The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.
SUMMARY June 14, 2018
2018COA86
No. 17CA0433 Hogan v. Bd. of Cty. Comm’rs — Taxation — Property Tax — Residential Land
In this property tax case, a division of the court of appeals
concludes that the Board of Assessment Appeals misconstrued
section 39-1-102(14.4)(a), C.R.S. 2017. The division analyzes the
statute and concludes that (1) a landowner’s potential future sale of
a parcel of land contiguous to a residential parcel is generally not
relevant in determining whether the parcel is residential on the
relevant assessment date; (2) the use of the contiguous parcel need
not be “necessary” or “essential” to be “integral” to the parcel
containing a residence; and (3) the use of the contiguous parcel
need not be “active” as opposed to “passive.” COLORADO COURT OF APPEALS 2018COA86
Court of Appeals No. 17CA0433 Board of Assessment Appeals Case No. 68822
Marc Hogan and Marilyn Hogan,
Plaintiffs-Appellants,
v.
Board of County Commissioners of Summit County, Colorado; and Board of Assessment Appeals,
Defendants-Appellees.
ORDER REVERSED AND CASE REMANDED WITH DIRECTIONS
Division V Opinion by JUDGE CASEBOLT* Dunn and Welling, JJ., concur
Announced June 14, 2018
Ryley Carlock & Applewhite, F. Brittin Clayton III, Denver, Colorado, for Plaintiffs-Appellants
Jeffrey Huntley, County Attorney, Franklin Celico, Assistant County Attorney, Breckenridge, Colorado, for Respondent-Appellee Board of County Commissioners
Cynthia H. Coffman, Attorney General, Evan P. Brennan, Assistant Attorney General, Denver, Colorado, for Respondent-Appellee Board of Assessment Appeals
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2017. ¶1 Petitioners, Marc Hogan and Marilyn Hogan (the Hogans),
appeal the order of the Board of Assessment Appeals (BAA) denying
their request to reclassify a parcel of their land as residential for
property tax purposes. We reverse the BAA’s order and remand the
case for further proceedings.
I. Background
¶2 The Hogans own three connected and contiguous parcels of
land in Summit County, Colorado. They purchased the first parcel
(Lot 1) in 1983 and built a home on it. They purchased an
adjoining parcel (Lot 2) in 1988 and subsequently built a deck
extending from their home across the boundary line onto Lot 2. In
1995, the Hogans acquired a third adjoining parcel (Lot 3). Lot 3 is
located in a subdivision and has an underground sewer line and an
unpaved driveway installed by the original developer of the
subdivision, but otherwise remains undeveloped. The three parcels
form an “L” shape, with the Hogans’ home on Lot 1 at the top and
Lot 3 at the bottom.
¶3 The Summit County Assessor classified both Lot 2 and Lot 3
as vacant land. The Hogans requested the two parcels be
reclassified as residential land. The County Assessor agreed that
1 Lot 2 qualified as residential land but denied the request to
reclassify Lot 3 as residential, determining it to be vacant land for
purposes of taxation.
¶4 The Hogans appealed the County Assessor’s decision to the
Board of County Commissioners of Summit County (County), which
upheld the County Assessor’s classification. The Hogans appealed
that determination to the BAA. After a de novo hearing, the BAA
upheld the County’s classification of Lot 3 as vacant land, relying
primarily on the testimony of the County Assessor.
¶5 This appeal followed.
II. Discussion
¶6 The Hogans challenge the BAA’s order regarding Lot 3. They
contend that all three parcels qualify for residential classification
under section 39-1-102(14.4)(a), C.R.S. 2017, which states:
“Residential land” means a parcel or contiguous parcels of land under common ownership upon which residential improvements are located and that is used as a unit in conjunction with the residential improvements located thereon.
¶7 The Hogans assert that the BAA erred in determining that Lot
3 was not “used as a unit in conjunction with the residential
2 improvements.” We conclude that the BAA based its ruling on an
erroneous interpretation of “residential land.” Consequently, we
reverse the BAA’s order and remand the case for redetermination
under the proper interpretation of “residential land.”
A. Standard of Review
¶8 Because the BAA’s property classification involves mixed
questions of law and fact, we will uphold it on appeal if it (1) has a
reasonable basis in law and (2) is supported by substantial evidence
in the record. O’Neil v. Conejos Cty. Bd. of Comm’rs, 2017 COA 30,
¶ 11.
¶9 We consult and defer to the implementing agency’s
determinations, including those of the Property Tax Administrator
(PTA) and the BAA, if they accord with statutory provisions.
Boulder Cty. Bd. of Comm’rs v. HealthSouth Corp., 246 P.3d 948,
951 (Colo. 2011).
