Final Report 2013 Taxpayer Complaint Teller County February 12, 2014 Submitted by: Laura Forbes, Administrative Resources
2013 Taxpayer Complaint Teller County Page 1 Complaint filed: Teller County Property Owner: Douglas Bruce Statutory Authority: Specifics of Complaint: 39-2-111, C.R.S. Complaints. The administrator shall examine all complaints filed with him wherein it is alleged that a class or subclass of taxable property in a county has not been appraised or valued as required by law or has been improperly or erroneously valued or that the property tax laws have in any manner been evaded or violated. Complaints shall be in writing and may be filed only by a taxing authority in a county or by any taxpayer. Complaints may be filed only with respect to property located in the county in which the taxing authority levies taxes or in which the taxpayer owns taxable property. If the administrator finds the complaint is justified, he may use his findings as the basis for petitioning the state board of equalization for an order of reappraisal pursuant to section 39-2-114. The property owner is making a formal complaint under the above statute that a subclass of real property, specifically improved residential property, is erroneously or improperly valued. On November 6, 2013, JoAnn Groff, Property Tax Administrator, received a letter of complaint regarding the Teller County Assessor from Teller County property owner, Douglas Bruce. Mr. Bruce referenced the above statute; specifically stating Her lies, her criminal trespass, and other misconduct and abuse of legal standards should qualify under C.R.S. 39-2-111 as not being appraised or valued as required by law or has been improperly or erroneously valued or that the property tax law has been evaded or violated. Additionally, Mr. Bruce pointed out that Her assessor forms are illegal in that they do not state a right to appeal classification. The property owned by the taxpayer is located in a subdivision known as Tranquil Acres. The assessor reclassified the property from improved residential property to vacant land with a minor structure in 2013. Scope of Work: The scope of the investigation was limited to the portion of the statute that references that a class or subclass of taxable property in a county has not been appraised or valued as required by law or has been improperly or erroneously valued, 39-2-111, C.R.S. Specifically, the investigation focused on whether or not the
2013 Taxpayer Complaint Teller County Page 2 assessor is properly applying Colorado Revised Statutes and the Assessors Reference Library when classifying property as improved residential property or vacant land with minor structures. Additionally, the assessor s forms were reviewed for compliance. The statutes that govern this investigation are those in Title 39 of the Colorado Revised Statutes. More specifically: 39-1-102(14.3), C.R.S., regarding the definition of residential improvements. 39-1-102(14.4), C.R.S., regarding the definition of residential land. 39-1-104(10.2), C.R.S., regarding the proper level of value for the relevant year(s). 39-1-105, C.R.S., regarding date of assessment. 39-1-103, C.R.S., regarding the actual value of vacant land and residential property. 39-1-103(14)(c)(II)(A), C.R.S., regarding the definition of minor structures.. 39-2-109(1)(d), C.R.S., regarding approval of all forms and notices furnished or sent by assessors to owners of taxable property. Investigative Techniques: Reporting: Information on the taxpayer s property was gathered from the public information available on the Teller County website, requests for information through the Board of Assessment Appeals and the Teller County Assessor s Office. A telephone interview was conducted with the assessor to determine policies and procedures used by the assessor in reclassifying property. Specific information regarding the taxpayer s property was discussed. The investigation focused on whether procedures for classifying vacant land with a minor structure and improved residential property for ad valorem purposes are in compliance with current property tax laws, appraisal procedures, and the Assessors Reference Library. Additional information was requested from the assessor regarding other similarly classified properties. Conclusions were drawn as to whether proper classification procedures have been followed and whether or not property classifications met a test of reasonableness. Notices of Valuation were reviewed for compliance with the Colorado Revised Statutes and the Assessors Reference Library.
