Sixty-first General Assembly

LLS NO. 97­0478.01 JAP SENATE BILL 97­142

STATE OF COLORADO

BY SENATOR Mutzebaugh

FINANCE

A BILL FOR AN ACT

CONCERNING VALUATION OF PROPERTY FOR PROPERTY TAX PURPOSES.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

Instructs an assessing officer, in valuing vacant land, to first determine whether the land is being actively developed for retail sale and, if it is, to apply specified discount factors when using the market approach to appraisal in determining the value of the land. Prohibits consideration of the indirect costs of development in valuing said vacant land.

Specifies that "site improvements", as applied to vacant land, includes culverts and other sewage and drainage facilities only if they have been dedicated to public use and accepted for maintenance. Directs the assessor to obtain a completed subdivision land valuation questionnaire from subdivision developers and other owners of vacant land. Specifies that the questionnaire should elicit information concerning whether the land is being actively developed for retail sale.

For property tax years beginning on or after January 1, 1997, repeals provisions allowing a petitioner to submit a petition to arbitration after denial by the county board of equalization of an appeal of an assessor's valuation. Removes the limitations on the right of a respondent to seek judicial review of decisions by the board of assessment appeals regarding property valuation.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  39­1­103 (14), Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended to read:

39­1­103.  Actual value determined ­ when. (14) (a)  The general assembly hereby finds and declares that, in determining the actual value of vacant land, there appears to exist a wide disparity in the treatment of vacant land by the assessing officers of the various counties; that the methods of appraisal currently being utilized by assessing officers for such valuation remain unclear; and that such assessing officers are provided detailed information concerning the appraisal of vacant land in the manuals, appraisal procedures, and instructions prepared and published by the administrator. THE GENERAL ASSEMBLY FURTHER FINDS THAT THE PROVISIONS OF THIS SUBSECTION (14) ARE NECESSARY TO AID DEVELOPERS OF VACANT LAND BY RELIEVING SOME OF THE PROPERTY TAX BURDEN INCURRED WHILE THE VACANT LAND IS BEING ACTIVELY PREPARED AND DEVELOPED FOR RETAIL SALE TO END USERS OF THE PROPERTY.

(b) (I)  The assessing officers shall give appropriate consideration to the cost approach, market approach, and income approach to appraisal as required by the provisions of section 3 of article X of the state constitution in determining the actual value of vacant land. When using the market approach to appraisal in determining the actual value of vacant land as of the assessment date, assessing officers shall take into account, but need not limit their consideration to, the following factors: The anticipated market absorption rate, the size and location of such land, the direct costs of development, any amenities, any site improvements, access, and use. When using anticipated market absorption rates, the assessing officers shall use appropriate discount factors in determining the present worth of vacant land until eighty percent of the lots within an approved plat have been sold and shall include all vacant land in the approved plat. For purposes of such discounting, direct costs of development shall be taken into account. The use of present worth shall reflect the anticipated market absorption rate for the lots within such plat, but such time period shall not generally exceed thirty years. For purposes of this paragraph (b), no indirect costs of development, including, but not limited to, costs relating to marketing, overhead, or profit, shall be considered or taken into account. WHEN USING THE MARKET APPROACH TO APPRAISAL IN DETERMINING THE ACTUAL VALUE OF VACANT LAND AS OF THE ASSESSMENT DATE, THE ASSESSING OFFICER SHALL FIRST DETERMINE WHETHER THE VACANT LAND IS BEING ACTIVELY PREPARED AND DEVELOPED BY THE CURRENT OWNER FOR RETAIL SALE TO ONE OR MORE END USERS. SUCH DETERMINATION SHALL REST WITHIN THE DISCRETION OF THE ASSESSING OFFICER AND SHALL BE BASED UPON OBJECTIVE CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES. THE ASSESSING OFFICER MAY CONSIDER THE SUBJECTIVE INTENT OF THE CURRENT OWNER AS TO PLANS FOR DEVELOPMENT AND SALE, BUT IT SHALL NOT BE A CONTROLLING FACTOR IN THE DETERMINATION.

