Tr. v. Bd. of Cty. Comm'rs , 2020 COA 74 ( 2020 )

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
April 30, 2020
2020COA74
No. 18CA0245, Morrison Tr. v. Bd. of Cty. Comm’rs — Taxation
— Property Tax — Residential Land
For the first time, a division of the court of appeals applies the
Colorado Supreme Court’s articulation in Mook v. Board of County
Commissioners, 2020 CO 12, 457 P.3d 568, of the “used as a unit”
test for determining whether a vacant parcel should be classified as
residential land for tax purposes. The division reverses the Board of
Assessment Appeals’ denial of the appellant’s petition and remands
the case for a determination of whether the petition should be
granted under the Mook test for “used as a unit.”
COLORADO COURT OF APPEALS 2020COA74
Court of Appeals No. 18CA0245
Board of Assessment Appeals Case No. 70093
Sandra K. Morrison Trust,
Petitioner-Appellant,
v.
Board of County Commissioners of Eagle County, Colorado,
Respondent-Appellee,
and
Board of Assessment Appeals, State of Colorado,
Appellee.
ORDER REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division VII
Opinion by JUDGE LIPINSKY
Fox and Davidson*, JJ., concur
Announced April 30, 2020
Ryley Carlock & Applewhite, F. Brittin Clayton III, Stacy L. Brownhill, Denver,
Colorado, for Petitioner-Appellant
Brian R. Treu, County Attorney, Christina C. Hooper, Assistant County
Attorney, Eagle, Colorado, for Respondent-Appellee
Philip J. Weiser, Attorney General, John August Lizza, First Assistant Attorney
General, Evan P. Brennan, 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. 2019.
¶1 Sandra K. Morrison Trust (the Trust) appeals the denial of its
petition by the Board of Assessment Appeals (BAA) to reclassify a
parcel of its land (the subject parcel) as residential for property tax
purposes. The subject parcel adjoins a parcel (the residential
parcel) on which the Trust owns a half-duplex. The residential
parcel is taxed as residential land, while the subject parcel is taxed
at a higher rate as vacant land. The Trust contends that, in
determining that the subject parcel should be taxed as vacant land,
the BAA misconstrued the “used as a unit in conjunction with . . .
residential improvements” element for classification of property as
residential land under section 39-1-102(14.4)(a), C.R.S. 2019.
¶2 This case does not present us with a blank slate, however.
The Trust’s appeal is one of no fewer than twenty-six substantially
similar cases in which landowners have challenged the
classification of their vacant parcels as non-residential. Divisions of
this court have interpreted section 39-1-102(14.4)(a) differently.
See, e.g., Mook v. Bd. of Cty. Comm’rs, 2020 CO 12, ¶ 45, 457 P.3d
568, 578 (citing court of appeals cases reaching different
conclusions regarding the meaning of the statute). In Mook, the
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Colorado Supreme Court resolved the divisions’ disagreements
regarding the meaning of “used as a unit.” Id.
¶3 Based on the supreme court’s analysis in Mook, we conclude
that the BAA applied the incorrect legal standard in denying the
Trust’s petition for reclassification of the subject parcel as
residential land. We therefore reverse and remand the case to the
BAA for reconsideration of the Trust’s petition using the analysis of
“used as a unit” in Mook, as we explain further below.
I. A Tale of Two Parcels
¶4 The Trust sought reclassification of the subject parcel from
vacant to residential land, retroactive for two tax years. The Board
of County Commissioners of Eagle County (BCC) affirmed the
county assessor’s classification of the subject parcel as vacant land.
¶5 The Trust filed a petition with the BAA seeking review of the
BCC’s classification of the subject parcel as vacant land. At the
hearing, Alec Morrison, a witness for the Trust, testified that the
Morrison family, which resides out of state, considers the
residential parcel a second home. Morrison family members visit
the residential parcel two to five times each year. Morrison testified
that his family uses the subject parcel as an extension of its
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backyard, to access nearby Bureau of Land Management land, to
hike, and to pick wildflowers. Morrison further explained that the
Trust purchased the subject parcel to offer the family privacy and to
preserve “the view out the back [of the residence] up the hill.” He
said that the Trust would not have purchased the subject parcel if it
had not also owned the residential parcel.
¶6 An appraiser for the Eagle County Assessor’s Office testified on
behalf of the BCC. The appraiser reported that the subject parcel
was not improved with any structures; “there was no physical
evidence of any type of use”; the subject parcel was not an integral
part of the residential use of the residential parcel; and the subject
parcel would “[m]ost likely not” be conveyed with the residential
parcel as a unit. The assessor recommended that the BAA deny the
Trust’s request for reclassification of the subject parcel as
residential land.
