Colorado Court of Appeals Clarifies Time Frame for Property Tax Reassessments

The Court Remanded the Case to Determine Whether COVID-19 Was an “Unusual Condition”

After more than two years, it seems that the various COVID-19 public health orders are behind us. But, to borrow a phrase from Karen Carpenter, a recent court of appeals decision shows that pandemic-related property tax issues have only just begun. If the decision remains the law, commercial property owners may have more options to lower their property tax assessments in future years.

In Colorado, property value is assessed every two years, and takes effect on Jan. 1 of odd-numbered years. That assessment carries over to the even-numbered year and can only be reassessed under three circumstances: (1) to correct a clerical error or omission; (2) to correct an incorrect value; or (3) to adjust for an unusual condition affecting the property. Thibodeau v. Denver Cnty. Bd. Of Comm’rs, 2018 COA 124. Traditionally, very few property owners demand reassessment. The COVID-19 pandemic, which significantly reduced revenue generated from many commercial properties, placed a spotlight on this seldom-invoked statute.

In a flurry of lawsuits, property owners across the state are claiming that the COVID-19 pandemic is one of those very circumstances requiring reassessment. The first case to obtain a decision at the Colorado Court of Appeals is MLS Properties, Inc. v. Weld Cnty. Bd. Of Equalization, 2022 COA 117, in which a group of 55 property owners in Weld County alleged that Colorado’s property tax assessment statute, C.R.S. § 39-1-104, required the assessor to revalue the plaintiffs’ properties because of two unusual conditions: the COVID-19 pandemic and the resulting governmental orders restricting property use. In response, Weld County argued that the pandemic and its associated governmental orders occurred too late to be considered in the 2020 property assessments. The county claimed that the 2019 assessment only carried forward to Jan. 1, 2020, and therefore the pandemic occurred too late in the process to be considered an “unusual condition.”

The Court of Appeals’ subsequent decision, unless later reversed, will impact future property assessments. First, as a matter of first impression, the court held that the property tax assessment statute requires assessors to consider the unusual conditions that occurred “at any point during the even-numbered calendar year of the reassessment cycle, not just those that are present before January 1 of the even year.” This opens up the time frame under which property owners may seek reassessment based on any of the above three circumstances and means that circumstances that occur at any time within the two-year period between assessments are relevant for reassessment. For example, the COVID-19 pandemic, which started impacting Colorado in March 2020, now falls within this time frame.

Second, the court remanded the case so the trial court could hold further proceedings on (1) whether the pandemic was, in fact, an unusual condition and (2) whether the related government orders constituted new regulations “restricting or increasing the use of the land” under C.R.S. § 39-1-104(11)(b)(I). In other words, while the court did not decide whether the COVID-19 pandemic and related orders constitute unusual conditions, the court also opened the door for the trial court to find them to be unusual conditions after presentation of additional evidence.

The deadline to reassess property taxes for 2020 has passed. Nevertheless, considering that the trial court may later determine that COVID-19 and the related government orders are unusual conditions, commercial property owners would be wise to consider how COVID-19 has impacted their revenue and property values for tax years moving forward and whether to file a protest. While the traditional deadline to protest 2022’s property taxes has passed for reassessment of 2022 property taxes, other options may be available, such as an abatement proceeding.

This document is intended to provide you with general information regarding the Colorado Court of Appeals' ruling in Thibodeau v. Denver County Board Of Commissioners. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.