(II)  IF THE ASSESSING OFFICER DETERMINES THAT THE VACANT LAND IS BEING ACTIVELY PREPARED AND DEVELOPED FOR RETAIL SALE TO ONE OR MORE END USERS, THE ASSESSING OFFICER SHALL TAKE INTO ACCOUNT, BUT NEED NOT LIMIT CONSIDERATION TO, THE FOLLOWING DISCOUNT FACTORS IN USING THE MARKET APPROACH TO APPRAISAL TO DETERMINE THE ACTUAL VALUE OF THE VACANT LAND AS OF THE ASSESSMENT DATE:

(A)  THE ANTICIPATED MARKET ABSORPTION RATE IF IT IS LONGER THAN TWO YEARS BUT LESS THAN TEN YEARS;

(B)  THE SIZE AND LOCATION OF THE PARCEL OF VACANT LAND BEING VALUED;

(C)  THE DIRECT COSTS OF DEVELOPMENT ACTUALLY INCURRED AND PAID BY THE CURRENT OWNER WHICH ARE SEPARATE AND APART FROM AND IN ADDITION TO THE SALES PRICE PAID FOR THE LAND BY THE CURRENT OWNER; AND

(D)  ANY AMENITIES, SITE IMPROVEMENTS, ACCESS TO THE VACANT LAND, AND PERMITTED USES OF THE LAND.

(III)  WHEN USING ANTICIPATED MARKET ABSORPTION RATES, THE ASSESSING OFFICER SHALL USE APPROPRIATE DISCOUNT FACTORS IN DETERMINING THE PRESENT WORTH OF VACANT LAND UNTIL EIGHTY PERCENT OF THE LOTS WITHIN AN APPROVED PLAT OR OTHER MARKETING AREA, AS DETERMINED BY THE ASSESSOR, HAVE BEEN SOLD OR IMPROVED AND SHALL INCLUDE ALL VACANT LAND IN SAID APPROVED PLAT OR MARKETING AREA.

(IV)  FOR PURPOSES OF THIS PARAGRAPH (b), THE ASSESSING OFFICER SHALL NEITHER CONSIDER NOR TAKE INTO ACCOUNT ANY INDIRECT COST OF DEVELOPMENT, INCLUDING, BUT NOT LIMITED TO, COSTS RELATING TO MARKETING, OVERHEAD, OR PROFIT.

(c) (I)  For purposes of this subsection (14), "vacant land" means any lot, parcel, site, or tract of land upon which no buildings or fixtures, other than minor structures, are located. "Vacant land" may include land with site improvements. "Vacant land" includes land that is part of a development tract or subdivision when using present worth discounting in the market approach to appraisal; however, "vacant land" shall not include any lots within such subdivision or any portion of such development tract that improvements, other than site improvements or minor structures, have been erected upon or affixed thereto. "Vacant land" does not include agricultural land, producing oil and gas properties, severed mineral interests, and all mines, whether producing or nonproducing.

(II)  For purposes of this subsection (14):

(A)  "Minor structures" means improvements that do not add value to the land on which they are located and that are not suitable to be used for and are not actually used for any commercial, residential, or agricultural purpose.

(B)  "Site improvements" means streets with curbs and gutters, culverts and other sewage and drainage facilities THAT ARE DEDICATED TO PUBLIC USE AND ACCEPTED FOR MAINTENANCE, and utility easements and hookups for individual lots or parcels.