2013 Taxpayer Complaint Teller County Page 3 Investigation Details On November 6, 2013, Cherice Kjosness, Manager of the Administrative Resources Section of the Division of Property Taxation, assigned the investigation to Laura Forbes, Property Tax Specialist in Administrative Resources. They discussed a plan of action that began with interviewing the county assessor and reviewing the hearing files from the Board of Assessment Appeals hearing that was held October 28, 2013. On November 7, 2013, Laura Forbes telephoned Betty Clark-Wine, Teller County Assessor. Ms. Forbes discussed with Ms. Clark-Wine some specifics about the taxpayer s property and the steps that were followed before the classification of the property was changed from improved residential property to vacant land with a minor structure for 2013. Ms. Clark-Wine stated that staff had approached her several times about changing the classification on the property to vacant land with a minor structure due to the dilapidated condition of the improvements. Staff felt that the condition of the property was such that it could not be used as a residence. Among other documents in the assessor s property record file, a letter dated September 18, 1997, indicated that Teller County Code Enforcement had deemed the property dangerous and unsafe for human occupancy. Based on staff recommendations as well as information in the county file, Ms. Clark- Wine agreed that the classification for 2013 should be changed to vacant land with a minor structure. Ms. Clark-Wine explained that she spoke to Mr. Bruce on May 6, 2013, regarding the classification of the property. Mr. Bruce then filed a written protest with the assessor s office, dated May 6, 2013, formally protesting the change in classification. The records reflect that the assessor denied the appeal on June 28, 2013. Mr. Bruce appealed to the County Board of Equalization (CBOE) on July 1, 2013. The assessor personally inspected the outside of the property on July 16, 2013, and took photographs. She also had discussions with the water company and the building department. Based upon her physical inspection and additional information from other county resources, she believed the property to be uninhabitable and believed the correct classification for the property to be vacant land with a minor structure. The CBOE denied the appeal on August 7, 2013, and Mr. Bruce appealed to the Board of Assessment Appeals (BAA) on August 9, 2013. The Board of Assessment Appeals heard the appeal on October 28, 2013. On November 7, 2013, Ms. Forbes filed an Open Records Request to review the files of the Board of Assessment Appeals for the taxpayer s hearing held on October 28, 2013. The BAA allowed access to the files on November 8, 2013. The file contained exhibits from the petitioner and the respondent, including current photographs of the property, a report prepared by the county assessor, copies of county records and information with a cover letter filed by the petitioner.
2013 Taxpayer Complaint Teller County Page 4 Ms. Forbes spoke to the county assessor again on November 14, 2013. Ms. Forbes specifically asked Ms. Clark-Wine about properties similar to Mr. Bruce s and how the assessor determines that a property may need to be reclassified. Ms. Clark-Wine stated that properties that may need reclassified are discovered in several ways: Sales Confirmation Process Building permits Information provided by the county or other governmental agency Internal flags applied to properties that need periodic review Nosy neighbors Ms. Clark-Wine explained that most of Teller County is an historic mining area, and has numerous old buildings, many of which were built in the 1800 s. The assessor s office reviews the current use of properties while performing field inspections due to sales confirmations or based on building permits. Some reviews occur due to property information that is brought to the assessor s attention. Additionally, Ms. Clark-Wine explained that several properties in the county are flagged for periodic review; these are properties that may not fit neatly into an appraisal model, are improvements that are under construction or are in the process of being demolished, are in a state of transition, or have a curable condition. The office relies on the Assessors Reference Library and Colorado Revised Statutes for guidance in classifying property, and more specifically relies on 39-1-103(14)(c)(II)(A), C.R.S., for the definition of minor structures. On November 27, 2013, the assessor s office provided Ms. Forbes with an electronic spreadsheet listing 224 properties classified as vacant land with minor structures. The list was re-sorted to exclude any property that was classified as a manufactured home site or mobile home and was assessed at the residential assessment rate. Ms. Forbes researched the remaining 153 properties via the Teller County Assessor s website. The properties included a value for a minor structure such as an outbuilding or a shed. Thirty-nine of the properties were identified by the assessor as only having salvage value. Fifty-six properties were identified to be residential in nature but were classified by the assessor as vacant land with a minor structure. Structures reviewed included old wood homes or old log cabins, some structures with only salvage value remaining, abandoned or incomplete residential improvements, and cabins with one or two rooms and no utilities. Summary and Conclusions The specific concerns of the taxpayer; Her lies, her criminal trespass, and other misconduct and abuse of legal standards are concerns that were not investigated and cannot legally be addressed by the Property Tax Administrator. The investigation focused specifically on property classification processes in the Teller County Assessor s Office and properties similarly classified as compared to the taxpayer s property. The assessor s forms were also reviewed for compliance with Colorado Revised Statutes.
