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                                                         ADVANCE SHEET HEADNOTE
                                                                       April 8, 2019

                                        2019 CO 22

No. 17SC862, Hinsdale County v. HDH Partnership—Taxation—Record Title—
Restrictive Covenants.

       In this property tax case, the supreme court is asked to determine whether the

restrictive covenants and bylaws of a hunting and fishing club render the club the true

“owner” of the club grounds and therefore liable for property taxes, even though the club

members hold record fee title to land parcels that comprise the club grounds.

       The supreme court holds that such covenants and bylaws do not render the club

the “owner” of real property for tax purposes. Colorado’s property tax scheme reflects

legislative intent to assess property taxes to the record fee owners of real property. The

parcel owners in this case hold record title to their parcels, which they own in fee simple

and can freely sell. They purchased their parcels with notice of, and subject to, the club’s

restrictive covenants and bylaws, which they can vote to amend or repeal. Because the

parcel owners voluntarily agreed to the restrictive covenants and bylaws that facilitate

the collective use of their property for recreational purposes, the court holds that they

cannot rely on these same restrictive covenants and bylaws to avoid property tax liability

that flows from their record title ownership. The court therefore reverses the judgment
of the court of appeals and reinstates the Board of Assessment Appeals’ order upholding

the assessment of property taxes to each of the record title owners.
                     The Supreme Court of the State of Colorado
                     2 East 14th Avenue • Denver, Colorado 80203

                                       2019 CO 22

                          Supreme Court Case No. 17SC862
                        Certiorari to the Colorado Court of Appeals
                         Court of Appeals Case No. 16CA1723

                                       Petitioners:

  Hinsdale County Board of Equalization and Board of Assessment Appeals, State of
                                    Colorado.

                                            v.

                                     Respondents:

     HDH Partnership; Lawrence Ausherman; Hondros Family Real Estate, LLC;
       Mark L. Ish; Herb Marchman; and Teresa M. Mull Revocable Trust.

                                  Judgment Reversed
                                       en banc
                                     April 8, 2019


Attorneys for Petitioner Hinsdale County Board of Equalization:
Schumacher & O’Loughlin, LLC
Michael P. O’Loughlin
      Gunnison, Colorado

Attorneys for Petitioner Board of Assessment Appeals:
Philip J. Weiser, Attorney General
Krista M. Maher, Assistant Attorney General
Grant T. Sullivan, Assistant Solicitor General
       Denver, Colorado

Attorneys for Respondents:
Hoskin Farina & Kampf
Michael J. Russell
Andrew H. Teske
Karoline M. Henning
      Grand Junction, Colorado
JUSTICE MÁRQUEZ delivered the Opinion of the Court.
JUSTICE GABRIEL concurs in the judgment, and JUSTICE HOOD joins in the
concurrence in the judgment.

                                      2
¶1     The Lake Fork Hunting and Fishing Club (the Club) in Hinsdale County,

Colorado, consists of 1,400 acres divided into twenty-nine parcels called “Ranches” that

are owned in fee simple. Each owner holding a deed to a Ranch becomes a member of

the Club and is subject to a host of restrictive covenants and bylaws through which the

Club exercises significant control over the property. The question before us is whether

the restrictive covenants and bylaws render the Club the true “owner” of the Ranch

parcels and therefore liable for property taxes, even though the Ranch owners hold record

title to those parcels. The answer is no.

¶2     Respondents are four Ranch owners who, with notice of the Club’s restrictive

covenants and bylaws, purchased deeds conferring record title to their respective

Ranches.    In 2015, the Hinsdale County Assessor conducted valuations of the

Respondents’ Ranches and assessed property taxes to their parcels.         Respondents

protested these valuations and assessments to the Hinsdale County Board of Equalization

(the BOE), which denied their petitions.        Respondents then appealed the BOE’s

determination to the Board of Assessment Appeals (the BAA), arguing that because of

the Club’s restrictive covenants and bylaws, the Club is the true owner of those parcels

and should be held responsible for real property taxes.          The BAA denied the

Respondents’ appeal and affirmed the Assessor’s valuation of the Ranch parcels.