¶7 The BAA upheld the BCC’s classification of the subject parcel
as vacant land. The BAA found that the subject parcel was not
“used as a unit in conjunction with the residential improvements”
on the residential parcel. The BAA therefore concluded that the
Trust had not met its burden of proving that the subject parcel
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satisfied the definition of “residential land” under section
39-1-102(14.4)(a). The Trust appealed the BAA’s order.
II. Standard of Review
¶8 The ultimate determination of the appropriate classification of
land for property tax purposes involves mixed issues of law and
fact. Home Depot USA, Inc. v. Pueblo Cty. Bd. of Comm’rs, 50 P.3d
916, 920 (Colo. App. 2002). The interpretation of statutes is a
question of law that we review de novo. Mook, ¶ 24, 457 P.3d at
574. We will apply an agency’s interpretation of the statutes it
administers so long as “the interpretation has a reasonable basis in
the law and is supported by the record.” Marshall v. Civil Serv.
Comm’n, 2016 COA 156, ¶ 9, 401 P.3d 96, 99. An agency’s reading
of a statute, however, cannot alter the statutory language by adding
or subtracting words from it. Holcomb v. Jan-Pro Cleaning Sys. of S.
Colo., 172 P.3d 888, 894 (Colo. 2007).
¶9 In proceedings before the BAA, a county assessor’s
classification is presumed correct and the taxpayer bears the
burden of rebutting that presumption by a preponderance of the
evidence. Home Depot, 50 P.3d at 920. Whether the taxpayer has
met his or her burden of proof is a question of fact for the BAA.
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Gyurman v. Weld Cty. Bd. of Equalization, 851 P.2d 307, 310 (Colo.
App. 1993). “[T]he evaluation of the credibility of the witnesses and
the weight, probative value, and sufficiency of all of the evidence are
matters solely within the fact-finding province of the BAA, whose
decisions in such matters may not be displaced on appeal by a
reviewing court.” Id.
¶ 10 We will set aside an order of the BAA only if it constituted an
abuse of discretion or was arbitrary and capricious, based upon
findings of fact that were clearly erroneous, unsupported by
substantial evidence, or otherwise contrary to law. Boulder Cty. Bd.
of Comm’rs v. HealthSouth Corp., 246 P.3d 948, 951 (Colo. 2011).
III. The Law Governing the Classification of Real Property for Tax
Purposes
A. The Statutory Definitions of “Residential Land” and
“Residential Improvements”
¶ 11 The General Assembly defined “residential land” as “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.”
§ 39-1-102(14.4)(a). Thus, for an undeveloped parcel to be
classified as residential land in a scenario involving multiple
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parcels, it must be (1) contiguous with residential land; (2) used as
a unit with residential land; and (3) under common ownership with
residential land. Mook, ¶ 28, 457 P.3d at 575.
¶ 12 The statutory definition of “residential improvements” is “a
building, or that portion of a building, designed for use
predominantly as a place of residency by a person, a family, or
families.” § 39-1-102(14.3). “Residential improvements” include
“buildings, structures, fixtures, fences, amenities, and water rights
that are an integral part of the residential use.” Id.
B. The State Property Tax Administrator’s Interpretation of
Section 39-1-102(14.4)(a)
¶ 13 The State Property Tax Administrator (PTA) provides guidance
regarding how property should be classified for tax purposes
through interpretations of the statutory definitions. The PTA
publishes the Assessors’ Reference Library (ARL) to assist tax
assessors in applying the statutory definitions of different types of
land, including the definition of “residential land” in section 39-1-
102(14.4)(a). See Mook, ¶ 48, 457 P.3d at 578. The section entitled
“Contiguous Parcels of Land with Residential Use” states that
“[p]arcels of land, under common ownership, that are contiguous
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and used as an integral part of a residence, are classified as
residential property.” 2 Div. of Prop. Taxation, Dep’t of Local
Affairs, Assessors’ Reference Library § 6, at 6.11 (rev. Jan. 2020).
C. The Supreme Court Clarifies the Meaning of “Used as a Unit”
¶ 14 As noted above, the Colorado Supreme Court clarified the
meaning of “used as a unit” in Mook, a trio of consolidated cases
involving the statutory definition of “residential land.”
¶ 15 Marc and Marilyn Hogan, the plaintiffs in one of the
consolidated cases, own three contiguous parcels, two of which are
classified as residential for property tax purposes. Their third
parcel (the Hogan parcel) is classified as vacant land. The Hogans
contended that the Hogan parcel should be classified as residential
because they use the three parcels as a unit. Mook, ¶¶ 11-14, 457
P.3d at 572-73.