(d)  As soon after the assessment date as may be practicable, the assessor shall mail or deliver two copies of a subdivision land valuation questionnaire for each approved plat within the county to the last­known address of the subdivision developer OR OTHER OWNER known or believed to own vacant land within such approved plat. Such questionnaire shall be designed to elicit information vital TO DETERMINING WHETHER THE VACANT LAND IS BEING ACTIVELY PREPARED AND DEVELOPED FOR RETAIL SALE TO ONE OR MORE END USERS AND to determining the present worth of vacant land within such approved plat. Such THE subdivision developer, or his OR HER agent, OR THE OWNER, OR HIS OR HER AGENT, shall answer all questions to the best of his OR HER ability, attaching such exhibits or statements thereto as may be necessary, and shall sign and return the original copy thereof to the assessor no later than the March 20 subsequent to the assessment date. All information provided by the subdivision developer OR THE OWNER in such questionnaire shall be kept confidential by the assessor; except that the assessor shall make such information available to the person conducting any valuation for assessment study pursuant to section 39­1­104 (16) and his OR HER employees and the property tax administrator and his OR HER employees.

(e)  If any subdivision developer OR OWNER fails to complete and file one or more questionnaires by March 20, then the assessor may determine the actual value of the taxable vacant land within an approved plat OR MARKETING AREA which THAT is owned by such subdivision developer OR OWNER on the basis of the best information available to and obtainable by the assessor.

SECTION 2.  39­1­113 (6), Colorado Revised Statutes, 1994 Repl. Vol., is amended to read:

39­1­113.  Abatement and refund of taxes. (6)  Notwithstanding any law to the contrary, for taxes levied on and after January 1, 1990, BUT PRIOR TO JANUARY 1, 1997, a taxpayer may file a petition for abatement or refund of taxes levied on property if the valuation of such property was the subject of an arbitration hearing pursuant to section 39­8­108.5 and the arbitrator presiding over such hearing failed to deliver a decision to the taxpayer prior to the beginning date of the period during which the assessor sits to hear all objections and protests concerning the valuation of such property in the year following the year in which such arbitration hearing was held.

SECTION 3.  39­8­107 (1), Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended to read:

39­8­107.  Hearings on appeal. (1)  At the hearing upon a petition, the assessor or the assessor's authorized representative shall be present and shall produce information to support the basis and amount of the assessor's valuation of the property. The board shall hear and consider all testimony and examine all exhibits produced or introduced by either the petitioner or the assessor, with no presumption in favor of any pending valuation, and may subpoena witnesses to testify. The costs of producing the petitioner's witnesses shall be paid by the petitioner, and the costs of producing the assessor's witnesses shall be paid by the county. On the basis of the testimony produced and the exhibits introduced, the board shall grant or deny the petition, in whole or in part, and shall notify the petitioner and the assessor in writing. If the board denies the petition, in whole or in part, such written notice shall inform the petitioner of the right to appeal within the thirty­day period following the denial to the district court or the board of assessment appeals pursuant to the provisions of section 39­8­108 (1). or within the thirty­day period following the denial to submit the case to arbitration pursuant to the provisions of section 39­8­108.5. Such notice shall state that, if the appeal is to the board of assessment appeals, the hearing before the board of assessment appeals shall be the last hearing at which testimony, exhibits, or any other type of evidence may be introduced by either party and that, if there is an appeal to the court of appeals pursuant to section 39­8­108 (2), the record from the hearing before the board of assessment appeals and no new evidence shall be the basis for the court's decision. The phone number and address of the board of assessment appeals shall also be included on the notice. The notice shall also state, in general terms, how to pursue arbitration and that, if a taxpayer submits the case to arbitration, the decision reached under such process shall be final and not subject to review.