¶3     The Ranch owners then appealed the BAA’s decision to the court of appeals,

which reversed the BAA’s order. HDH P’ship v. Hinsdale Cty. Bd. of Equalization, 2017

COA 134, ¶¶ 3, 51, ___ P.3d ___. The court of appeals looked beyond the Ranch owners’

record title and examined the Club’s restrictive covenants and bylaws. Given the extent

                                            3
of the Club’s control over the property, the court concluded that the Club is the true

owner of the parcels for purposes of property taxation and viewed the Ranch owners’

interests as akin to mere licenses to conduct certain activities on the Club’s property. Id.

at ¶¶ 24–26.

¶4     We granted certiorari review,1 and now reverse the judgment of the court of

appeals. Colorado’s property tax scheme reflects legislative intent to assess property

taxes to the record fee owners of real property. The Respondents in this case hold record

title to their Ranch parcels, which they own in fee simple and can freely sell. They

purchased their Ranch parcels with notice of, and subject to, the Club’s restrictive

covenants and bylaws, which they can vote to amend or repeal. Because Respondents

voluntarily agreed to the restrictive covenants and bylaws that facilitate the collective use

of their property for recreational purposes, we hold that they cannot rely on these same




1 The BOE and BAA each filed petitions for certiorari review, presenting similar
questions. We granted certiorari review of the BOE’s petition on the following issue:
       1. Whether the court of appeals erred in determining that the homeowners
          association that manages a subdivision, rather than the fee title owners
          of the subdivision parcels, is subject to real property taxation due to the
          covenants that permit the association to restrict property access for
          nonpayment of association assessments.
We also granted certiorari review of the BAA’s petition on the following issue:
       2. Whether the court of appeals erred in deciding that record title owners
          of real property are not the true owners of the property and are therefore
          not responsible for property taxes, and that, instead, an entity that
          enforces covenants on the property is the true owner.

                                             4
restrictive covenants and bylaws to avoid property tax liability that flows from their

record title ownership. Accordingly, the court of appeals erred in relying on the Club’s

restrictive covenants and bylaws to conclude that the Club is the “owner” of the Ranch

parcels and that the Ranch owners hold mere licenses to use Club grounds. The court

further erred in holding that the Assessor therefore improperly valued the Respondents’

parcels.

                           I.     Facts and Procedural History

¶5       The Lake Fork Hunting and Fishing Club sits on 1,400 acres in Hinsdale County,

Colorado. The Club was established in 1979 when the original developer recorded a

“Declaration and Establishment of Covenants, Conditions, Reservations, and Restrictions

for Lake Fork Hunting and Fishing Club” and subdivided the land.

¶6       The Club property is divided into twenty-nine parcels, or Ranches, that range in

size from 35 to 155 acres. The Ranches are owned in fee simple; Ranch owners may freely

sell their Ranch parcels and keep the proceeds. Each owner holding a deed to a Ranch

becomes a member of the Club. Club membership follows record title to a Ranch and

cannot be separately sold, assigned, or transferred, except for one “floating

membership”2 created by the Club’s bylaws that is not attached to a Ranch.




2   The “floating membership” is not at issue in this case.

                                               5
¶7     Club members in good standing can seek election to a three-member Board of

Governors that manages the Club’s affairs, including its grounds, cabins, funds, and the

election of Club officers.

¶8     Through restrictive covenants, bylaws, and rules, the Club exercises significant

control over the property. Notably, the Declaration provides that the Club reserves for

the enjoyment and benefit of Club members “exclusive hunting and fishing rights and

privileges, including all rights of ingress and egress upon and across the entire property,

including all Ranches.” This reservation allows all Ranch owners to hunt, fish, and camp

throughout the entire 1,400 acres without regard to Ranch property lines. In a similar

vein, the Club reserves the exclusive right to construct and maintain utilities, roads, lakes,

ditches, bridges, and fences; pasture livestock on the entire property, including

individual Ranches; impound, store, and divert waters of the Lake Fork of the Gunnison

River across the Ranches for the benefit of Club members; and maintain easements

necessary to upkeep the Club’s skeet and trap field, golf driving range, and airport

runway. The Declaration also imposes several restrictions on the Ranch parcels. For

example, Ranches cannot be conveyed in smaller lots or subdivided; no trailers or mobile

homes are permitted on the property without written permission of the Board of

Governors; and no part of the property can be used for mining or drilling activities.