¶ 10 Although we take into account the agency’s determination,
interpretation of statutes is a question of law that we review de
novo. Id. Thus, “[w]hile we give deference to an administrative
agency’s interpretation of a statute, we are not bound by a decision
that misapplies or misconstrues the law.” Fifield v. Pitkin Cty. Bd.
3 of Comm’rs, 2012 COA 197, ¶ 6 (quoting Jet Black, LLC v. Routt Cty.
Bd. of Cty. Comm’rs, 165 P.3d 744, 748 (Colo. App. 2006)).
Moreover, a reviewing court may set aside a BAA decision if it
“reflects a failure to abide by the statutory scheme for calculating
property tax assessments.” Id. (quoting Bd. of Assessment Appeals
v. E.E. Sonnenberg & Sons, Inc., 797 P.2d 27, 34 (Colo. 1990)).
¶ 11 When interpreting a statute, “[o]ur primary objective is to
effectuate the intent of the General Assembly by looking to the plain
meaning of the language used, considered within the context of the
statute as a whole.” Id. at ¶ 5 (quoting Bly v. Story, 241 P.3d 529,
533 (Colo. 2010)).
B. Other Applicable Law
¶ 12 The PTA is statutorily required to create manuals, appraisal
procedures, and instructions concerning methods of appraising and
valuing land and improvements. § 39-2-109(1)(e), C.R.S. 2017. The
PTA has created the Assessor’s Reference Library (ARL), and county
assessors are required to follow it. Huddleston v. Grand Cty. Bd. of
Equalization, 913 P.2d 15, 17-18 (Colo. 1996). The ARL interprets
section 39-1-102(14.4) to mean that “[p]arcels of land, under
common ownership, that are contiguous and used as an integral
4 part of a residence, are classified as residential property.” 2 Div. of
Prop. Taxation, Dep’t of Local Affairs, Assessors Reference Library
§ 6, at 6.10 (rev. Apr. 2018).
¶ 13 In determining whether a contiguous parcel is used in
conjunction with a residential parcel, the ARL dictates that an
assessor should consider the following factors:
Are the contiguous parcels under common ownership?
Are the parcels considered an integral part of the residence and actually used as a common unit with the residence?
Would the parcel(s) in question likely be conveyed with the residence as a unit?
Is the primary purpose of the parcel and associated structures to be for the support, enjoyment, or other non-commercial activity of the occupant of the residence?
Id. at 6.11.
C. Analysis
¶ 14 It is undisputed that the property at issue is contiguous and
under common ownership. The Hogans argue that the BAA
misconstrued the “used as a unit in conjunction with the
residential improvements” requirement of “residential land” under
section 39-1-102(14.4)(a). Specifically, they argue that (1) the
5 likelihood of the parcel being conveyed separately is irrelevant; (2)
the use of the parcel need not be necessary or essential to qualify as
integral; and (3) use of the parcel need not be “active” as opposed to
merely “passive.” We agree.
1. Conveyed as a Unit
¶ 15 “[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.” Farny v. Bd. of
Equalization, 985 P.2d 106, 109 (Colo. App. 1999). In comparable
cases regarding agricultural land, the supreme court has held that
“[t]he taxpayer’s subjective intent to use the land is not relevant for
ad valorem tax classification purposes. . . . Rather, the actual
surface use of the land must be the focus of any classification of
agricultural land for property tax assessment purposes.” Douglas
Cty. Bd. of Equalization v. Clarke, 921 P.2d 717, 723 (Colo. 1996);
see Estes v. Colo. State Bd. of Assessment Appeals, 805 P.2d 1174,
1175 (Colo. App. 1990) (reversing BAA classification of land as
nonagricultural because, even though owner’s primary purpose was
to offer and sell the property for monetary profit, the actual surface
use of property is the determining factor for purposes of
6 classification as “agricultural land,” and the owner’s intentions for
its ultimate disposition are irrelevant).
¶ 16 Hence, if a property owner’s use of the parcel on the
assessment date satisfies the requirements for residential
classification, then it is irrelevant if the owner has future plans to
sell the parcel or make nonresidential use of it. If the use changes
in the future, the County may reclassify the property at that time.
Mission Viejo Co. v. Douglas Cty. Bd. of Equalization, 881 P.2d 462,
464 (Colo. App. 1994) (“[R]eclassification can and does occur under
certain circumstances[;] the statutory scheme as a whole reflects a
legislative intent to allow reclassification upon a change of actual
use.”); see § 39–1–103(5)(c), C.R.S. 2017.
