by Matie Belle Lakish
Two days before a trial de Novo was scheduled to be heard by District Court Judge Martin Gonzalez, the plaintiffs proposed a settlement agreement with the Saguache County Assessor and County Board of Equalization over the reassessment of their properties in the Town of Crestone and some parcels in the Baca Grande subdivision. According to Elaine Johnson, one of the property owners bringing the action, the “case resulted in a very favorable settlement for the owners two days before the start of trial.”
Johnson summarized the reassessment process thus: “The 2013 Valuations were the result of the State Board of Equalization ordering a reappraisal of property in Saguache County. This process began in October 2011, when the State Board ordered that all residential property in Saguache County be reappraised by the Saguache County Assessor. Between October 2011 and October 2012 the County Assessor was unable to complete the reappraisal. This resulted in Orders from the State Board in November 2012, requiring that all residential property be reappraised for 2011 and 2012. They further ordered that there would be reappraisals of all classes of real property that incurred omitted new construction and these values would be used for the 2013 valuations.”
The Department of Local Affairs Division of Property Taxation worked closely with County Assessor Jackie Stevens and staff to perform the assessment. A number of State personnel were in Saguache County for several months. According to JoAnn Groff, Property Tax Administrator for the State Board of Equalization, “Cherice Kjosness was designated the supervisor of the reappraisal and Curtis Belcher was the assigned manager of field operations. Saguache County Assessor, Jacqueline Stephens, worked closely with Mr. Belcher to identify new building permits. Pete Magee of Integrated Land Services was contracted by the county to provide GIS support services to identify improvements on currently designated vacant land parcels.”
The County Assessor’s office has been hampered for some time by internet problems, database incompatibility with state systems, and lack of adequate assessment staff. These factors were all mitigated by the additional county and state staff and equipment upgrades, and hand-held electronic devices that the state provided.
However, some residents feel that the state dominated the reassessment process and mandated property values that were outside of the normal range, and especially in the town of Crestone. Many feel that the mandate to do mass appraisals came from the state, and should not have been used in Saguache County, and especially in a small town like Crestone, as there are too few annual sales to set a pattern for property prices.
Valuations are done by different methods, including comparing the sales within a class of properties, then making adjustments for certain factors related to those sales, such as access and utilities, and then setting a value to the property. This is what is known as using comparables to set values. Generally, comparables are sought from the last two years’ sales, but can be extended for a greater period of time. Certain types of sales are not considered when determining values, such as transactions between family members, which are judged to be biased in favor of the buyer.
In the case of the town of Crestone, there were insufficient sales in the last two years to set a pattern, according to state personnel. According to the documents filed in the case, “Mike Kerrigan was assigned the collection of data, analysis and valuation of omitted properties. Mr. Kerrigan identified six sales in Crestone, three residential and three commercial, which he believed indicated undervaluation of properties in Crestone. He made recommendations to the assessor regarding these lots, and the assessor applied these recommendations to valuations of properties in Crestone. The Division of Property Taxation instructed the Assessor as to the values that would be applied to the properties.” Many local residents argue that Kerrigan erred in discarding sales that indicated lower values and choosing only those sales that were the highest. In addition, plaintiffs argued that there were not enough sales in the town to set a pattern that would allow for an accurate determination of value using the mass valuation techniques. According to the state, at least six sales in any class in any two-year period are needed to set a pattern. Many property owners felt that the comparables for their properties listed by the assessor’s office did not apply, while other sales were excluded.
In addition, according to the case, all residential lots had their values raised 370%, while commercial properties were raised 1058% to 2116%. What this means for individual owners is a dramatic increase in taxes.
According to commissioners, however, the Board of Equalization looked closely at all property sales before coming to their conclusions. They lowered the taxes to the lowest figures possible within the range that was allowed by the State Board of Equalization, and noted that Crestone has had a very volatile real estate market for the last few years.
According to the case, from C.R.S. 39-1-103(5)(a), “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 . . . by a common multiple in response to the order of said board . . . such changes shall be made only upon individual valuations of each and every parcel, using each of the approaches specified in this paragraph, (Cost Approach, Income Approach, and Market Approach) if applicable . . .”.