¶9     The Club’s bylaws and rules further regulate use of the Club grounds (defined as

Club property and all Ranches). Among other things, these bylaws and rules limit the

number of guests a member may invite to the Club for hunting and fishing, and the

number of days a guest may hunt or fish. Members must register themselves and their

                                              6
guests when using the Club grounds. Only “members in good standing” are entitled to

the Club’s privileges. And the Board of Governors can suspend the privileges of a

member who violates the Club’s regulations or “for any conduct which in the opinion of

the Board, is improper or prejudicial to the welfare of or reputation of the Club.”

¶10   Importantly, although the Ranch owners take their parcels subject to the Club’s

covenants and bylaws, they can vote to amend or repeal those covenants and bylaws, or

even terminate the Declaration in its entirety. As an example of the Ranch owners’

self-governance, a supermajority of Ranch owners voted in 1999 to amend the Declaration

to prohibit the construction of any residences on an individual Ranch.

¶11   Respondents HDH Partnership, Lawrence Ausherman, Mark L. Ish, Herb

Marchman, Hondros Family Real Estate, LLC, and Teresa M. Mull Revocable Trust

(collectively, Respondents) own Ranches in the Club.3 The Respondents purchased their

Ranches via general warranty or quitclaim deeds and hold record title to their Ranches.

It is undisputed that Respondents had notice of the restrictive covenants when they

purchased their respective parcels.

¶12   In 2015, the Hinsdale County Assessor conducted new valuations of the Ranch

parcels and assessed property taxes to the Ranch owners. Respondents protested the




3Respondent HDH Partnership owns one Ranch parcel; Respondents Ausherman, Ish,
and Marchman collectively own one Ranch parcel; Hondros Family Real Estate, LLC
owns a 1/3 interest in each of three Ranch parcels; and Respondent Teresa M. Mull
Revocable Trust owns a 1/3 interest in one Ranch parcel.

                                            7
valuations and assessments to the BOE, which denied Respondents’ petitions.

Respondents appealed the BOE’s decision to the BAA, arguing that although they hold

record title to the Ranches, they do not actually enjoy the traditional incidents of

ownership, which instead are retained by the Club. Therefore, Respondents contended,

the Club should be considered the “owner” of those parcels for purposes of property

taxation.

¶13    The BAA rejected Respondents’ arguments.             It observed that Respondents

obtained interests in their Ranches through deeds transferring real property, and that as

holders of those deeds, Respondents had the unrestricted right to sell their Ranch parcels

and keep the proceeds.       The BAA also observed that Ranch owners enjoy other

quintessential incidents of ownership, such as the right to possess and use the entire

1,400-acre Club grounds (including to hunt and fish), and the right to exclude

non-members from Club grounds. Indeed, it found that the use of the entire Club

grounds is a benefit that Respondents purposefully bargained for when purchasing

property rights within the Club’s grounds. The BAA thus viewed the Club’s restrictions

as the Ranch owners’ exercise of their liberties and self-governance, finding that the

restrictions “are entirely self-imposed as they can be amended or terminated at any time

by the majority vote of the Ranch owners.” Finally, it rejected Respondents’ attempt to

classify their property rights as mere licenses or timeshares, reasoning that Respondents

can sell, transfer, or dispose of their parcels as they see fit, and that their access to Club

grounds is not time-limited.