¶ 17 We agree with the Hogans that to the extent the ARL’s
guidance permits property classification based on the owner’s
predicted future actions, it is contrary to the law. See Clarke, 921
P.2d at 723 (“The taxpayer’s subjective intent to use the land is not
relevant for ad valorem tax classification purposes.”). We
acknowledge that, in some circumstances, consideration of a future
conveyance may be permissible as circumstantial evidence that
helps illuminate a property owner’s actual use of the property on
7 the assessment date. Here, however, the County Assessor testified
that, in her opinion, the Hogans would be likely to sell Lot 3
separately in the future. The BAA found the testimony of the
County Assessor “to be compelling with regard to the factors
referenced by the ARL, in particular” the factor concerning the
likelihood of conveyance as a unit. The BAA discussed this issue in
depth, giving it significant weight. Importantly, this discussion
focused solely on the Hogans’ potential future action of selling Lot 3
without reference to how this related to the current use of the
property.
¶ 18 Accordingly, we conclude the BAA misapplied the law in its
order by relying on the possible future conveyance as a separate
unit without reference to how that possibility related to the Hogans’
current use of the parcel.
2. Integral
¶ 19 At the BAA hearing, the County Assessor testified that she
interpreted the word “integral” on page 6.11 of the ARL to mean
“necessary” or “essential.” The BAA ultimately concluded that Lot 3
“is not used as an integral part of the residence.” (Emphasis
8 added.) The BAA further found that the County Assessor “had
correctly applied” the statute and the procedures in the ARL.
¶ 20 In part, the BAA based its conclusions on the fact that it was
“not convinced that [the Hogans’] uses, including walking the dog,
parking, view protection, and buffer from neighboring properties
constitute ‘use as a unit in conjunction with the residential
improvement’ as contemplated by [s]ection 39-1-102(14.4).’” And
the BAA found that Lot 2 “already provides ample buffer for walking
the dog and preservation of views.”
¶ 21 The definition of residential land in section 39-1-102(14.4)(a)
does not use the word “integral” except in one particular way that is
not relevant here. The statute specifies that residential land also
includes “two acres or less of land on which a residential
improvement is located where the improvement is not integral to an
agricultural operation conducted on such land.” Id. (emphasis
added); see Auman v. People, 109 P.3d 647, 656-57 (Colo. 2005)
(“Just as important as what the statute says is what the statute
does not say. . . . We should not construe these omissions by the
General Assembly as unintentional.”).
9 ¶ 22 Although the statute does not use the word “integral” in the
manner the BAA’s order referenced, we nevertheless defer to the
ARL in its interpretation if that interpretation accords with
statutory provisions. HealthSouth Corp., 246 P.3d at 951. We note
that definitions of “integral” include “formed as a unit with another
part” and “composed of constituent parts.” Merriam Webster
Dictionary, https://perma.cc/RJ5M-CNFA. Such definitions are
clearly compatible with the statute’s language that the parcel be
“used as a unit in conjunction with” the residential improvements.
§ 39-1-102(14.4)(a).
¶ 23 However, the County and BAA argue that, as used in the ARL,
“integral” means “necessary” or “essential.” Although the definition
of integral can include something that is “essential to
completeness,” Merriam Webster Dictionary,
https://perma.cc/RJ5M-CNFA, there is no support in the statute
for this interpretation. “We do not add words to a statute.”
HealthSouth Corp., 246 P.3d at 951. Hence, we “decline to judicially
rewrite these statutes by adding this language.” Marsico Capital
Mgmt., LLC v. Denver Bd. of Cty. Comm’rs, 2013 COA 90, ¶ 25.
Accordingly, to the extent that the ARL’s use of the word “integral”
10 makes the definition of residential land narrower than the statute,
it is erroneous.
¶ 24 Here, the BAA expressly adopted the County Assessor’s
erroneous interpretation of the statute and the ARL requiring that
the parcel’s use be a necessary or essential part of the residence.
The BAA appears to have relied on this interpretation when it found
that the Hogans’ uses of Lot 3 — walking dogs, parking, protecting
views, and buffering from adjacent landowners — were not uses
contemplated by section 39-1-102(14.4)(a). To the extent the BAA’s
decision relied on these uses being not necessary or essential, it
was erroneous.
¶ 25 Likewise, it appears the County Assessor’s erroneous
interpretation underlies the BAA’s analysis of whether Lot 2 is
sufficient for the Hogans’ stated uses. We defer to the BAA’s factual
finding that Lot 2 provides “ample buffer for walking the dog and
preservation of views.” But this factual finding has no legal bearing
on whether Lot 3 qualifies as residential land. Rather than
determining whether Lot 3 was being used as a unit in conjunction
with the residential improvements, the BAA determined that the
11 uses of Lot 3 were unnecessary because those uses could be carried
out on Lot 2. This is a misapplication of the law.
