Court Opinion

ID: 5166264
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:37:48.710036+00
Date Added: 2024-06-11T08:25:51.960654
License: Public Domain

Judge ROY
dissenting.
In my view, the trial court abused its discretion in holding that plaintiffs met their burden of showing that the assessments were incorrect. Therefore, I respectfully dissent.
The dispute here concerns only the value of residential improvements. The assessor, in the first instance, made a determination of market value using a “mass appraisal” technique based on recent sales in the vicinity using procedures approved by the Property Tax Administrator. While the technique is somewhat complex, in essence, the assessor determines the actual value by first ascertaining the average value per square foot for sales of comparable residential properties in the vicinity and then multiplying that figure by the number of square feet in each of the subject properties as reflected in the assessor’s records. This procedure resulted in assessed values for plaintiffs’ improvements of $463,280 and $503,306, respectively. The county board of equalization adjusted the latter to $457,454 by shifting value to the unimproved real estate, the value of which is undisputed. The taxpayers do not allege that this methodology violates any applicable statute, regulation, or approved procedure.
Following the commencement of this action in the trial court, the assessor undertook a more traditional, detailed, and focused appraisal using and adjusting comparable sales in the vicinity of the subject properties. This appraisal resulted in an actual value, as of June 30, 1992, of $687,270 and $678,600, respectively, for the total property, or $567,270 and $558,600 for the improvements, if the agreed values for the vacant real estate are deducted.
In challenging the assessor’s valuation, plaintiffs did not introduce any evidence of the actual values of the subject properties by expert opinion or otherwise. Rather, they introduced evidence that the rate of increase *866in value of the subject properties exceeded those of similar properties in the vicinity and then asserted what is essentially an equalization argument.
. Finding no reasonable explanation for the disparity in values and further finding that the assessor had failed to equalize the values of the subject properties with those in the vicinity, the trial court then applied the average increase in value of other properties in the vicinity, or 10.73%, to the values of the subject properties as determined by the Board of Assessment Appeals (BAA) in 1991 and reduced the valuations of the improvements to $386,240 and $381,365, respectively.
In my view, the evidence offered by plaintiffs and relied upon by the court was irrelevant in determining the actual values of the residential improvements on taxpayer’s land, and the argument relating to equalization was misplaced.
I.
The statutes and constitutional provisions relating to property taxation have been subject to numerous and frequent amendments. This activity has resulted in a complex system in terms of administration, valuation, equalization, and review. The foundation of property taxation is, however, actual value.
Article X, Section 3(l)(a) of the Colorado Constitution states, in pertinent part:
Each property tax levy shall be uniform upon all real and personal property not exempt from taxation under this article located within the territorial limits of the authority levying the tax. The actual value of all real and personal property not exempt from taxation under this article shall be determined under general laws, which shall prescribe such methods and regulations as shall secure just and equalized valuations for assessments of all real and personal property not exempt from taxation, under this article. Valuations for assessment shall be based on appraisals by assessing officers to determine the actual value of property in accordance with provisions of law, which laws shall provide that actual value be determined by appropriate consideration of cost approach, market approach, and income approach to appraisal. However, the actual value of residential real property shall be determined solely by consideration of cost approach and market approach to appraisal; ... (emphasis added)
See also Colo. Const, art. X, § 20(8)(c) (requiring actual value to be stated on tax bills and notices).
Article X, Section 3 then requires that the General Assembly cause yearly studies to be conducted to ascertain whether each assessor has complied with the constitution and statutes in valuing property and has determined actual value and valuation for assessment of each and every class of taxable real and personal property consistent with such provisions. Colo. Const, art. X, § 3(2)(a).
The General Assembly has required that property be valued in two-year cycles commencing in 1989. Section 39-10-104(10.2), C.R.S. (1994 Repl.Vol. 16B). The tax year at issue here, 1993, is the first year of such a cycle.
Plaintiffs urge that the average increase in value, or a percentage basis, of properties in the “neighborhood” be applied to the 1991 valuation of the subject properties as determined by the BAA However, the average increase in value, on a percentage basis, would not, except fortuitously, result in a determination of the actual value of the subject property predicated on a market approach.
