39-1-103. Actual value determined - when.

(1) The valuation for assessment of producing mines and nonproducing mining claims shall be determined as provided in article 6 of this title.

(2) The valuation for assessment of leaseholds and lands producing oil or gas shall be determined as provided in article 7 of this title.

(3) The actual value for property tax purposes of the operating property and plant of all public utilities doing business in this state shall be determined by the administrator, as provided in article 4 of this title.

(4) (a) Repealed.

(b) The valuation for assessment of mobile homes shall be determined as provided in section 39-5-203.

(5) (a) All real and personal property shall be appraised and the actual value thereof for property tax purposes determined by the assessor of the county wherein such property is located. The actual value of such property, other than agricultural lands exclusive of building improvements thereon and other than residential real property and other than producing mines and lands or leaseholds producing oil or gas, shall be that value determined by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal. The assessor shall consider and document all elements of such approaches that are applicable prior to a determination of actual value. Despite any orders of the state board of equalization, no assessor shall arbitrarily increase the valuations for assessment of all parcels represented within the abstract of a county or within a class or subclass of parcels on that abstract by a common multiple in response to the order of said board. If an assessor is required, pursuant to the order of said board, to increase or decrease valuations for assessment, such changes shall be made only upon individual valuations for assessment of each and every parcel, using each of the approaches to appraisal specified in this paragraph (a), if applicable. The actual value of agricultural lands, exclusive of building improvements thereon, shall be determined by consideration of the earning or productive capacity of such lands during a reasonable period of time, capitalized at a rate of thirteen percent. Land that is valued as agricultural and that becomes subject to a perpetual conservation easement shall continue to be valued as agricultural notwithstanding its dedication for conservation purposes; except that, if any portion of such land is actually used for nonagricultural commercial or residential purposes, that portion shall be valued according to such use. The actual value of residential real property shall be determined solely by consideration of the market approach to appraisal. A gross rent multiplier may be considered as a unit of comparison within the market approach to appraisal. The valuation for assessment of producing mines and of lands or leaseholds producing oil or gas shall be determined pursuant to articles 6 and 7 of this title.

(b) If, having considered the three approaches prescribed in paragraph (a) of this subsection (5), at the sole discretion of the assessor the use of the three approaches to value cannot accurately determine the actual value of any parcel of taxable property, or in the opinion of the assessor the application of the three approaches to value does not result in uniform, just, and equalized valuation, then the actual value thereof shall be determined by comparison of the surface use of such property with a similar surface use.

(c) 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.

(d) If a parcel of land is classified as agricultural land as defined in section 39-1-102 (1.6) (a) (III) and the perpetual conservation easement is terminated, violated, or substantially modified so that the easement is no longer granted exclusively for conservation purposes, the assessor may reassess the land retroactively for a period of seven years and the additional taxes, if any, that would have been levied on the land during the seven year period prior to the termination, violation, or modification shall become due.

(6) and (7) Repealed.

(8) In any case in which sales prices of comparable properties within any class or subclass are utilized when considering the market approach to appraisal in the determination of actual value of any taxable property, the following limitations and conditions shall apply:

(a) (I) Use of the market approach shall require a representative body of sales, including sales by a lender or government, sufficient to set a pattern, and appraisals shall reflect due consideration of the degree of comparability of sales, including the extent of similarities and dissimilarities among properties that are compared for assessment purposes. In order to obtain a reasonable sample and to reduce sudden price changes or fluctuations, all sales shall be included in the sample that reasonably reflect a true or typical sales price during the period specified in section 39-1-104 (10.2). Sales of personal property exempt pursuant to the provisions of sections 39-3-102, 39-3-103, and 39-3-119 to 39-3-122 shall not be included in any such sample.

(II) Because of the unique characteristics and limited number of oil shale mineral interests, a minimum of five arm's-length sales of reasonably comparable oil shale mineral interests shall be required to constitute a market for purposes of utilization of the market approach to appraisal in determining the actual value of nonproducing oil shale mineral interests.

(b) Each such sale included in the sample shall be coded to indicate a typical, negotiated sale, as screened and verified by the assessor.

(c) All such coded, typical sales samples shall be supplied to the administrator for the performance of his duties.

(d) In no event shall a sales ratio be established or utilized for any class or subclass of property unless and until there have been at least thirty such coded, typical sales or at least five percent of all properties in such class or subclass within the county have been sold and verified by the assessor as coded, typical sales, whichever amount is greater. When such minimum requirement has not been met but typical sales within any such class or subclass indicate that valuations in the class or subclass are too high or too low, such fact shall be reported to the state board of equalization, which board may order an independent appraisal study in such county.

(e) Repealed.

(f) Such true and typical sales shall include only those sales which have been determined on an individual basis to reflect the selling price of the real property only or which have been adjusted on an individual basis to reflect the selling price of the real property only.

(9) (a) In the case of an improvement which is used as a residential dwelling unit and is also used for any other purpose, the actual value and valuation for assessment of such improvement shall be determined as provided in this paragraph (a). The actual value of each portion of the improvement shall be determined by application of the appropriate approaches to appraisal specified in subsection (5) of this section. The actual value of the land containing such an improvement shall be determined by application of the appropriate approaches to appraisal specified in subsection (5) of this section. The land containing such an improvement shall be allocated to the appropriate classes based upon the proportion that the actual value of each of the classes to which the improvement is allocated bears to the total actual value of the improvement. The appropriate valuation for assessment ratio shall then be applied to the actual value of each portion of the land and of the improvement.

(b) In the case of land containing more than one improvement, one of which is a residential dwelling unit, the determination of which class the land shall be allocated to shall be based upon the predominant or primary use to which the land is put in compliance with land use regulations. If multiuse is permitted by land use regulations, the land shall be allocated to the appropriate classes based upon the proportion that the actual value of each of the classes to which the improvements are allocated bears to the combined actual value of the improvements; the appropriate valuation for assessment ratio shall then be applied to the actual value of each portion of the land.

