Court Opinion

ID: 9574203
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:03:17.477854+00
Date Added: 2024-06-11T12:44:13.165495
License: Public Domain

ERICKSON, Justice,
specially concurring:
The majority opinion utilizes the “highest and best use” standard of valuation as developed in eminent domain cases and applies it in a property taxation context. As an element of this valuation method, the majority holds that future use of real property may be considered in determining the property’s actual value for tax purposes.
A number of other jurisdictions have followed the same basic rationale, but have set forth a limitation in reaching a value for tax purposes, which requires that future use must be reasonable, not speculative or elusive in nature. Application of Rosewell, 120 Ill.App.3d 369, 75 Ill.Dec. 953, 458 N.E.2d 121 (1983); City of Newark v. West Milford TP, 9 N.J. 295, 88 A.2d 211 (1952); Hackensack Water Co. v. Ha*158worth, 178 N.J.Super. 251, 428 A.2d 934 (1981); Finch v. Grays Harbor County, 121 Wash. 486, 209 P. 833 (1922). Even though the majority in determining the appropriate tests that may be used in valuing real property allows for the “highest and best use” standard, in my view, this standard and the “reasonable future use” test should be restricted. Because the assessment process, unlike the condemnation process, is flexible and may be altered in subsequent years, speculation should not be permitted in the determination of actual value for tax purposes. Consideration of future use should be restricted by tying the determination of actual value of real estate to concrete factual circumstances.
In my view, if an assessor is allowed to drastically increase an assessment based upon future use, such an increase should be subject to the strictest judicial scrutiny. By definition, even a “reasonable” future use is to a large degree speculative because it allows for the taxing of non-existent improvements of an assumed type and quality. As is exemplified in the present case, the majority’s holding enables an assessor to value an identical piece of vacant land in 1982 at $95,630 and then at $545,790 in 1983, an increase of over 500 per cent without any evidence of construction or improvement of the land. Such a sharp increase in the assessment infringes upon article X, section 3 of the Colorado Constitution, providing that real and personal property shall be taxed at its actual value. This assessment also flies in the face of the legislative mandate that parallels the Colorado Constitution and requires that real property shall be taxed according to its actual value. See § 39-1-101, 16B C.R.S. (1982).
In my opinion, the more prudent assessment method would be to assess the vacant land only as vacant land at least until the time that the use of the land is known, or can be determined with a reasonable degree of certainty. At that time, the assessor could reevaluate the real property, pursuant to section 39-1-104(11)(b)(I), 16B C.R.S. (1982). Section 39-1-104(11)(b)(I) specifically provides for reevaluation during intervening years when there has been a “change in the use of the land.” The construction of a condominium complex on vacant land would fall within the ambit of a change in the use, and the assessment could be increased accordingly. This method would allow for correct tax assessments while protecting against possible assessor abuses in the form of taxation upon speculation.
At a minimum, however, rather than state a per se rule as announced by the majority, namely, that “reasonable future use is relevant to a property’s current market value for tax assessment purposes,” I would hold that whether future use is relevant to such a determination should depend on the facts of each case. Because I find adequate support in the record for the reasonable future use of the Club’s land for the development of condominiums, I believe the Board’s increased assessment was supported by the record and should be affirmed.