SECTION 4.  39­8­108 (1) and (2), Colorado Revised Statutes, 1994 Repl. Vol., as amended, are amended to read:

39­8­108.  Decision ­ review. (1)  If the county board of equalization grants a petition, in whole or in part, the assessor shall adjust the valuation accordingly; but, if the petition is denied, in whole or in part, the petitioner may appeal the valuation set by the assessor or, if the valuation is adjusted as a result of a decision of the county board of equalization, the adjusted valuation to the board of assessment appeals or to the district court of the county wherein the petitioner's property is located for a trial de novo. or the petitioner may submit the case to arbitration pursuant to the provisions of section 39­8­108.5. Such appeal or submission to arbitration shall be taken no later than thirty days after the date such denial was mailed pursuant to section 39­8­107 (2). Any decision rendered by the county board of equalization shall state that the petitioner has the right to appeal the decision of the county board to the board of assessment appeals or to the district court of the county wherein the petitioner's property is located or to submit the case to arbitration and, to preserve such right, the time by which such appeal or submission to arbitration must be made. Any request by any person other than the taxpayer pro se for a hearing before the board of assessment appeals shall be accompanied by a nonrefundable filing fee in an amount of twenty­five dollars for each tract, parcel, or lot of real property and for each schedule of personal property included in such request; except that, if any request for a hearing before the board of assessment appeals involves more than one tract, parcel, or lot owned by the same taxpayer and involves the same issue regarding the valuation of such real property, only one filing fee shall be required for such request for a hearing. In addition, any request by a taxpayer for a hearing before the board of assessment appeals shall be stamped with the date on which such request was received by the board. All such requests shall be presumed to be on time unless the board can present evidence to show otherwise.

(2)  If the petitioner has appealed to the board of assessment appeals, and FOLLOWING the decision of the board of assessment appeals, is against the petitioner, the petitioner OR THE RESPONDENT may petition the court of appeals for judicial review according to the Colorado appellate rules and the provisions of section 24­4­106 (11), C.R.S. If the decision of the board is against the respondent, the respondent, upon the recommendation of the board that it either is a matter of statewide concern or has resulted in a significant decrease in the total valuation of the respondent county, may petition the court of appeals for judicial review according to the Colorado appellate rules and the provisions of section 24­4­106 (11), C.R.S. In addition, on and after June 7, 1989, if the decision of the board is against the respondent, the respondent may petition the court of appeals for judicial review of alleged procedural errors or errors of law within thirty days of such decision when the respondent alleges procedural errors or errors of law by the board of assessment appeals. If the board does not recommend its decision to be a matter of statewide concern or to have resulted in a significant decrease in the total valuation of the respondent county, the respondent may petition the court of appeals for judicial review of such questions within thirty days of such decision. Any decision issued by the board of assessment appeals shall inform the petitioner or respondent, as may be appropriate, of the right to petition the court of appeals for judicial review.

SECTION 5.  39­8­108.5 (1) (a), Colorado Revised Statutes, 1994 Repl. Vol., is amended, and the said 39­8­108.5 is further amended BY THE ADDITION OF A NEW SUBSECTION, to read:

39­8­108.5.  Arbitration of property valuations ­ arbitrators ­ qualifications ­ procedures ­ repeal. (1) (a)  In order to give taxpayers an alternative to pursuing an appeal of the county board of equalization's decision through either the board of assessment appeals or the district court, an arbitration process shall be established; EXCEPT THAT THE ARBITRATION PROCESS ESTABLISHED IN THIS SECTION SHALL NOT BE AVAILABLE TO PERSONS FILING PETITIONS WITH THE COUNTY BOARD OF EQUALIZATION FOR PROPERTY TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 1997. The board of county commissioners shall develop a list of persons who shall be qualified to act as arbitrators of property valuation disputes. Such list shall be kept in the office of the county clerk and recorder.

(7)  THIS SECTION IS REPEALED, EFFECTIVE JANUARY 1, 1998.

SECTION 6.  Effective date ­ applicability.  This act shall take effect upon passage. Section 1 of this act shall apply to property tax years beginning on or after January 1, 1999. Section 39­8­108 (2), Colorado Revised Statutes, as amended in section 4 of this act, shall apply to petitions filed with the court of appeals on or after July 1, 1997.

SECTION 7.  Safety clause.  The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.