2013 Taxpayer Complaint Teller County Page 5 The Colorado Revised Statutes and the Assessors Reference Library Volume 2, Chapter 6, Property Classification Guidelines and Assessment Percentages, provide assessors with guidance in classifying property for ad valorem purposes. Minor structures are defined in statute as: 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. 39-1-103(14)(c)(II)(A), C.R.S. Section 39-1-102(14.3) provides the definition of a residential improvement: Definitions. (14.3) Residential improvements means a building, or that portion of a building, designed for use predominantly as a place of residency by a person, a family, or families. The term includes buildings, structures, fixtures, fences, amenities, and water rights that are an integral part of the residential use. The term also includes a manufactured home as defined in subsection (7.8) of this section, a mobile home as defined in subsection (8) of this section, and a modular home as defined in subsection (8.3) of this section. 39-1-102, C.R.S. The assessor may change the classification of a property if it is found to be erroneous: Actual value determined when. (5)(c) Except as provided in section 39-1-102(14.4)(b), once any property is classified for property tax purposes, it shall remain so classified until such time as its actual use changes or the assessor discovers that the classification is erroneous. The property owner shall endeavor to comply with the reasonable requests of the assessor to supply information which cannot be ascertained independently but which is necessary to determine actual use and properly classify the property when the assessor has evidence that there has been a change in the use of the property. Failure to supply such information shall not be the sole reason for reclassifying the property. Any such request for such information shall be accompanied by a notice that states that failure on the part of the property owner to supply such information will not be used as the sole reason for reclassifying the property in question. Subject to the availability of funds under the assessor's budget for such purpose, no later than May 1 of each year, the assessor shall inform each person whose property has been reclassified from agricultural land to any other classification of property of the reasons for such reclassification including, but not limited to, the basis for the determination that the actual use of the property has changed or that the classification of such property is erroneous. 39-1-103, C.R.S.
2013 Taxpayer Complaint Teller County Page 6 The taxpayer protested and appealed his property s classification to the BAA level. The assessor was ordered by the BAA to reclassify the property as residential. In the BAA decision dated December 2, 2013, Docket number 62035, the board found that: The improvements require repairs in order to be habitable but no testimony has been provided to suggest they do not contribute value above the land value. The Board is in agreement with Petitioner that the classification for the subject property should be changed back to residential for tax year 2013. In Farny v. Board of Equalization of Dolores County, 985 p2d 106 (Colo. App. 1999), the Court affirmed a BAA decision where the BAA found that a cabin with no electricity or plumbing qualified as a residential improvement because taxpayers actually used the structure as a place of residence and it was at least minimally suitable for residential purposes. The Court noted the statutory definition of minor structures in that minor structures do not add value to the land and are not suitable or actually used for any other purpose. Colorado Revised Statutes, DPT policies and procedures, and court case law give assessors guidance in classifying property. Assessors are given the constitutional authority to classify and value property for ad valorem purposes. Any taxpayer who disagrees with the assessor s judgment has the right to appeal the valuation or the classification through the protest and appeal process. The taxpayer has followed proper administrative remedies to address the classification assigned by the assessor. Individual property valuations and classifications are adjusted by various appeal bodies on a regular basis through the protest and appeal process. An adjustment to an individual property valuation or classification by the CBOE or BAA does not render the entire class improperly or erroneously valued. Research indicated that the classifications assigned to the 153 properties are reasonable. Further, the classification and valuation methods were found to be in compliance with state statutes, and The Assessors Reference Library. Mr. Bruce also complained that the Teller County s Notice of Valuation did not notify him of the ability to protest the classification. Teller County s Notice of Valuation was approved by the Division of Property Taxation on January 23, 2013. The taxpayer s Notice of Valuation, as printed from the county s website, contains these two sentences: You have the right to protest the classification and/or valuation of your property., and Please refer to the back of this form for information on how to appeal your property valuation or its classification. Mr. Bruce s exhibits as submitted to the Board of Assessment Appeals and to the Property Tax Administrator do not have either of these sentences.
2013 Taxpayer Complaint Teller County Page 7 Recommendations After research, analyses, discussions with Division staff and discussions with the Teller County Assessor, it is determined that the classification methods used by the Teller County Assessor are in compliance with Colorado Revised Statutes and existing DPT guidelines. Further, the Division considers the reclassification by the Teller County Assessor to be based on substantial evidence and not found to be arbitrary or capricious. The fact that the Board of Assessment Appeals reversed the assessor s decision on one property does not render the entire class improperly or erroneously valued. The investigation and resulting discussions revealed a lack of specificity in the existing procedures outlined in the Assessors Reference Library for properties assigned to the 0600 Vacant Land with Minor Structure classification. The DPT will be looking to clarify these procedures for better consistency throughout the state. The following observations need to be brought to the attention of the assessor: The assessor should review her forms to ensure that her mailed forms contain all the essential elements of the forms provided on the website and approved by the DPT. One clerical error was discovered during the review process. Parcel R0019845 has a vacant land code of 0100 and an improvement code of 1212. The assessor should review this parcel to correct either the land code or the improvement code. The assessor may want to conduct a study and review sales prices of vacant land to determine if these vacant parcels with minor structures are selling at or close to the vacant land value. Such a study would add evidence to the statement that the minor structures truly do not add value to the land. The structures should then be valued accordingly. Please contact Laura Forbes, or Cherice Kjosness, at 303-864-7777, if there are any questions regarding this report.