(10) Common property or common elements within a common interest community as defined in the "Colorado Common Interest Ownership Act", article 33.3 of title 38, C.R.S., shall be appraised and valued pursuant to the provisions of section 38-33.3-105, C.R.S.

(10.5) (a) The general assembly hereby finds and declares that bed and breakfasts are unique mixed-use properties; that all areas of a bed and breakfast, except for the commercial lodging area, are shared and common areas that allow innkeepers and guests to interact in a residential setting; that the land on which a bed and breakfast is located and that is used in conjunction with the bed and breakfast is primarily residential in nature; and that there appears to exist a wide disparity in how assessors classify the different portions of bed and breakfasts.

(b) Therefore, notwithstanding any other provision of this article, a bed and breakfast shall be assessed as provided in this subsection (10.5). The commercial lodging area of a bed and breakfast shall be assessed at the rate for nonagricultural or nonresidential improvements. Any part of the bed and breakfast that is not a commercial lodging area shall be considered a residential improvement and assessed accordingly. The actual value of each portion of the bed and breakfast shall be determined by the application of the appropriate approaches to appraisal specified in subsection (5) of this section. The actual value of the land containing a bed and breakfast shall be determined by the application of the appropriate approaches to appraisal specified in subsection (5) of this section. The land containing a bed and breakfast shall be assessed as follows:

(I) The portion of land directly underneath a bed and breakfast shall be assessed pursuant to the procedures pertaining to land set forth in subsection (9) of this section.

(II) There shall be a rebuttable presumption that all remaining land shall be assessed as residential land. Such presumption shall only be overcome if there is a nonresidential use not reasonably associated with the operation of the bed and breakfast on some portion of the remaining land, in which case, such portion of the remaining land shall be assessed as nonresidential land.

(III) Subparagraphs (I) and (II) of this paragraph (b) shall not apply to agricultural land.

(11) The general assembly hereby declares that consideration by assessing officers of the cost approach, market approach, and income approach to the appraisal of real property has resulted in valuations of minerals in place which are neither uniform, nor just and equal, because of wide variations within the same locality in quality and quantity of mineral deposits, if any, because of uncertainty in the existence or extent of such deposits, because of difficulty in measuring acquisition or replacement costs, or because of speculative value judgments when minerals in place are not income producing. Therefore, in the absence of preponderant evidence shown by the assessing officer that the use of the cost approach, market approach, and income approach result in uniform and just and equal valuation, minerals in place are not to be considered in determining the actual value of real property.

(12) In any case in which the income approach is utilized in the determination of the actual value of any nonproducing oil shale mineral interests, the following limitations and conditions shall apply:

(a) The assessor shall capitalize the annual rental income for such nonproducing mineral interests at a capitalization rate of thirteen percent. If nonproducing mineral interests are unleased, the assessor shall use the annual rental as defined in paragraph (b) of this subsection (12).

(b) For the purposes of this subsection (12), "annual rental" means annual rental payments, or other compensatory payments payable for the right to hold a mineral interest, which payments are fixed and certain in amount and payable periodically over a fixed period calculated on a twelve-month basis. "Annual rental" shall be the representative annual rental for such mineral interests leased within the county or the area, and "annual rental" does not include royalty payments, advanced royalty payments, bonus payments, or minimum royalty payments covering periods when the mineral interests are not in production, even though said payments may be fixed and certain in amount and payable periodically. For the purposes of this paragraph (b), "royalty payments", "advanced royalty payments", and "minimum royalty payments" mean payments attributable to a portion of the current or future mineral production of a mineral interest, paid for the privilege of producing minerals, and "bonus payments" means compensation paid as consideration for the granting of a mineral lease or other compensatory payments which are payable regardless of the extent of use of the mineral interest and which are fixed and certain in amount and may be payable in one or more periodical increments over a fixed period.

(13) (a) The general assembly hereby finds and declares that, in the consideration of the cost approach, market approach, and income approach to the appraisal of personal property by assessing officers, the cost approach shall establish the maximum value of property if all costs incurred in the acquisition and installation of such property are fully and completely disclosed by the property owner to the assessing officer.

(b) Therefore, in the assessment of taxable personal property, the assessing officer shall consider the value derived from the cost approach to be the maximum value of the property if the property owner has timely filed his declaration and the declaration contains all relevant information pertaining to the valuation of the property and, also includes, a full disclosure of all costs incurred in the acquisition and installation of all personal property owned by or in the possession of the taxpayer.

(c) Assessing officers shall consider the cost approach to the appraisal of property, pursuant to the provisions of this subsection (13), in good faith and shall deny the use of the cost approach only upon just cause that the requirements set forth in this subsection (13) and in section 39-5-116 have not been complied with by a taxpayer. If it is determined at any time that an assessing officer wrongly denied the use of the cost approach, such assessing officer shall be held liable for all costs incurred by the taxpayer in protesting such assessment based on such denial. However, nothing in this subsection (13) shall preclude the assessing officers from considering the market approach or income approach to the appraisal of personal property when such consideration would result in a lower value of the property and when such valuation is based on independent information obtained by the assessing officers.

(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.

(b) 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.

(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, 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 last-known address of the subdivision developer known or believed to own vacant land within such approved plat. Such questionnaire shall be designed to elicit information vital to determining the present worth of vacant land within such approved plat. Such subdivision developer or his agent shall answer all questions to the best of his 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 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 39-1-104 (16) and his employees and the property tax administrator and his employees.

(e) If any subdivision developer 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 which is owned by such subdivision developer on the basis of the best information available to and obtainable by the assessor.