¶ 16 The facts in the Hogans’ case are similar to those in the
Trust’s case. The Hogans alleged that they use the Hogan parcel “to
walk their dog, gather firewood, park vehicles and a trailer, and
secure scenic views with a privacy buffer.” Id. at ¶ 15, 457 P.3d at
573. And, like the subject parcel, there are no residential
improvements on the Hogan parcel. Id. at ¶ 46, 457 P.3d at 578.
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¶ 17 The county assessor rejected the Hogans’ request for
reclassification of the Hogan parcel after determining that they did
not “use the subject parcel as a unit” with their two residential
parcels. Id. at ¶¶ 15, 46, 457 P.3d at 573, 578. The assessor
interpreted the ARL’s guidelines to mean that the Hogans’ use of the
Hogan parcel was insufficiently “active” to satisfy the “used as a
unit” test. Id. The assessor also concluded that the Hogan parcel
could not be “considered an integral part of the residence” because
it was neither “necessary” nor “essential” to the use of the
residential parcels. Id. at ¶ 50, 457 P.3d at 578. Further, the
assessor determined that the Hogan parcel could not be taxed as
residential land because it did not contain a “residential
improvement.” Id. at ¶ 46, 457 P.3d at 578.
¶ 18 The Hogans appealed the assessor’s classification of the Hogan
parcel to the Board of County Commissioners of Summit County,
which upheld the assessor’s decision. Id. at ¶ 14, 457 P.3d at 573.
The Hogans then appealed to the BAA, which also affirmed the
assessor’s determination. Id. at ¶ 46, 457 P.3d at 578. A division of
this court reversed the BAA’s decision. Hogan v. Bd. of Cty.
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Comm’rs, 2018 COA 86, ¶ 46, ___ P.3d ___, ___, aff’d sub nom.
Mook, ¶ 87, 457 P.3d at 584.
¶ 19 The supreme court’s analysis of “used as a unit” in Mook
guides our review of the BAA’s decision in the Trust’s case. We next
consider those portions of Mook most relevant to this appeal.
1. The Court Harmonized the Statutory Definitions
¶ 20 First, the supreme court applied the dictionary definitions of
“used” and “unit” to interpret the statutory language. The court
concluded that these definitions suggest that a property owner
“must employ the subject property as a constituent part of a larger
whole” to satisfy the “used as a unit” test. Mook, ¶ 51, 457 P.3d at
579. This means treating the residential and subject parcels “as a
single residential unit and us[ing] it accordingly.” Id.
¶ 21 After reviewing the dictionary definition of “integral,” the
supreme court held that the assessor (and the BAA) erred in
engrafting the concepts of “necessary” and “essential” onto “used as
a unit.” Id. at ¶ 52, 457 P.3d at 579. “These terms do not track the
statutory language, and using them significantly narrows the plain
meaning of ‘used as a unit.’” Id.
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¶ 22 But the analysis of whether a vacant parcel should be
reclassified as residential land does not conclude upon a
determination that the owner uses the parcels as a single
residential unit. The landowner must also not use the vacant
parcel for a non-residential use. “The last sentence of section
39-1-102(14.4)(a) provides that ‘[t]he term [residential land] does
not include any portion of the land that is used for any purpose
that would cause the land to be otherwise classified . . . .’” Id. at
¶ 69, 457 P.3d at 581. Thus, the subject property cannot be
classified as residential land if it is used for commercial,
agricultural, or other non-residential uses, as defined by statute or
the ARL. Id.
¶ 23 The supreme court then harmonized the conflicting definitions
of “residential land” and “vacant land.” It explained how assessors
can determine whether a landowner’s use of undeveloped property
qualifies the land for a residential land classification over a vacant
land classification, noting that the determination of whether a
parcel satisfies the “used as a unit” requirement is “an issue of
classification, not valuation.” Id. at ¶ 76, 457 P.3d at 583.
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[T]he residential land definition addresses the
specific circumstances present here. That
definition expressly permits the reclassification
of undeveloped property if the parcel is
contiguous to residential land, commonly
owned with residential land, and used as a
unit with residential land. And the Hogans
seek to reclassify not just any undeveloped
parcel but one that is contiguous to, and
under common ownership with, their
residential land and which they purportedly
use in conjunction with their home. Thus, to
the extent the residential land definition
irreconcilably conflicts with the vacant land
definition, we elect to apply the residential
land definition here.
Id.
¶ 24 The court concluded that
[t]he plain language of section 39-1-
102(14.4)(a), the ARL, and relevant court of
appeals caselaw indicate that, to satisfy the
“used as a unit” requirement, a landowner
must use multiple parcels of land together as a
collective unit of residential property. This is
the standard the BAA should apply on remand
to determine whether [a landowner’s] use of
the subject parcel satisfies the “used as a unit”
requirement of section 39-1-102(14.4)(a).