                                              8
¶14    Respondents appealed the BAA’s decision to the court of appeals, which reversed

the BAA’s order. HDH P’ship, ¶¶ 3, 51. The court first concluded that record title is not

determinative of property ownership. Id. at ¶¶ 16–17. It reasoned that, although section

39-5-102(1), C.R.S. (2018), directs assessors to ascertain ownership “from the records of

the county clerk and recorder,” such records are merely “prima facie evidence of all

things appearing therein.” Id. at ¶ 16 (citing § 39-1-115, C.R.S. (2018)). Because “prima

facie” means “[a]t first sight; on first appearance but subject to further evidence or

information,” see prima facie, Black’s Law Dictionary (10th ed. 2014), and because section

39-5-122(2), C.R.S. (2018), allows a person who believes property has been erroneously

assessed to him or her to “appear before the assessor and object,” the court concluded

that record title “merely creates a rebuttable presumption” of ownership. HDH P’ship,

¶¶ 16–17.

¶15    The court then decided it was required to look beyond “form,” or record title, and

examine the “substance” of Respondents’ and the Club’s rights to determine who should

be held responsible for taxes. See id. at ¶¶ 18–27. It concluded that, because the Club has

a high degree of control over the grounds, and because Respondents may only use the

grounds subject to the Club’s control and regulation, the Club is the true owner of the

parcels (and therefore liable for property taxes), while Respondents’ fee title interests are

akin to mere licenses. See id. at ¶¶ 21–27.

¶16    The court also summarily rejected the BOE’s contention that the Colorado

Common Interest Ownership Act (CCIOA) required the Assessor to assess the parcels

individually, reasoning that section 38-33.3-105(2), C.R.S. (2018), applies only to common

                                              9
interest communities created after June 30, 1992, unless they have elected CCIOA

treatment. Id. at ¶ 39 (citing §§ 38-33.3-115, -117, -118, C.R.S. (2018)). The court noted that

the Club was created in 1979 and has not elected CCIOA treatment. Id.

¶17    Finally, based on its conclusion that the Club is the true property owner and that

Respondents hold only licenses to use Club grounds, the court held that the Assessor

improperly valued the parcels. Id. at ¶ 46.

¶18    We granted the BOE’s and the BAA’s petitions for a writ of certiorari to review the

court of appeals’ decision. We now reverse the judgment of the court of appeals and

reinstate the BAA’s order.

                                 II.   Standard of Review

¶19    A taxpayer who challenges an assessment bears the burden to prove, by a

preponderance of the evidence, that the assessor’s valuation is incorrect. Cantina Grill, JV

v. City & Cty. of Denver Bd. of Equalization, 2015 CO 15, ¶ 15, 344 P.3d 870, 876. An

appellate court may set aside an order of the BAA only if it finds an abuse of discretion,

or that the order was arbitrary and capricious, based upon clearly erroneous factual

findings, unsupported by substantial evidence in the record, or otherwise contrary to law.

See § 24-4-106(7), C.R.S. (2018); Boulder Cty. Bd. of Comm’rs v. HealthSouth Corp., 246 P.3d

948, 951 (Colo. 2011). We review questions of law and statutory interpretation de novo.

Boulder Cty., 246 P.3d at 951.

                                       III.   Analysis

¶20    Petitioners argue that the court of appeals erred in holding that the Club is the true

owner of the Ranches for purposes of property tax liability, and in holding that

                                              10
Respondents, who are the record title owners of the Ranches, possess mere licenses to use

Club grounds. We agree.

¶21    We begin by discussing how the relevant statutory tax scheme reflects the

legislature’s intent to assess property taxes to the record title owners of real property. We

explain why the cases relied on by the court of appeals are inapplicable here. We then

discuss why the restrictive covenants and bylaws here do not strip Respondents of their

ownership interest in their respective parcels and note the policy implications of the court

of appeals’ ruling to the contrary.

         A. Tax Statutes Reflect Legislative Intent to Hold Record Title
                    Owners Accountable for Property Taxes

¶22    Colorado’s tax statutes reflect the legislature’s intent to levy property tax on the

record fee owner of real property. To begin, section 39-5-104, C.R.S. (2018) requires

county assessors to appraise and value “each tract or parcel of land” separately. The

assessor must then mail a notice of valuation to “each person who owns land.”