(15) The general assembly hereby finds and declares that assessing officers shall give appropriate consideration to the cost approach, market approach, and income approach to appraisal as required by section 3 of article X of the state constitution in determining the actual value of taxable property. In the absence of evidence shown by the assessing officer that the use of the cost approach, market approach, and income approach to appraisal requires the modification of the actual value of taxable property for the first year of a reassessment cycle in order to result in uniform and just and equal valuation for the second year of a reassessment cycle, the assessing officer shall consider the actual value of any taxable property for the first year of a reassessment cycle, as may have been adjusted as a result of protests and appeals, if any, prior to the assessment date of the second year of a reassessment cycle, to be the actual value of such taxable property for the second year of a reassessment cycle.

(16) (a) The general assembly hereby finds and declares that in the consideration of the cost approach, market approach, and income approach to appraisal for the valuation of superfund water treatment facilities, the cost approach to appraisal does not adequately reflect characteristics specific to superfund water treatment facilities that negatively impact the value of such facilities, including, but not limited to, the lack of income producing ability and the absence of any market for sale of superfund water treatment facilities. Therefore, in the assessment of superfund water treatment facilities, the income approach to appraisal shall be considered the primary indicator of value and the cost approach or market approach to appraisal shall be used only if the value determined under the cost approach or market approach is less than the value determined under the income approach to appraisal. For the purposes of determining the actual value of superfund water treatment facilities as of the assessment date using the income approach to appraisal, the assessing officer shall capitalize the actual income generated by the facility during the calendar year preceding the assessment date at the rate of ten percent per annum.

(b) For purposes of this subsection (16), "superfund water treatment facilities" means real and personal property that is:

(I) Installed and constructed pursuant to an agreement with or an order of the federal government or the state or any of its political subdivisions and to satisfy the federal "Comprehensive Environmental Response, Compensation, and Liability Act of 1980", 42 U.S.C. sec. 9601, et seq., as amended; and

(II) Operated for the purpose of eliminating, reducing, controlling, or disposing of pollutants, as defined in section 25-8-103 (15), C.R.S., that could alter the physical, chemical, biological, or radiological integrity of state waters if released into state waters.

(17) (a) The general assembly declares that the valuation of possessory interests in exempt properties is uncertain and highly speculative and that the following specific standards for the appropriate consideration of the cost approach, the market approach, and the income approach to appraisal in the valuation of possessory interests must be provided by statute and applied in the valuation of possessory interests to eliminate the unjust and unequalized valuations that would result in the absence of specific standards:

(I) The actual value of any possessory interest of the lessee or permittee of lands owned by the United States and leased or permitted for use for ski area recreational purposes in connection with a business conducted for profit shall be determined by capitalizing at an appropriate rate the annual fee paid to the United States by the lessee or permittee of such land for the use thereof in the immediately preceding calendar year, adjusted to the level of value using a factor or factors to be published by the administrator pursuant to the same procedures and principles as are provided for property in section 39-1-104 (12.3) (a) (I). The rate used to capitalize any fee pursuant to this subparagraph (I) shall include an appropriate rate of return, an appropriate adjustment for the applicable property tax rate, and an appropriate adjustment to reflect the portion of the fee, if any, required to be paid over by the United States to the state of Colorado and its political subdivisions.

(II) (A) Except for possessory interests in land leased or permitted for use for ski area recreational purposes valued in accordance with subparagraph (I) of this paragraph (a) and except as otherwise provided in subparagraph (III) of this paragraph (a), the actual value of a possessory interest in land, improvements, or personal property shall be determined by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal. When the cost or income approach to appraisal is applicable, the actual value of the possessory interest shall be determined by the present value of the reasonably estimated future annual rents or fees required to be paid by the holder of the possessory interest to the owner of the underlying real or personal property through the stated initial term of the lease or other instrument granting the possessory interest; except that the actual value of a possessory interest in agricultural land, including land leased by the state board of land commissioners other than land leased pursuant to section 36-1-120.5, C.R.S., shall be the actual amount of the annual rent paid for the property tax year. The rents or fees used to determine the actual value of a possessory interest under the cost or income approach to appraisal shall be the actual contract rents or fees reasonably expected to be paid to the owner of the underlying real or personal property unless it is shown that the actual contract rents or fees to be paid for the possessory interest being valued are not representative of the market rents or fees paid for that type of real or personal property, in which case the market rents or fees shall be substituted for the actual contract rents or fees.

(B) The rents or fees taken into account under the cost or income approach to appraisal under sub-subparagraph (A) of this subparagraph (II) shall exclude that portion of the rents and fees required to be paid for all rights other than the exclusive right to use and possess the land, improvements, or personal property. Such rents or fees to be excluded shall include, but shall not be limited to, any portion of such rents or fees attributable to any of the following: Nonexclusive rights to use and possess public property, such as roads, rights-of-way, easements, and common areas; rights to conduct a business, as determined in accordance with guidelines to be published by the administrator; income of the holder of the possessory interest that is not directly derived from and directly related to the use or occupancy of the possessory interest; any amount paid under a timber sales contract or similar agreement for the purchase of timber or for the right to acquire and remove timber; and reimbursement to the owner of the underlying real or personal property of the reasonable costs of operating, maintaining, and repairing the land, improvements, or personal property to which the possessory interest pertains, regardless of whether such costs are separately stated, provided that the types of such costs can be identified with reasonable certainty from the documents granting the possessory interest. The actual value of the possessory interest so determined shall be adjusted to the taxable level of value using a factor or factors to be published by the administrator pursuant to the same procedures and principles as are provided for personal property in section 39-1-104 (12.3) (a) (I).