Id. at ¶ 77, 457 P.3d at 583 (emphasis added).
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2. The Court Held that a Contiguous Vacant Parcel Can Be
Reclassified as Residential Land Even if It Does Not Contain a
Residential Improvement
¶ 25 Second, the supreme court held that “the plain language of
section 39-1-102(14.4)(a) doesn’t require each parcel of land in a
multi-parcel assemblage to contain a residential improvement.” Id.
at ¶ 59, 457 P.3d at 580. “In stating the ‘used as a unit’
requirement, the legislature refers to the ‘contiguous parcels of land
under common ownership’ as a collective group that must together
(not individually, parcel-by-parcel) satisfy that element.” Id. at
¶ 60, 457 P.3d at 580. “[R]esidential improvements located
thereon” in section 39-1-102(14.4)(a) “refers to the multi-parcel
‘unit.’ Thus, the statute only requires that landowners use the
collective unit of property (composed of multiple, individual parcels)
together with the residential improvements located on that collective
unit. Nothing in the statute mandates that these residential
improvements exist on each parcel.” Id.
3. The Court Explained that Assessors Should Disregard
Whether the Owner Would Likely Sell the Parcels Together or
Separately
¶ 26 Third, the supreme court rejected the assessor’s prediction
that the Hogans would likely sell the Hogan parcel separately from
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their residential parcels because the statute refers only to “an
owner’s present use of property.” Id. at ¶ 54, 457 P.3d at 579.
Assessors may only consider “an owner’s present use of land for
classification purposes,” id. at ¶¶ 54-55, 457 P.3d at 579, because
the statutory definition of “residential land” is drafted in the present
tense. Id.
4. The Essential Principles for Interpreting “Used as a Unit”
¶ 27 Based on this analysis, the supreme court articulated two
essential principles for interpreting the “used as a unit”
requirement. First, the parcels must be used “as though they’re a
greater, single parcel of land.” Id. at ¶ 65, 457 P.3d at 581.
Second, the landowner must not use the subject parcel for “non-
residential property uses.” Id. at ¶ 69, 457 P.3d at 581.
¶ 28 At the conclusion of Mook, the supreme court affirmed the
division’s ruling in Hogan and remanded the case to the BAA with
instructions to apply the legal standards articulated in Mook to
determine whether the Hogan parcel satisfied the “used as a unit”
test and, therefore, should be reclassified as residential land. Id. at
¶ 87, 457 P.3d at 584.
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IV. The BAA Erred in Classifying the Subject Parcel as Vacant
Land
¶ 29 Based on the supreme court’s guidance in Mook, we conclude
that the BAA erred in rejecting the Trust’s petition for
reclassification of the subject parcel as residential land because it
applied a test for “used as a unit” that the supreme court rejected in
Mook. We remand the case to the BAA to reconsider the Trust’s
petition under the “used as a unit” analysis in Mook. On remand,
the BAA should
 consider whether the Trust uses (1) the subject parcel
and the residential parcel “as though they’re a greater,
single parcel of land,” id. at ¶ 65, 457 P.3d at 581; (2) the
subject parcel for “non-residential property uses,” such
as a commercial or agricultural use, id. at ¶ 69, 457 P.3d
at 581; and (3) the subject parcel and the residential
parcel as “a collective unit of residential property,” id. at
¶ 77, 457 P.3d at 583;
 disregard the lack of residential improvements on the
subject parcel because the residential parcel contains a
half-duplex, see id. at ¶ 60, 457 P.3d at 580; and
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 disregard whether the Trust would or would not likely
convey the subject parcel and the residential parcel
together as a unit, see id. at ¶¶ 54-55, 457 P.3d at 579.
V. The BAA’s Right to File an Answer Brief
¶ 30 We decline to review the Trust’s challenge to the BAA’s right to
file an answer brief. The Trust raised this issue for the first time in
a footnote in its reply brief. Issues not presented in an opening
brief will not be considered when raised for the first time in a reply
brief. Knappenberger v. Shea, 874 P.2d 498, 503 (Colo. App. 1994).
VI. Conclusion
¶ 31 The BAA’s denial of the Trust’s petition is reversed. The case
is remanded to the BAA for a redetermination of whether the
subject parcel should be reclassified as residential land using the
supreme court’s analysis of “used as a unit” in Mook. The BAA, in
its discretion, may take additional evidence in redetermining this
matter.
JUDGE FOX and JUDGE DAVIDSON concur.
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