¶ 26 Accordingly, we conclude the BAA erred by adopting and
applying an interpretation of the statute that requires the parcel to
be a “necessary” or “essential” part of the residence.
3. Active versus Passive Use
¶ 27 As an additional factor in her denial of reclassification of Lot 3
as residential, the County Assessor testified that the Hogans did not
“use” Lot 3 in conjunction with their residence because all the uses
to which the Hogans testified, such as dog walking, parking, and
view buffering, were passive, not active uses. She stated that “it is
not [the County’s] opinion that passive uses qualify [property] for
reclassification” as residential. Instead, she testified that she
typically looked for such “active” uses as the presence of physical
improvements, fire pits, playgrounds, septic systems, garages, or
other support structures.
¶ 28 As noted previously, the BAA determined that the assessor
had “correctly applied” section 39-1-102(14.4)(a) and also stated in
its order that it was not convinced that the Hogans’ uses of Lot 3,
including walking the dog, parking, and view protection, constituted
12 “use of the property in conjunction with the residential
improvements located” on Lots 1 and 2.
¶ 29 We find no statutory support for the County Assessor’s
restrictive interpretation of “use,” or the BAA’s implicit adoption of
that interpretation as a legal test. We see nothing in section 39-1-
102(14.4)(a) that would limit the definition of “used” to “active”
uses. The usual meaning of “used” is “employed in accomplishing
something.” Merriam Webster Dictionary,
https://perma.cc/XWB7-7PMD.
¶ 30 Furthermore, existing case law supports a more expansive
definition of the term. In Gyurman v. Weld Cty. Bd. of Equalization,
851 P.2d 307, 308 (Colo. App. 1993), the taxpayer had a home on a
thirty-six-acre parcel of land. The assessor imposed a mixed
classification, with approximately two acres being classified as
residential land and the remaining acreage being classified as
vacant land. Id. at 309. The taxpayer appealed to the BAA, which
changed the classification to entirely residential land because there
was no nonresidential use. Id. at 308. The BAA ruled that the
subject property should not be classified as mixed use property
because it had only one use on the assessment date, that being use
13 for residential purposes. Id. at 309. It further stated that neither it
nor the assessor nor the Board of Equalization had “the power to
dictate to a Colorado taxpayer what size parcel of land he must use
for a homesite.” Id. The Board of Equalization appealed the BAA
ruling to this court.
¶ 31 In affirming the BAA’s decision, a division of this court noted
that the taxpayer had testified that
the entire tract was being used as residential property on the . . . assessment date and that all of it was part of his residence. Specifically, taxpayer testified that he bought the property because he was looking for at least 40 acres to “get some distance” between himself and other people and that he used it by “looking at the wildlife that was out there and keeping people off of it.” Taxpayer further testified that all of the land went with the house because, apart from the agricultural use he was planning, nothing else could be done with the land other than to live on it. In documentary evidence, taxpayer also denied that any of the land was vacant and asserted that it was all being used as a unit with his house.
Id. at 308.
¶ 32 Hence, the division found sufficient support in the record for
the BAA’s determination. It further stated that “there is no
prescribed limit on the amount of acreage which may be entitled to
14 residential classification as being a part of a taxpayer’s residence.”
Id. at 309. Gyurman thus establishes that passive uses, such as
those attested to by the Hogans here, are legally sufficient as
“uses.”
¶ 33 Similarly, in Farny, the taxpayers had contended that their
entire parcel of 320 acres, which contained a 400-square-foot rustic
dwelling, should be classified as residential. 985 P.2d at 107. The
BAA agreed, and a division of this court affirmed on appeal. The
division noted that, based on the evidence presented, “there is no
basis for saying that some part of the land was used for a different
purpose.” Id. at 110. Likewise, here, there is no evidence in the
record that Lot 3 was used for a nonresidential purpose.
¶ 34 We recognize, as the County and the BAA argue, that
Gyurman and Farny did not involve multiple parcels. However, by
its structure and language, section 39-1-102(14.4) and the
standards it enunciates apply to both single and multiple-parcel
properties. § 39-1-102(14.4)(a) (“‘Residential land’ means a parcel
or contiguous parcels of land[.]”) (emphasis added). Accordingly,
the construction of “used as a unit” applies equally to both.
15 ¶ 35 Therefore, to the extent that the BAA’s order holds as a matter
of law that only “active” uses can qualify under the phrase “used as
a unit in conjunction with the residential improvements,” it erred.