§ 39-5-121(1)(a)(I), C.R.S. (2018). Section 39-5-102(1), in turn, provides that “[o]wnership

of real property shall be ascertained by the assessor from the records of the county clerk

and recorder.” Importantly, this provision does not authorize the assessor to mail a

notice of valuation to a party that does not hold record ownership. By their plain

language, these statutes provide that assessors must value and tax separate parcels of real

property and assess taxes on the parcel owner as determined by the county’s real

property records.




                                             11
¶23    The court of appeals’ decision in Traer Creek-EXWMT LLC v. Eagle County Board of

Equalization, 2017 COA 16, 401 P.3d 569, comports with our reading of the property tax

scheme. In that case, the court of appeals affirmed the dismissal of a commercial lessee’s

challenge to a property tax valuation. Traer Creek, ¶ 1, 401 P.3d at 571. Traer Creek was

contractually obligated to pay property taxes for a parcel it leased; however, the owner

typically paid the property taxes and Traer Creek reimbursed the owner. Id. at ¶ 2, 401

P.3d at 571. After the owner received a notice of valuation regarding the parcel, Traer

Creek initiated a protest to challenge it, arguing that it had standing because it “owned”

an interest in property, albeit a leasehold interest. Id. at ¶¶ 3, 10, 401 P.3d at 571–72.

¶24    The court of appeals rejected Traer Creek’s argument, explaining that “[w]hen the

valuation in question concerns the fee interest in real property, the statutory phrase ‘owns

land’ is most naturally understood as referring to a fee owner, not someone with a mere

leasehold interest in property.” Id. at ¶ 11, 401 P.3d at 572 (quoting § 39-5-121(1)(a)(I)).

The division reasoned that section 39-5-102(1) confirms this understanding of ownership

because it provides that “[o]wnership of real property shall be ascertained by the assessor

from the records of the county clerk and recorder.” Id. at ¶ 12, 401 P.3d at 572. Such

records, the division noted, “typically identify fee owners.” Id. And “only fee owners of

real property are liable to the taxing authority for taxes assessed pursuant to a valuation

of real property.” Id. (emphasis omitted). The division also observed that it is the record

fee owners who receive notice of, and have the authority to challenge, the valuation of

their real property. Id. at ¶¶ 13–16, 401 P.3d at 572–73 (citing §§ 39-5-121(1)(a), -122; §§

39-8-106, -108, C.R.S. (2018)). Thus, “the fee owner is the only party given statutory

                                              12
standing to object to and protest the assessor’s valuation of real property in fee.” Id. at

¶ 15, 401 P.3d at 572.

¶25    As the Traer Creek division recognized, property tax valuation and assessment in

Colorado is premised on the notion that the party holding record title to the property is

the fee owner responsible for property taxes. See id.; see also § 39-5-102(1). Even where

there are multiple interests in a specific property (such as Traer Creek’s leasehold

interest), the “unit assessment rule” requires all estates in a parcel of real property to be

assessed together, and taxes are assessed to the record fee owner as though it was an

unencumbered fee. Cantina Grill, ¶ 20, 344 P.3d at 877; City & Cty. of Denver v. Bd. of

Assessment Appeals, 848 P.2d 355, 358 (Colo. 1993); see also § 39-1-106, C.R.S. (2018) (“For

purposes of property taxation, it shall make no difference that the use, possession, or

ownership of any taxable property is qualified, limited, not the subject of alienation, or

the subject of levy or distraint separately from the particular tax derivable therefrom.”).

The responsibility of apportioning the tax among various interest holders rests with the

private parties who own those interests, and can be resolved as a contractual matter

between landlord and tenant. City & Cty. of Denver, 848 P.2d at 359–60. Notably, this

approach avoids the “administrative nightmare” of requiring an assessor to look beyond

record title to examine the terms of leases to allocate multiple interests in the taxable

property. Id.