(III) Subparagraphs (I) and (II) of this paragraph (a) shall not apply to any management contract. In the case of a management contract, the possessory interest shall be presumed to have no actual value. For purposes of this subparagraph (III), "management contract" means a contract that meets all of the following criteria:

(A) The government owner of the real or personal property subject to the contract directly or indirectly provides the management contractor all funds to operate the real or personal property;

(B) The government owns all of the real or personal property used in the operation of the real or personal property subject to the contract;

(C) The government maintains control over the amount of profit the management contractor can realize or sets the prices charged by the management contractor, or the management contractor's exclusive obligation is to operate and manage the real or personal property for which the management contractor receives a fee;

(D) The government reserves the right to use the real or personal property when it is not being managed or operated by the management contractor;

(E) The management contractor has no leasehold or similar interest in the real or personal property;

(F) To the extent the management contractor manages a manufacturing process for the government on the real property subject to the contract, the government owns all or substantially all of the personal property used in the process; and

(G) The real or personal property is maintained and repaired at the expense of the government.

(b) This subsection (17) shall not apply to and shall not be construed to affect or change the valuation of public utilities pursuant to article 4 of this title, the valuation of equities in state lands pursuant to section 39-5-106, the valuation of mines pursuant to article 6 or any other article of this title, or the valuation of oil and gas leaseholds and lands pursuant to article 7 of this title.

(18) (a) The general assembly hereby finds and declares that real property that is located in a district in which limited gaming is authorized but that is not used for limited gaming may be unfairly valued by comparison of said real property with real property that is used for limited gaming. The general assembly further finds that real property that is located in a gaming district may be reasonably used for purposes other than limited gaming, that such alternative uses may be beneficial in strengthening the economies of gaming districts, and that such alternative uses should be encouraged. In addition, the general assembly finds that applying the cost and market approaches to appraisal in valuing real property that is located in a limited gaming district but that is not used for limited gaming may result in an unfairly high valuation of real property that is reasonably used for a purpose other than limited gaming. Therefore, the provisions of this subsection (18) shall govern the classification and valuation of real property that is located within a gaming district but that is not used for limited gaming.

(b) For property tax years beginning on or after January 1, 1999, if the actual use as of the assessment date of any real property that is located in a limited gaming district but that is not used for limited gaming is used as residential real property, the real property shall be classified as residential real property, and the assessing officer shall determine the actual value of said real property as of the assessment date by applying the market approach to appraisal. If, due to the limited number of real properties located within a limited gaming district that are not used for limited gaming and that are used as residential real property, comparable valuation data is not available from within a limited gaming district to determine adequately the actual value of real property located within said limited gaming district that is not used for limited gaming and that is used as residential real property, notwithstanding any law to the contrary, the assessing officer shall consider sales of reasonably comparable residential real property located inside and outside of any limited gaming district for purposes of utilization of the market approach to appraisal in determining the actual value of said real property located within a limited gaming district that is not used for limited gaming and that is used as residential real property.

(c) For property tax years beginning on or after January 1, 1999, if the actual use as of the assessment date of any real property that is located in a limited gaming district is not for limited gaming or as residential real property, including but not limited to vacant land, the real property shall be classified as nongaming real property, and the assessing officer shall determine the actual value of said real property as of the assessment date by giving appropriate consideration to the cost, market, and income approaches to appraisal. If, due to the limited number of real properties located within a limited gaming district that are not used for limited gaming or as residential real property, comparable valuation data is not available from within a limited gaming district to determine adequately the actual value of real property located within said limited gaming district that is not used for limited gaming or as residential real property, notwithstanding any law to the contrary, the assessing officer shall:

(I) Consider sales of reasonably comparable real property that is not used as residential property located inside and outside of any limited gaming district for purposes of utilization of the market approach to appraisal in determining the actual value of real property located within a limited gaming district that is not used for limited gaming or as residential real property; and

(II) Consider reasonably comparable real property that is not used as residential property located inside and outside of any limited gaming district for purposes of utilization of the income approach to appraisal in determining the actual value of real property located within a limited gaming district that is not used for limited gaming or as residential real property.

(d) For purposes of this subsection (18), real property is considered to be "used for limited gaming" if the owner or lessee of the real property holds a retail gaming license issued pursuant to part 5 of article 47.1 of title 12, C.R.S., and if the owner or lessee actually uses the real property in offering limited gaming for play or for administrative support services related to providing limited gaming or makes the real property available for other uses by persons who are engaged in limited gaming for play, including but not limited to using the property for parking, for a restaurant, or for a hotel or motel.

