Steamboat Springs The home on Rushing Water Lane in Storm Mountain Ranch is a grand affair.
Hand-hewn beams span the great room. The master bath has its own fireplace and massive stone hearth.
In all, the home is more than 4,400 square feet and situated on nearly 70 acres of storybook scenery, with views of June Falls shared by only 14 residents, the use of guest cabins, trophy trout fishing and a trail system on the ranch.
The sticker price for all this shouldn’t be shocking: The home sold for $3.375 million in September.
What Routt County thinks is inequitable is what the state Board of Assessment Appeals recently determined was the value of the land underneath the home: $60,000.
The county plans to appeal that decision to the Colorado Court of Appeals.
A 2011 law that sought to clarify which residential properties could receive agricultural status for tax purposes required the home to be “integral” to agricultural operations. Routt County determined that the residents of Storm Mountain Ranch were not integral to ranching operations and categorized the acre of land underneath the homes as residential. The owners, now facing thousands more in property taxes, appealed the decision to the Routt County Board of Commissioners and then the Board of Assessment Appeals.
Two members of the Board of Assessment Appeals determined that the land under their homes was not integral to agricultural operations but also laid out a methodology for valuing the building envelope that left its value at $60,000.
The board members’ decision stated that each acre of a property should be valued equally — the acre under the house is worth the same as the sliver that juts between two other lots only feet wide at its slimmest.
Routt County holds that the main utility of the lot is the ability to build a house on it, meaning the acre underneath the dwelling holds most of the lot’s value.
Routt County Assessor Gary Peterson previously explained that the board’s methodology is problematic when applied to other land preservation subdivisions in the county, which have varying lot sizes while still maintaining ranching operations. A 35-acre lot doesn’t sell for seven times more than a 5-acre lot because it’s bigger, he said. But using the Board of Assessment Appeals’ methodology, the acre underneath the house on the 5-acre lot would be valued substantially higher than the acre underneath the home on the 35-acre lot.
“Our biggest concern is that it defeats the purpose” of the 2011 legislation, Routt County Commissioner Doug Monger said about the valuation decision.
The $230 tax bill on the $60,000 valuation is thousands less than the county's previous determination.
The county is challenged by the Legislature and Colorado’s constitution, Monger said, to make sure property owners pay their fair share of taxes.
“We’re getting subsidization of those lots out there,” Monger said about the result of the board’s decision.
The county has until Friday to file a notice of appeal, Routt County Attorney John Merrill said, unless the Board of Assessment Appeals determines the matter is of statewide interest, as the county has requested it to do.
“We think this is a matter of statewide interest because it’s a new statute, and it’s the first case I know that applies the non-integral valuation role,” Merrill said.
If the Board of Assessment Appeals determined the case was of statewide interest, the period to file a notice of appeal would be extended from 30 days to 49 days, Merrill said.
He also said a broader review with a more careful ruling might be expected from the Court of Appeals if it was of statewide interest.
“What we really would like is a definite ruling that is more broadly applicable than just Storm Mountain Ranch,” he said.
Monger said that Routt County and Colorado Counties Inc., a membership organization for county officials, would be having conversations with legislators to seek clarification about the intent behind the 2011 law.
The county is tasked with treating all taxpayers equitably and correctly, Monger said.
“We don’t think (the decision) holds water," he said.
To reach Michael Schrantz, call 970-871-4206, email mschrantz@SteamboatToday.com or follow him on Twitter @MLSchrantz
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