                                             13
             B. Cases That Look Beyond “Forms and Labels” In Other
                          Contexts Are Inapposite Here

¶26     The court of appeals did not reference Traer Creek. Instead, it reasoned that the

records of the county clerk and recorder are merely “prima facie evidence of all things

appearing therein,” and therefore, record title “merely creates a rebuttable presumption

[of property ownership], not a conclusive determination,” HDH P’ship, ¶ 16 (citing § 39-

1-115). Relying on a handful of cases, the court then concluded that it must look beyond

“form[s] and labels” to determine “real ownership.” Id. at ¶¶ 18–20 (citing Cantina Grill,

2015 CO 15, 344 P.3d 870; Mesa Verde Co. v. Bd. of Cty. Comm’rs, 495 P.2d 229 (Colo. 1972);

City of Golden v. Aramark Educ. Servs., LLC, 2013 COA 45, 310 P.3d 262; Bernhardt v.

Hemphill, 878 P.2d 107 (Colo. App. 1994); Gunnison Cty. v. Bd. of Assessment Appeals, 693

P.2d 400 (Colo. App. 1984); Vill. at Treehouse, Inc. v. Prop. Tax Adm’r, 2014 COA 6, 321 P.3d

624). But the court mistakenly relied on these cases to conclude that it was required to

look beyond record fee title to determine who is the true “owner” of the Ranches in this

case.

¶27     The substance-over-form doctrine is one of a group of judicially created anti-abuse

doctrines that have developed in federal tax jurisprudence over the last century. Courts

have applied the doctrine along with other, closely related (and often overlapping)

doctrines such as the business purpose, economic substance, sham transaction, and step

transaction to break abusive tax shelters. See Joseph Bankman, The Economic Substance

Doctrine, 74 S. Cal. L. Rev. 5, 7 (2000); see also Linda D. Jellum, Codifying and “Miscodifying”

Judicial Anti-Abuse Tax Doctrines, 35 Va. Tax Rev. 579, 590–91 (2014). Courts use these


                                              14
doctrines to call out questionable transactions undertaken to minimize or avoid income

tax by requiring a transaction to comply with the underlying purpose of a tax statute and

not just its language.4 Jellum, supra, at 590. But the substance-over-form doctrine is

inapplicable here.

¶28    The passage quoted by the court of appeals from City of Golden observed that

courts have “refused to permit the transfer of formal legal title to shift the incidence of

taxation attributable to ownership of property where the transferor continues to retain

significant control over the property transferred.” HDH P’ship, ¶ 18 (quoting City of

Golden, ¶ 31, 310 P.3d at 269). This passage from City of Golden was lifted from the U.S.

Supreme Court’s decision in Frank Lyon Co. v. United States, which noted that in applying

the substance-over-form doctrine “the Court has looked to the objective economic

realities of a transaction rather than to the particular form the parties employed.” 435 U.S.

561, 572–73 (1978). But there is no questionable transaction here shifting formal legal title

to minimize or avoid taxation. The Club did not, for example, transfer fee title in the

parcels to the Ranch owners but then retain such significant incidents of ownership that

it would be unfair or inequitable to transfer the tax burden to the Ranch owners and not

to tax the Club.




4Consequently, these common law doctrines are the subject of some debate because they
represent a decidedly nontextual approach to the interpretation of tax statutes. Jellum,
supra, at 589–90; see also Bankman, supra, at 5.

                                             15
¶29    This court’s decisions in Mesa Verde and Cantina Grill likewise do not support the

court of appeals’ approach here. Both of those cases concerned a unique application of

the unit assessment rule allowing assessment of property taxes to private concessioners

operating businesses on otherwise tax-exempt, government-owned land. Mesa Verde, 495

P.2d at 231–32; Cantina Grill, ¶¶ 1–4, 20–22, 344 P.3d at 873–74, 877. As we explained in

Cantina Grill, where the fee owner of real property is the government and therefore not

subject to taxation, the unit assessment rule permits taxation of the private possessory

interest in the land and improvements, given the absence of a fee owner who pays the

full taxes. Cantina Grill, ¶ 21, 344 P.3d at 877 (citing Bd. of Cty. Comm’rs v. Vail Assocs.,

Inc., 19 P.3d 1263, 1279 (Colo. 2001)); see also § 39-1-107(4), C.R.S. (2018) (“The property

tax on a possessory interest in real or personal property that is exempt from taxation

under this article shall be assessed to the holder of the possessory interest and collected

in the same manner as property taxes assessed to owners of real or personal property.”).