Source: L. 64: R&RE, p. 676, § 1. C.R.S. 1963: § 137-1-3. L. 67: p. 945, §§ 2-4. L. 70: p. 380, § 9. L. 71: p. 1242, § 1. L. 73: pp. 237, 1429, §§ 18, 1. L. 75: (6)(a)(I) amended, p. 1453, § 1, effective May 22; (4)(b) repealed, p. 1473, § 30, effective July 18. L. 76: (5) amended, p. 754, § 3, effective January 1, 1977. L. 77: (5) amended and (7) and (8) added p. 1729, § 2, effective June 20; (4)(b) RC&RE, p. 1740, § 2, effective January 1, 1978. L. 81: (5)(a) amended, p. 1829, § 1, effective June 12. L. 83: (8)(d) amended and (9) added, pp. 1489, 1492, §§ 1, 1, effective April 21; (4)(a) and (5)(b) repealed and (5)(a), IP(8), and (8)(a) amended, pp. 1485, 1480, §§ 11, 2, effective April 22; (6) repealed, p. 1488, § 6, effective June 1. L. 84: (8)(e) and (8)(f) added, p. 986, § 1, effective March 16; (10) added, p. 987, § 1, effective April 5. L. 85: (5)(b) RC&RE, (8)(a) amended, and (11) and (12) added, pp. 1210, 1211, §§ 3, 4, effective May 9; (5)(a) amended, p. 1217, § 1, effective May 24. L. 87: (7) repealed, p. 1304, § 1, effective May 20; (13) added, p. 1415, § 2, effective June 16; (8)(e) amended, p. 1388, § 9, effective June 20. L. 88: (14) added, p. 1281, § 4, effective January 1, 1989. L. 89: (8)(a)(I) amended, p. 1482, § 4, effective May 9; (14)(b) and (14)(c)(I) amended, p. 1449, § 1, effective June 7. L. 90: (5)(c), (14)(d), and (14)(e) added, (8)(a)(I) and (14)(b) amended, and (8)(e) repealed, pp. 1701, 1688, 1705, §§ 34, 3, 2, 41, effective June 9; (15) added, p. 1697, § 22, effective January 1, 1991. L. 91: (8)(a)(I) amended, p. 2005, § 3, effective June 6. L. 92: (14)(b) amended, p. 2215, § 1, effective June 2. L. 93: (10) amended, p. 654, § 22, effective April 30; (5)(c) amended, p. 1743, § 2, effective July 1. L. 95: (8)(a)(I) amended, p. 8, § 2, effective March 9; (5)(a) amended and (5)(d) added, p. 174, § 3, effective April 7. L. 96: (16) added, p. 130, § 1, effective March 25; (5)(a) and (8)(a)(I) amended, p. 718, § 1, effective May 22; (14)(c) amended, p. 1198, § 1, effective June 1; (17) added, p. 1852, § 4, effective June 5. L. 97: (17)(a)(II)(B) amended, p. 1030, § 63, effective August 6. L. 98: (18) added, p. 110, § 1, effective March 23. L. 2000: (5)(a) amended, p. 1499, § 2, effective August 2. L. 2002: IP(17)(a) amended, p. 1008, § 1, effective August 7; (10.5) added, p. 1672, § 2, effective January 1, 2003. L. 2003: (17)(a)(II)(A) amended, p. 1696, § 1, effective January 1, 2004; (17)(a)(II)(B) amended, p. 2492, § 1, effective January 1, 2004. L. 2004: (17)(a)(II)(A) amended, p. 1088, § 1, effective January 1, 2005.

ANNOTATION

Law reviews. For article, "Appealing Property Tax Assessments," see 15 Colo. Law. 798 (1986). For article, "Legislative Update on Property Taxation and New Arbitration Procedures", see 17 Colo. Law. 1751 (1988). For article, "Taxation of Possessory Interests in Exempt Property Under S.B. 02-157", see 32 Colo. Law. 81 (March 2003).

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

Standing to challenge constitutionality of subsection (5). Members of board of county commissioners, also empowered to sit as board of equalization to equalize valuations, lack standing to challenge the constitutionality of ministerial duties imposed by subsection (5). Bd. of County Comm'rs v. Fifty-first Gen. Ass'y, 198 Colo. 302, 599 P.2d 887 (1979).

Requirement in subsection (5)(a) that a property assessor give "appropriate consideration" to the income, market, and cost approaches does not require complete and documented calculations of each approach or an explanation of the reasons for excluding those not used. ASARCO, Inc. v. Bd. of Comm'rs of Lake County, 916 P.2d 550 (Colo. App. 1995).

If the market and income approaches to valuation are inapplicable or do not produce a meaningful valuation for assessment purposes, it is appropriate for the assessor to use only the cost approach. ASARCO, Inc. v. Bd. of Comm'rs of Lake County, 916 P.2d 550 (Colo. App. 1995).

Under the cost approach, reproduction cost rather than replacement cost was held to be an appropriate measure in light of the special purpose and regulatory specifications applicable to an EPA-ordered water treatment facility. ASARCO, Inc. v. Bd. of Comm'rs of Lake County, 916 P.2d 550 (Colo. App. 1995).

The comparable sales price, rather than the manufacturer's cost, is the appropriate starting point for the cost approach. Xerox Corp. v. Bd. of County Comm'rs, 87 P.3d 189 (Colo. App. 2003).

No requirement for assessor or board to compare valuations with other counties to determine compliance with article X, § 3, of the Colorado Constitution. The issue of just and equal valuation among counties is not cognizable in an appeal to the board of an assessor's valuation, and constitutional requirement does not require an assessor or a board to compare valuations with those made for comparable properties in other counties. Bd. of Assess. Appeals v. E.E. Sonnenberg, 797 P.2d 27 (Colo. 1990).

Actual value is the guiding principle for the taxation of real property in Colorado. Arapahoe County Bd. of Equaliz. v. Podoll, 935 P.2d 14 (Colo. 1997); San Miguel County Bd. of Equaliz. v. Telluride Co., 947 P.2d 1381 (Colo. 1997).

Valuing similar property, similarly situated is consistent with statutory and constitutional mandates to achieve just and equalized values for purposes of taxation. Telluride Co. v. County Bd. of Equaliz., 962 P.2d 313 (Colo. App. 1997).

Value determined as of date of assessment. County assessor has the duty of determining the values of properties as they existed on the date of the assessment. Colo. & Utah Coal Co. v. Rorex, 149 Colo. 502, 369 P.2d 796 (1962).

Assessor's valuation presumed correct. An assessor's ascertainment of the value of property for taxation is presumed to be right. Colo. & Utah Coal Co. v. Rorex, 149 Colo. 502, 369 P.2d 796 (1962).

Assessors furnished guides to aid in valuation. In order to promote uniformity and equality in taxation, assessors are supplied with manuals which furnish them with guides for determining valuations for tax purposes. Stalder v. Bd. of County Comm'rs, 147 Colo. 493, 364 P.2d 389 (1961); Colo. & Utah Coal Co. v. Rorex, 149 Colo. 502, 369 P.2d 796 (1962).

Clear and convincing evidence must be adduced to overcome presumption of correctness of an assessor's valuation of property for taxation. Colo. & Utah Coal Co. v. Rorex, 149 Colo. 502, 369 P.2d 796 (1962).

