Summit County assessor triumphs in bulk of initial property-tax appeals
February 20, 2017
The outcomes of a handful of lucrative property-tax appeals in Summit County came back late last month, with the county assessor's office mostly prevailing, though several more similar petitions have already been submitted for review.
The state's Board of Assessment Appeals, which hears requests from property owners on the local valuation of their land, upheld six of seven earlier county decisions on vacant versus residential designations on Jan. 25. The label is consequential because uninhabited properties are taxed at 29 percent while those with defined living quarters pay only about 6.5 percent.
Recognizing this stark difference in land fees, and the opportunity for interpretive debate, the Denver office of financial services firm Duff & Phelps solicited 1,500 Colorado residents to file claims. Of that number, 170 clients initially surfaced across counties like Boulder, Eagle, Pitkin and Routt, including seven in Summit, and 10 more requesting evaluation with still others in processing. Duff & Phelps said it sent between 80-100 letters within the county, so more state hearings could be in the works.
"Our potential is great, but I think we only have like 50 at the moment," said County Assessor Beverly Breakstone. "But we feel great. We feel we did a very good job presenting our case and making our point. It just so happens these hearing officers agreed with us, that they, in most of these cases, agreed that the residential use is not there."
Summit's cases stretched over the entire county, from Keystone Ranch to Angler Mountain, Bill's Ranch near Frisco, Baldy Mountain in Breckenridge and the Willowbrook Subdivision in Silverthorne. Those hearings — the very first of the bunch — were of particular importance to assessor offices throughout the state as well as Duff & Phelps because of the standard they could set for those counties to follow facing down appeals. Eagle completed its hearings this past Friday and Boulder and La Plata are up next.
The question in each case, both in Summit and elsewhere, is whether parcels of land adjacent to a residence — all with a vacant classification — also meet the definitions that would grant the reduced property-tax burden. As an example, the difference in fees per designation on a $400,000 property, say, in Breckenridge, is about $4,500 a year. Multiply that by 10 years and numerous parcels and it equals the loss of approaching $5 million for county coffers that help pay for public services like schools, emergency response and snow plowing.
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According to statute, land needs to be contiguous to the residential plot and be of common ownership, in addition to clearly being used in conjunction with the main property, to be classified residential. Whether the nearby land would be conveyed in a future sale is another factor taken into consideration.
"Depending on how valuable the property, it's definitely worth a lot of money," said Frank Celico, an assistant attorney in Summit, and lead counsel on the assessor appeals. "We're really happy with the decisions. Until someone tells us otherwise, we feel our arguments are strong."
In the lone case the county lost upon BAA appeal, Breakstone said the property presented in the hearing was different than the one that had previously been reviewed and found not to qualify as residential. The county has since resolved not to appeal the case to the Colorado Court of Appeals, as the facts of the case changed and may not have led to a denial in the first place.
"We call that one 'foul ball,'" said Breakstone. "We just decided that we're going to give the man his money and move on."
Were the county to lose in future petitions, despite strong standing after favorable verdicts in those so far, the assessor contended the county would request legal hearings in the court system. The other initial six cases, as well as those to follow, could still wind up with the court of appeals.
Reached by email, Denver-based litigation attorney F. Brittin Clayton, of Ryley Carlock & Applewhite, who is representing Duff & Phelps in the matter, offered little comment. "We are evaluating our options," he wrote.
The county assessor plans to review the next set of properties once the winter weather subsides and will continue applying the residential description the county has used for decades — the same one with which the BAA concurred last month.
"As soon as the snow melts," said Breakstone, "we'll inspect every single one of them and see if they do have the criteria that makes them residential. The ones that are, we will make residential, and the ones that are not we will deny."
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