Storm Mountain Ranch property tax appeal yields mixed results
December 16, 2013
Steamboat Springs — Storm Mountain Ranch owners failed in their appeal to keep agricultural tax status for the building envelopes of their luxury homes but succeeded in reducing the valuation of that land.
The homeowners in Storm Mountain Ranch had challenged Routt County's interpretation of a 2011 law that requires residences to be "integral" to ranching operations to receive ag status for their 1-acre building envelopes. The ag status of the remaining portion of the 35- or 70-acre lots is not disputed.
As much as the Routt County Board of Commissioners grappled with how to define "integral" for the purpose of the law, the members of the Board of Assessment Appeals who heard the challenge struggled to apply the test to a subdivision such as Storm Mountain Ranch.
Land preservation subdivisions in Routt County allow developers to earn extra building envelopes by clustering homes and preserving more ranch land, helping maintain the character of the valley and providing leases to area ranchers.
In its decision, the Board of Assessment Appeals stated that the Storm Mountain Ranch cases are among the first tests of the new law.
Storm Mountain Ranch owners argued through their attorney, Mikaela Rivera, that they participate in decisions that govern ranching through their homeowners association and that dues go toward agricultural operations.
The ranch employs a full-time ranch manager, three ranch workers and seasonal employees.
Even though their residences are not used for agricultural purposes, the owners argued that their involvement through the homeowners association qualified the land under their homes for ag classification.
The Board of Assessment Appeals agreed with the county that the owners are several steps removed from agricultural operations through the HOA, full-time ranch staff and the operators who lease the ranch land.
However, the actual tax burden of Storm Mountain Ranch owners was considerably eased by the Board of Assessment Appeals' decision to value the acre under each of their residences at $60,000, far less than the county's assigned value of about $1.5 million. The property tax bill for just that acre would be about $230, according to Routt County assessor Gary Peterson. The annual tax bill for one such building envelope in Storm Mountain Ranch would have been more than $5,000 using the county's previous valuation.
The board and the county differed in the approach each took to assigning a portion of the lot's overall value to the 1 acre under the homes.
The county assigned the majority of the lot's value to the area under the residence, assuming that the "intrinsic value" of the lot is that it is buildable, according to Peterson.
A 5-acre lot in a land preservation subdivision and a 35-acre lot have the same utility, Peterson said Monday. Only one residence can be built on each of those lots.
"That 35 acres doesn't sell for seven times the 5 acres because it's bigger," he said.
The board held that each acre of the lot has equal value. The value of being able to build a home is accounted for in the total price of the lot, the board's decision states, and because the home site can’t be divided from the larger lot, it should not be assigned a larger percentage of the total value.
"Even though you can't find a buildable envelope for $60,000 anywhere near the ski area, that's what they got," Peterson said.
Peterson said applying that methodology makes the acre under a home on a 5-acre lot in Alpine Mountain Ranch & Club, another land preservation subdivision, worth more than an acre under a Storm Mountain Ranch home because the overall value is divided by fewer acres.
"Even though their parcels are worth more money, they have the advantage of larger acreage," he said of Storm Mountain Ranch owners.
Peterson said he has yet to debrief with Routt County attorney John Merrill and decide if the county wants to take the land valuation decision to the Colorado Court of Appeals.
Rivera, the owners' attorney, could not be reached for comment on the decision or whether or not her clients intend to appeal the decision.