Presumption of correction of assessor's valuation overcome. May Stores Shopping Centers, Inc. v. Shoemaker, 151 Colo. 100, 376 P.2d 679 (1962).

Presumption of correctness of assessor's valuation rebutted where sufficient evidence presented of assessor's failure to comply with requirements of subsection (5)(a). Transamerican Realty Corp. v. Clifton, 817 P.2d 1049 (Colo. App. 1991).

Method of valuation is legislative determination. The method by which valuation for taxation purposes is to be formulated is a legislative function and is not a proper subject for judicial determination. Bd. of County Comm'rs v. Bd. of Assess. Appeals, 628 P.2d 156 (Colo. App. 1981); Leavell-Rio Grande v. Bd. of Assess. Appeals, 753 P.2d 797 (Colo. App. 1988).

Assessor held not to have followed mandate of statute in determining "actual value". Majestic Great W. Sav. & Loan Ass'n v. Reale, 30 Colo. App. 564, 499 P.2d 644 (1972).

Market value usually measure of "actual value". In determining "actual value", market value is usually taken as the measure, because most likely to be just and least difficult of ascertainment. Fellows v. Grand Junction Sugar Co., 78 Colo. 393, 242 P. 635 (1925).

For determination of "market value", see Union P. R. R. v. Hanna, 73 Colo. 162, 214 P. 550 (1923); Fellows v. Grand Junction Sugar Co., 78 Colo. 393, 242 P. 635 (1925); City & County of Denver v. Lewin, 106 Colo. 331, 105 P.2d 854 (1940); Stalder v. Bd. of County Comm'rs, 147 Colo. 493, 364 P.2d 389 (1961); Colo. & Utah Coal Co. v. Rorex, 149 Colo. 502, 369 P.2d 796 (1962); May Stores Shopping Centers, Inc. v. Shoemaker, 151 Colo. 100, 376 P.2d 679 (1962).

Trial court has no authority to make an assessment or fix a valuation. Colo. & Utah Coal Co. v. Rorex, 149 Colo. 502, 369 P.2d 796 (1962).

Review by the court is therefore limited to the narrow ascertainment of agency abuse of discretion by neglecting to abide by the statutes in the calculation of tax assessments. Leavell-Rio Grande v. Bd. of Assess. Appeals, 753 P.2d 797 (Colo. App. 1988).

The language of the statute is unambiguous and sets forth an exclusive and restrictive set of unusual circumstances upon which the assessor may, in his discretion, rely in calculating the actual value of commercial property. Leavell-Rio Grande v. Bd. of Assess. Appeals, 753 P.2d 797 (Colo. App. 1988).

Factors, such as a depressed economy, which encourage rent abatement, are not included within that list of unusual circumstances. Leavell-Rio Grande v. Bd. of Assess. Appeals, 753 P.2d 797 (Colo. App. 1988).

Unusual conditions affecting actual value are factors for consideration by the assessor in assessing real property. Depreciation factors apply only to personal property. CF & I Steel Corp. v. Patton, 765 P.2d 586 (Colo. App. 1988), rev'd on other grounds, 785 P.2d 605 (Colo. 1990).

Reasonable future use is relevant to a property's current market value for tax assessment purposes. Bd. of Assess. Appeals v. Arlberg Club, 762 P.2d 146 (Colo. 1988).

Highest and best future use of land in its condition at the time of valuation may be considered in determining present fair market value while speculative future uses may not be taken into consideration. Bd. of Assess. Appeals v. Arlberg Club, 762 P.2d 146 (Colo. 1988).

Subsection (5)(a) requires that, if an approach to value is applicable, assessor must give it appropriate consideration in valuing property. Transamerican Realty Corp. v. Clifton, 817 P.2d 1049 (Colo. App. 1991).

Subsection (5)(a) requires only that "appropriate consideration" be given to the cost approach, market approach, and income approach to appraisal when valuing property for assessment. Montrose Prop. v. Bd. of Assess. Appeals, 738 P.2d 396 (Colo. App. 1987).

However, where an assessor gave no consideration to the market or income approach to assessment of property because of financial and time constraints, the evidence did not support a conclusion that appropriate consideration was given to all three statutorily recognized approaches. Sonnenberg & Sons v. Bd. of Assess. Appeals, 768 P.2d 748 (Colo. App. 1988), aff'd in part and rev'd in part on other grounds, 797 P.2d 27 (Colo. 1990).

In valuing in accordance with constitutional and statutory requirements, the cost approach, market approach, and income approach must be considered by the assessor, but one or more of the three approaches may not be applicable in a particular case. The nature of the property may rule out consideration of one or more approaches or there may be insufficient data to allow all of the approaches to be used. 501 So. Cherry J. Venture v. Arapahoe Cty, 817 P.2d 583 (Colo. App. 1991).

Assessor's failure to consider income approach due to time constraints imposed in conducting major reappraisal in county, in addition to failure to adequately document market or cost approaches applied, violated statutory requirement to give "appropriate consideration" to all applicable approaches to valuation. Transamerican Realty Corp. v. Clifton, 817 P.2d 1049 (Colo. App. 1991).

In giving "appropriate consideration", assessor must consider and document all applicable approaches to valuation. Transamerican Realty Corp. v. Clifton, 817 P.2d 1049 (Colo. App. 1991).

"Appropriate consideration" of the cost approach, market approach, and income approach does not include consideration and documentation of inapplicable approaches. CF & I Steel Corp. v. Patton, 765 P.2d 586 (Colo. App. 1988), rev'd on other grounds, 785 P.2d 605 (Colo. 1990).

However, if an approach to value is applicable, it must be given appropriate consideration by the assessor, as well as by the board of assessment appeals, as the trier of fact. Home Depot USA, Inc. v. Pueblo County Bd. of Comm'rs, 50 P.3d 916 (Colo. App. 2002).

