the [s]tatute, I believe that

16

there has to be a — an improvement made to

the second lot.

And it has to be essential to the residential

use, that that’s maintained on the primarily —

primary residential site. Does, does that help?

[BAA Member] Essential to anybody using

it? . . .

[Chapin] Well, it — I — maybe. You know,

you stated, yourself, sir, that, you know, it’s,

it’s sort of up to the buyer, you know, or the

owner, what they want and what they

determine . . . is the use.

¶ 34 Thus, Chapin’s testimony about what type of improvement can

qualify as a related improvement depends on the use made of the

improvement and its subjective importance to the owner of the

contiguous residential lot. The BAA received testimony that the

Subject Lot was used for parking and the additional parking was

“absolutely necessary” given the physical needs of the Gargans, and

the Gargans described the uses that they and their guests made of

the Subject Lot in connection with the Residential Lot. Accordingly,

the record supports the BAA’s finding that the use of the Subject

Lot was essential to the Gargans’ use of the Residential Lot, and we

may not disturb that finding on appeal.

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IV. Disposition

¶ 35 The order is affirmed.

JUDGE LIPINSKY and JUSTICE MARTINEZ concur.