¶30    In Mesa Verde, we examined whether, for ad valorem tax purposes, the

concessioner was the “owner” of improvements it had built in Mesa Verde National Park

to carry on its service business to the public. 495 P.2d at 231. We noted that although the

United States held legal title to the improvements, the parties’ contract gave the

concessioner a “possessory interest in all concessioner’s improvements consisting of all

incidents of ownership,” including the right to sell, transfer, assign, encumber, or

mortgage its possessory interest, and to operate the properties for private profit. Id. at

232–33. We reasoned that because the concessioner possessed “the most significant

incidents of ownership,” it would be “especially unjust” to allow the concessioner to

                                             16
“escape state taxation merely because the United States held legal title.” Id. at 233. In

other words, we looked beyond legal title in Mesa Verde to ensure that a private party’s

possessory interests in otherwise tax-exempt government property did not escape

taxation.

¶31    More recently, in Cantina Grill, we addressed taxation of concessioners’ private

possessory interests in tax-exempt city-owned airport land. ¶ 1, 344 P.3d at 873–74. As

with Mesa Verde, we looked beyond the government’s legal title to examine the nature of

the concessioners’ possessory interests because the tax-exempt status of the government

fee owner meant that ordinary application of the unit assessment rule would not capture

those possessory interests. Id. at ¶¶ 22, 29–31, 344 P.3d at 877, 879.

¶32    In short, we looked beyond title in Mesa Verde and Cantina Grill to assess taxable

private possessory interests in otherwise tax-exempt land.         But those cases do not

mandate a substance-over-form approach in the ordinary fee title ownership situation

here, particularly in the absence of a transaction or arrangement undertaken to minimize

or avoid taxation.

¶33    The court of appeals’ decision in Gunnison County concerned both the tax-exempt

nature of government property and a transaction. There, Gunnison County needed to

renovate its courthouse and jail facilities. Gunnison Cty., 693 P.2d at 402. To enable those

repairs, the county entered into a lease-purchase agreement under which it conveyed title

to its courthouse and jail to a private party who funded improvements to those facilities;

the county then leased the property back under renewable one-year leases with an option

to purchase for a nominal amount at the end of the lease. Id. When the county assessor

                                             17
assessed property taxes against the courthouse and jail, the county paid the taxes

pursuant to its lease but then petitioned for an abatement or refund, arguing that the

courthouse and jail were county property and therefore tax-exempt. Id.

¶34   Citing Mesa Verde, the court of appeals looked beyond record title and concluded

that the county had retained sufficient control of the property to render it tax-exempt,

reasoning that it occupied and controlled the property, controlled construction and

improvements on the property, maintained and insured the property, and held an option

to purchase the property for a nominal amount at the end of the lease. Gunnison Cty., 693

P.2d at 404 (citing Colo. Const. art. X, § 4). Although the record title holder in Gunnison

County ultimately was not liable for property taxes, the court of appeals’ application of

the substance-over-form doctrine focused on a transaction that nominally shifted title

from the county to a private party. Moreover, the outcome there must be understood in

the same general context as Mesa Verde and Cantina Grill. Given the circumstances of the

lease-purchase arrangement, including that the property remained occupied and used by

the tax-exempt county that originally owned the property, the division understandably

upheld the trial court’s determination that the property came within the public property

tax exemption under article X, section 4 of the Colorado Constitution. Id.

¶35   The other cases relied on by the court of appeals are also inapplicable.

¶36   In Village at Treehouse, the court of appeals held that development rights to build

condominium units purchased from a homeowners’ association constituted a taxable real

property interest for ad valorem tax purposes, even though the transferor association

retained rights in the common elements. ¶¶ 8–18, 321 P.3d at 624, 626–27. But Village at

                                            18
Treehouse did not clearly follow a substance-over-form principle. See id. at ¶ 16, 321 P.3d

at 627. In fact, that decision is consistent with the “record title” approach because the

conveyance of the development right there was recorded. Id. And in any event, Village

at Treehouse aligns with the notion of imputing tax liability to all interests in real property,

unless lawfully exempted. See § 39-1-102(16), C.R.S. (2018) (“‘Taxable property’ means

all property, real and personal, not expressly exempted from taxation by law.”).