The statute requires that market value be determined based on comparable sales information for an eighteen-month period terminating July 1 immediately preceding the assessment date, in this instance July 1, 1992, and with regard to the 1991 valuation, July 1, 1990. Section 39-l-104(10.3)(e), C.R.S. (1994 Repl.Vol. 16B). In addition, the valuation determined by the BAA in 1991 was based, in large part, on evidence of the actual cost of construction. The receipt of evidence of cost, and the use thereof, was appropriate in 1991, not so in 1993.
Thus, the evidence offered, and the methodology urged, by plaintiffs and adopted by the trial court is, in my view, extremely unlikely ever to result in the actual value of *867the subject property predicated on a market approach. Accordingly, it was not relevant to the matter at issue and should not have been admitted.
Further, two divisions of this court have rejected similar arguments that the assessed value of real property should be reduced because other similar properties are undervalued. See Bishop v. Cobrado State Board of Assessment Appeals, 899 P.2d 251 (Colo.App.1994); Crocog Co. v. Arapahoe County Board of Equalization, 813 P.2d 768 (Colo.App.1990).
Here, as in Bishop and Crocog, plaintiffs have not asserted that the values determined by the assessor are unsupported by the actual, or fair market value, of the subject properties, nor have they offered evidence to support that proposition. The argument here is simply that the values of the subject properties should not rise faster than those of other properties in the vicinity, or faster than the average value of properties in the vicinity. There may be a distinction here, but there is no difference.
II.
Next, to the extent the trial court granted relief for equalization with respect to plaintiffs’ assessed values, I would hold that such relief is not available.
The phrase “just and equalized” appears in Article X, Section 3 of the Colorado Constitution with respect to assessments, and in Article X, Section 15 of the Colorado Constitution, which creates the State Board of Equalization and defines its powers and responsibilities. Although the provisions were adopted at different times, I conclude that the phrase has the same meaning in both.
Article X, Section 15 of the Colorado Constitution states, in pertinent part:
(l)(a) There shall be in each county of the state a county board of equalization.... [T]he county boards of equalization shall raise, lower, adjust, and equalize valuations for assessment of taxes upon real and personal property located within their respective counties, subject to review and revision by the state board of equalization. (b) There shall be a state board of equalization. ... As may be prescribed by law, the state board of equalization shall review the valuations determined for assessment of taxes upon the various classes of real and personal property located in the several counties of the state and shall, upon a majority vote, raise, lower, and adjust the same to the end that all valuations for assessment of taxes shall be just and equalized; except that said state board of equalization shall have no power of original assessment, (emphasis added)
In Lamm v. Barber, 192 Colo. 511, 521, 565 P.2d 538, 545 (1977), our supreme court stated:
Assessment is the act of placing a value for tax purposes upon the property of a particular taxpayer. Equalization, on the other hand, is the act of raising or lowering the total valuation placed upon a class, or subclass, of property in the aggregate. Equalization deals with all the property of a class or subclass within a designated territorial limit, such as a county, without regard to who owns the individual parcels making up the class or subclass. Assessment relates to individual properties; equalization relates to classes of property collectively.
See also People v. Hively, 139 Colo. 49, 336 P.2d 721 (1959).
Equalization does not concern itself with differences, if any, in assessed values of individual properties but in the total valuation placed upon a class. Thus, the state board of equalization is not empowered to raise, lower, or adjust the assessed value of individual property. BQP Industries, Inc. v. State Board of Equalization, 694 P.2d 337 (Colo.App.1984).
The county board of equalization serves as both a board of equalization and a board of assessment appeals. Section 39-8-102(1), C.R.S. (1994 ReplVol. 16B) states:
The county board of equalization shall review the valuations for assessment of all taxable property appearing in the assessment roll of the county, directing the assessor to supply any omissions which may come to its attention. It shall correct any errors made by the assessor, and, whenev*868er in its judgment justice and right so require, it shall raise, lower, or adjust any valuation for assessment appearing in the assessment roll to the end that all valuations for assessment of property are just and equalized within the county, (emphasis added)
The assessor is directed by the constitution to determine actual value, and if every property is so valued, what is the point of “equalizing?” Despite its role with respect to equalization, the county board of equalization should not perform “equalization” when considering assessment appeals. Neither should the trial court.
In summary, equalization was never intended to soften the tax impact of owning property by diluting its actual value with the value of similar properties, with the value of other properties in the vicinity, or with changes in value of other properties in the vicinity.
I would reverse and remand with directions to enter judgment affirming the valuation assigned by the county board of equalization.