¶ 36 However, we cannot discern whether the BAA’s statement that
it was “not convinced that the Hogans’ uses . . . ‘constitute use as a
unit in conjunction with the residential improvements’” constitutes
a legal or factual determination. That is, we cannot tell whether the
BAA held that the Hogans’ uses do not qualify as “uses,” within the
meaning of the statute, or, instead, the BAA made a factual
determination that the uses were not “in conjunction with the
residential improvements.” Equally opaque is the BAA’s statement
that it “is persuaded by [the County Assessor’s] testimony that
there was no significant evidence of use observed on the . . . parcel.”
Again, we cannot determine whether the BAA meant the Hogans’
uses were legally insufficient because they were passive, or whether
the BAA meant that the facts failed to establish that the Hogans
used the parcel as they alleged. Accordingly, it should clarify those
matters on remand.
¶ 37 We are aware that another division of this court, in Rust v.
Board of County Commissioners, 2018 COA 72, held under
16 somewhat similar circumstances that the BAA did not misconstrue
the “used as a unit” element of section 39-1-102(14.4)(a). Id. at
¶¶ 4, 7. However, it does not appear from the opinion that the BAA
equated “integral” with “necessary” or “essential,” or that the “use”
of the property had to be “active” as opposed to “passive” for a
contiguous parcel to qualify as residential land. So Rust is
distinguishable from this case. In any event, we are not bound by
the decision of another division of this court. Valentine v. Mountain
States Mut. Cas. Co., 252 P.3d 1182, 1195 (Colo. App. 2011).
4. Other Grounds to Affirm
¶ 38 We are not persuaded by the BAA’s and County’s arguments
that we may nevertheless affirm the BAA’s order on different
grounds.
¶ 39 Both the BAA and the County argue that under Sullivan v.
Board of Equalization, 971 P.2d 675 (Colo. App. 1998), section 39-1-
102(14.4)(a) requires that some residential improvement exist on a
vacant parcel if it is to qualify as residential land for tax purposes.
Because no such improvements are on Lot 3 in this case, they
argue that we can affirm BAA’s order solely under the holding in
Sullivan.
17 ¶ 40 However, in Sullivan, the two contiguous parcels at issue did
not have common ownership as required by the statute. Id. at 676.
Thus, the taxpayer was relegated to arguing that the undeveloped
parcel “qualified for residential classification independently from the
adjacent improved parcel.” Id. (emphasis added). The division in
Sullivan rejected the taxpayer’s argument because “in order for a
parcel of land to qualify for residential classification independently
from other parcels, there must be a residential dwelling unit on the
property.” Id. (emphasis added).
¶ 41 Thus, Sullivan is distinguishable from this case because here,
the multiple parcels are both contiguous and have common
ownership. The issue is only whether Lot 3 met the “used as a
unit” requirement.
¶ 42 Further, the division in Fifield addressed this very issue of
whether each parcel must contain residential improvements. The
division in Fifield concluded that there was no such requirement in
the statute, and that the language to the contrary in Sullivan was
dicta. Fifield, ¶ 13. We agree with both the substantive holding of
Fifield as well as its conclusion that this language in Sullivan is
dicta.
18 ¶ 43 We also disagree with the County’s position that Fifield holds
that the ARL does not unlawfully narrow section 39-1-102(14.4)(a).
In the County’s view, the Fifield division cited 2 Assessors Reference
Library section 6, at 6.10-6.11, favorably and found no fault with its
guidance. However, the issue before the division in Fifield was
different from the issue in this case. Fifield addressed whether
separate parcels that are commonly owned and contiguous must
each contain a residential improvement to qualify as residential
land. Id. at ¶ 11. The division concluded the statute did not
require residential improvements on each parcel. Id. at ¶ 9.
Contrary to the County’s argument, the division did not hold that
the ARL’s guidance was faultless. Rather, the Fifield division merely
held that its interpretation of the statute “comports” and is
“consistent” with the ARL, and that “[n]othing in the PTA’s
interpretation of ‘residential land’ indicates” a contrary conclusion.
Id. at ¶¶ 10-11.
¶ 44 Thus, neither Fifield nor Sullivan compels a different result
here. In any event, we are not bound by the decision of another
division of this court. Valentine, 252 P.3d at 1195.
19 ¶ 45 In light of these determinations, we need not address the
parties’ remaining contentions.
III. Conclusion
¶ 46 The BAA’s order is reversed, and the case is remanded. On
remand, the BAA shall employ the correct legal standards, as we
have identified them, and redetermine whether the Hogans are
entitled to reclassification of Lot 3.
JUDGE DUNN and JUDGE WELLING concur.