Assessor was required to give appropriate consideration to the cost, market, and income approaches to appraisal when valuing a nonproducing mine undergoing reclamation that could not be classified as agricultural land. Hepp v. Boulder County Assessor, 113 P.3d 1268 (Colo. App. 2005).

Market value approach to value mandates that appraiser determine the probable sales price for property by considering what other comparable properties actually sold for in the market place at or about the date for which a value is sought. Home Federal Sav. v. Larimer County, 857 P.2d 562 (Colo. App. 1993).

The income approach is an important method for valuing office buildings, but it is not held as a matter of law that any particular approach must be used under the statutory scheme. The county assessor should determine proper valuation of taxpayer's property after appropriate consideration of the three approaches designated by the general assembly, after proper analysis of the applicable approaches, and after systematic correlation to reach a final estimate of value. 501 So. Cherry J. Venture v. Arapahoe Cty, 817 P.2d 583 (Colo. App. 1991).

Actual rent generated from a lease is a valid factor to be considered in determining the actual or market value of the property for purposes of assessment. Bd. of Assess. Appeals v. City & County of Denver, 829 P.2d 1319 (Colo. App. 1991), aff'd, 848 P.2d 355 (Colo. 1993).

Assessor's technical violation of the notification and timing requirements of subsection (5)(c) that does not prejudice taxpayers' substantive rights does not justify reversal of an order of the board of assessment appeals upholding the assessor's classification of taxpayers' property. Johnston v. Park County Bd. of Equaliz., 979 P.2d 578 (Colo. App. 1999).

Applicability of subsection (8)(d). Subsection (8)(d), requiring 30 sales of comparable properties within county in order to establish sales ratio for properties within that county, does not apply to the market valuation of property for property tax purposes. Sonnenberg & Sons v. Bd. of Assess. Appeals, 768 P.2d 748 (Colo. App. 1988), aff'd in part and rev'd in part on other grounds, 797 P.2d 27 (Colo. 1990).

Under subsection (9), if property is partially put to residential use and partially put to commercial hotel use, a mixed-use classification and allocation is appropriate. The primary factor to be considered in determining the proper classification for tax purposes is the actual use of the property on the relevant assessment date. E.R. Southtech, Ltd. v. BOE, 972 P.2d 1057 (Colo. App. 1998).

Board of assessment appeal's (BAA) ruling assigning a mixed-use classification to the subject property based on the breakdown of stays of less than 30 days and stays of 30 days or more is supported by the evidentiary record and has a reasonable basis in law. Thus, under the applicable standard of review, the BAA's classification determination will not be disturbed on review. E.R. Southtech, Ltd. v. BOE, 972 P.2d 1057 (Colo. App. 1998).

The determination as to the appropriate allocation percentages to be assigned to the residential and commercial uses of the property was a question of fact for the BAA to decide, based on its evaluation of the evidence presented. Because the BAA's factual determination in this regard is supported by competent and substantial evidence in the record as a whole, its ruling will not be disturbed on appeal. E.R. Southtech, Ltd. v. BOE, 972 P.2d 1057 (Colo. App. 1998).

Abuse of discretion by board of assessment appeals exists where board failed to consider evidence of value of similar properties in other counties in Colorado and other states for purposes of property tax assessment. Platinum Props. v. Assess. Appeals Bd., 738 P.2d 34 (Colo. App. 1987).

Depreciation required to be calculated annually from the base year to the date of assessment for valuing personal business property. BQP Indus. v. State Bd. of Equaliz., 694 P.2d 337 (Colo. App. 1984).

The assessor and the board of assessment appeals are unambiguously required to give consideration to the factors set forth in subsection (14)(b), when determining the actual value of vacant land using the market approach. The assessor may not avoid this requirement by claiming that 80% of the lots within the "market area" had been "developed". When determining whether 80% of the lots of the subdivision within which the vacant land is located have been sold, some general concept of a "market area" may not be substituted for the specific area included within the boundaries of the approved plat for that subdivision. Sunbelt Serv. Corp. v. Bd. of Assess. Appeals, 802 P.2d 1199 (Colo. App. 1990).

Subsection (14)(b) does not require the assessor to apply the anticipated market absorption rate. This is true even though the assessor and the property tax administrator have determined that the application of such rate is not appropriate. El Paso County Bd. of Equaliz. v. Craddock, 850 P.2d 702 (Colo. 1993).

Although the anticipated market absorption rate must be taken into account when assessing vacant land, other factors may lead the assessor to conclude that the application of such rate is not appropriate. El Paso County Bd. of Equaliz. v. Craddock, 850 P.2d 702 (Colo. 1993).

The factors listed in subsection (14)(b) must be taken into account by assessors, but the general assembly did not direct that assessors be limited to those factors. El Paso County Bd. of Equaliz. v. Craddock, 850 P.2d 702 (Colo. 1993).

Trial court erred in interpreting subsection (14)(b) as requiring both consideration and application of the market absorption rate. Although the anticipated market absorption rate must be considered, when assessing vacant land, its application is not mandatory. The assessor may take into account other factors, including the similarity of the tracts or their anticipated use, which may lead to the conclusion that the application of the market absorption rate is not appropriate. The assessor must document those factors, however, to allow meaningful review of its decision. Resolution Trust Corp. v. Bd. of County Comm'rs of Arapahoe County, 860 P.2d 1383 (Colo. App. 1993).

Market absorption rate is intended to be used in conjunction with comparable sales data in order to insure that the time and up-front costs connected with selling a quantity of individual lots have been reflected in the valuation. Resolution Trust Corp. v. Bd. of County Comm'rs, 904 P.2d 1363 (Colo. App. 1995).