According to County Attorney, Ben Gibbons, however, according to the Board of Equalization statute, assessments can’t be done on an individual basis, although the BOE can change the assessment on a class or a sub-class.
According to the Eye on the County, “The Saguache County Commissioners/Board of Equalization (BOE), Assessor and CO Division of Taxation have been engaged in settlement of an appeal of re-appraisal assessments by Crestone residents Steven P. McDowell, Elaine T. Johnson, MJ Investments, LLC, William Henry Folk, II and Julie E. Folk, Patricia Zinn, the Estate of Robert E. Sisemore (Deceased) and Eileen P. Sisemore, Lisa Cyriaks and Curtis English. Those assessments were made in a joint re-appraisal process required by the State, and completed by State and County workers. Some of the resulting figures were reduced in rounds of review by the Assessor and CBOE. Dis-satisfied with the process and resulting numbers, property owners have the options of seeking arbitration, appealing to the State Board of Assessment Appeals, or through the local courts. The appellants chose the latter.
“The trial was scheduled in early March to resolve the appeal as soon as possible. One of the witnesses endorsed by the County, a representative of the State, submitted his report late. His report and testimony as an expert was excluded by the Court, not because of the lateness of the report, but on the Court’s determination that ‘the intended testimony would be an usurpation of the court function as regards the applicable legal standards’. There were several representatives of the County, and State, endorsed by the County who were ready to share their knowledge and experience of the situation if called upon.
“Just days before that hearing, Durango attorney Jeffrey Robbins, representing the appellants, proposed a settlement instead, presenting figures his clients felt to be acceptable. The State Division of Property Taxation has since indicated acceptance of same. The final adjustments result in total tax abatements of $8,957.55, across the 17 parcels involved in the appeal, of which the County portion is $1,832.17.”
According to Elaine Johnson, “The property owners obtained the expert appraisal services of Don Root who provided a detailed expert report regarding the residential values. He opined that, due to the insufficient number of sales within the town of Crestone, that sales from Baca Chalet I should also be utilized. He explained that in conducting valuations, one must locate comparable sales in an area and then take into account differences in size, zoning, and other characteristics including, but not limited to, whether water and sewer tap fees have been paid. Mr. Root provided specific lot values for each lot at issue, which values ranged from $910 to $3,637 based upon the specific characteristics of each parcel. The County accepted these values in the settlement with the property owners.
“In regard to commercial lot values, due to the lack of comparable sales in Crestone, the property owners provided significant data regarding the character and values of the commercial properties throughout Saguache County and specifically of the values of commercial lots in the towns of Saguache and Center. The property owners submitted that the values of their commercial lots ranged from $3,125 to $12,500. The County accepted these values in the settlement with the property owners.
“In regard to the Baca subdivision property, the property owners alleged the values for certain consolidated lots in the Mobile Home Estates and certain lots in the Baca which contained a bed and breakfast failed to comply with Colorado law. In particular, the property owners asserted that there was discrimination due to a lack of uniformity and that the assessments were more favorable to one taxpayer than to another when the properties were the same or similar. The County accepted the positions of the property owners in regard to their properties and revalued and reclassified the properties consistent with the opinions of the owners.”
According to Commissioner Joseph, however, “it was really the State that accepted and Assessor and Board of Equalization and Board of County Commissioners were certainly agreeable, if the appellants and State arrived at figures they would both accept.”
As part of the settlement agreement, the two main issues raised by the appeal, the question of whether the state can value and assess county properties, and whether the mass valuation of property is appropriate for small towns such as Crestone, ended up not being addressed. Johnson says, “Several property owners intend to pursue the issue of why the Division of Property Taxation usurped the Constitutional mandate which provides that only the Saguache County Assessor can value and assess properties within Saguache County.”
According to the county, “Saguache County Board of Equalizations/County Commissioners and County Assessor are pleased with an ultimate solution agreeable to those parties, and completed the Settlement accordingly. How these adjustments relate to other parcels in the area will be reviewed. Property Values are assessed every 2 years, and will be assessed again in 2015.”