Board of assessment appeals correctly interpreted subsection (14) to include developer's profit and overhead in the cost of development which may be deducted from the valuation of vacant land. Commercial Fed. Sav. & Loan Ass'n v. Douglas County, 867 P.2d 17 (Colo. App. 1993).

Subsection (14) as in effect prior to the 1992 amendment required assessors to take indirect costs into account when valuing vacant land under the market approach. The 1992 amendment to this subsection was found to have changed, rather than clarified, the earlier version of the statute because the legislative history does not evince a clear intent to merely clarify the language of the statute. Douglas County Bd. of Equaliz. v. Fidelity Castle Pines, 890 P.2d 119 (Colo. 1995).

Subsection (14)(b), prohibiting assessors from considering the indirect costs of development in ascertaining the assessment value of vacant land under the present worth valuation method does not violate article X, § 3 of the Colorado Constitution, which requires the assessor to determine the actual value of property. Fidelity Castle Pines, Ltd. v. State, 948 P.2d 26 (Colo. App. 1997).

Subsection (14)(b) does not violate article X, § 3 of the Colorado Constitution by creating a separate class of commercial property, nor does it create an unreasonable classification of commercial property. Fidelity Castle Pines, Ltd. v. State, 948 P.2d 26 (Colo. App. 1997).

When the assessor presents evidence of all three approaches to valuation, it would impose an onerous and unnecessary burden also to require the taxpayer to provide those valuations. Because neither the constitution nor the statute imposes such a requirement, the court will not so interpret them. Principal Mut. Ins. v. Bd. of Equaliz., 890 P.2d 273 (Colo. App. 1994).

Valuation based upon assessor's formulation of an open space acquisition rate determined from a sales average of unbuildable land in the county was appropriate when the cost, market, and income approaches could not be used. Hughey v. Jefferson County Bd. of Comm'rs, 921 P.2d 76 (Colo. App. 1996).

While equalization of the basis for taxation is the end sought to be achieved by uniform laws and by uniform means and methods of assessment, perfect uniformity in actual assessment is not required under either this section or the constitution. Crocog Company v. Arapahoe County Bd. of Equaliz., 813 P.2d 768 (Colo. App. 1990); Bishop v. Colo. Bd. of Assess. Appeals, 899 P.2d 251 (Colo. App. 1994).

Taxpayers who protest property tax assessments have the burden of proving that the assessment is incorrect. Leavell-Rio Grande v. Bd. of Assess. Appeals, 753 P.2d 797 (Colo. App. 1988); 501 So. Cherry J. Venture v. Arapahoe Cty, 817 P.2d 583 (Colo. App. 1991).

Property tax valuation challenge. A taxpayer has the statutory right to challenge a property tax valuation for each tax year under the protest and adjustment procedure and possibly through de novo evidentiary proceedings before the board of assessment appeals. Weingarten v. Bd. of Assess. Appeals, 876 P.2d 118 (Colo. App. 1994).

Where the record shows that the method used in determining an actual value for assessment purposes was one specified by statute, taxpayers are precluded from protesting utilization of such method. Leavell-Rio Grande v. Bd. of Assess. Appeals, 753 P.2d 797 (Colo. App. 1988).

In order to adopt the taxpayer's valuation, the court must find that the taxpayer's expert complied with the property tax administrator's guidelines. Resolution Trust Corp. v. Bd. of County Comm'rs of Arapahoe County, 860 P.2d 1383 (Colo. App. 1993).

Where neighboring property was erroneously assessed during one tax year and the assessment was later corrected, complaining taxpayer has no standing to seek an order mandating a reassessment of the parcel erroneously assessed, and the court lacks authority to grant such relief. Crocog Company v. Arapahoe County Bd. of Equaliz., 813 P.2d 768 (Colo. App. 1990); Bishop v. Colo. Bd. of Assess. Appeals, 899 P.2d 251 (Colo. App. 1994).

Subsection (5) reflects legislative intent to allow reclassification upon a change of actual use. Nothing in the statute indicates that the provisions of subsection (5) are inapplicable to residential real property. Mission Viejo v. Douglas Cty. Bd. of Equaliz., 881 P.2d 462 (Colo. App. 1994).

Abandoned and uninhabited structure that did not contribute to the value of the property should be disregarded rather than valued separately. Resolution Trust Corp. v. Bd. of County Comm'rs of Arapahoe County, 860 P.2d 1383 (Colo. App. 1993).

Abandoned farmhouse on otherwise vacant parcel was "minor structure" within the meaning of administrative guidelines defining vacant land for purposes of determining whether the market absorption rate applied to the parcel. Resolution Trust Corp. v. Bd. of County Comm'rs, 904 P.2d 1363 (Colo. App. 1995).

Collateral estoppel does not bind the assessor with respect to property tax exemptions except as to the tax year actually at issue in the prior administrative proceedings. Guest Mansions, Inc. v. Arapahoe County Bd. of Equaliz., 899 P.2d 944 (Colo. App. 1995).

Trial court did not err in accepting mass appraisal method of valuation in valuing 20 vacant residential lots. C.P. & Son v. Bd. of County Comm'rs, 953 P.2d 1303 (Colo. App. 1998).

Tax-exempt areas outside building footprints at a federally funded public airport were properly excluded under subsection (17)(a)(II)(B) from valuation of leased parcels that were taxable possessory interests. Such areas are to be included in the valuation of a possessory interest in tax-exempt property only if the holder of the possessory interest has an exclusive right to possess and use the areas that is absolute and the areas included paved lanes running to and from runways, terminals, aircraft hangars, and other facilities that the holder could not exclude others from using under the terms of the lease. Denver jetCenter, Inc. v. Arapahoe County Bd. of Equaliz., 148 P.3d 228 (Colo. App. 2006).

Applied in Golden Gate Dev. v. Gilpin Cty. Bd., 856 P.2d 72 (Colo. App. 1993).