¶37    Finally, in Bernhardt, the court of appeals held that a timeshare contract did not

create a real property interest. 878 P.2d at 113. But Bernhardt is inapposite because it

involved a claim to contractual timeshare rights in a motel, not the taxability of a property

owner’s fee interest in land. Id. at 111–13.

¶38    In sum, the court of appeals mistakenly relied on these cases to conclude that it

was required to look beyond record fee title to determine who is the true “owner” of the

Ranches. The-substance-over-form doctrine is inapplicable here; as noted above, this case

does not concern a questionable transaction taken to minimize or avoid taxation or

otherwise improperly shift tax liability to the Ranch owners. Certainly, the cases relied

on by the court of appeals do not suggest that a record fee owner of real property may

not be the true “owner” for property tax purposes merely because restrictive covenants

and bylaws limit certain aspects of the owner’s fee interest.

              C. The Restrictive Covenants and Bylaws Did Not Strip
              Respondents of Fee Ownership of the Ranches or Their
                               Property Tax Liability

¶39    After determining that it was required to look beyond fee title to determine the

“real ownership” of the Ranch parcels, the court of appeals examined the restrictive

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covenants on the Ranch parcels to conclude that the Club is the true owner for property

tax purposes, and that the Ranch owners’ rights amount to “mere license to use Club

Property, not fee ownership.” HDH P’ship, ¶¶ 21–30. We disagree with the court’s

reasoning and conclusion.

¶40    The court of appeals observed that the Club exerts a high degree of control over

the Club grounds through restrictive covenants and bylaws, and that the Ranch owners

may only use the grounds subject to the Club’s regulation. Id. at ¶ 21. Given the extent

of the Club’s control, the court concluded that the Club enjoys most of the traditional

benefits of real property ownership. Id. at ¶¶ 25–26.

¶41    The court then likened the Ranch owners’ rights to mere licenses, relying on

another division’s reasoning in Roaring Fork Club, LLC v. Pitkin County Board of

Equalization, 2013 COA 167, 342 P.3d 467. There, the question was whether a private golf

club’s sold membership constituted an interest in land akin to a leasehold subject to

property tax under the unit assessment rule. Roaring Fork, ¶¶ 1, 35, 342 P.3d at 468, 472.

Roaring Fork Club members had “a personal privilege to perform any of a series of acts

on the club’s property, including playing golf, fishing, dining, or working out at the

fitness facility.” Id. at ¶ 41, 342 P.3d at 473. But members had no right to possession, could

not receive rents or profits from the club’s property, and could not “exclude any others

from the club’s property who would use it in the same way.” Id. at ¶¶ 38, 40, 342 P.3d at

472–73.   Furthermore, memberships could be revoked for non-payment of dues or

violation of club rules. Id. at ¶ 41, 342 P.3d at 473. The Roaring Fork division ultimately



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concluded that the memberships were merely licenses, and not taxable real property

interests in land. Id. at ¶¶ 36–42, 342 P.3d at 472–73.

¶42    Here, equating the Ranch owners’ fee title ownership with the benefits of the golf

club’s membership in Roaring Fork, the court of appeals concluded that the Ranch owners’

rights are akin to holding a mere license because the Club “enjoys most of the traditional

benefits of real property ownership.” HDH P’ship, ¶¶ 21, 25–26, 30.

¶43    The court of appeals’ reliance on Roaring Fork was misplaced. First, Roaring Fork

did not concern a substance-over-form analysis vis-à-vis record fee title. Second, as the

division in Roaring Fork noted, a license is not an ownership interest in land. ¶ 31, 342

P.3d at 472; compare Union Pac. R.R. Co., 334 P.2d 1077, 1087 (Colo. 1959) (“[S]trictly

speaking [a license] is not property or a property right, nor does it create a vested right.”),

with Title, Black’s Law Dictionary (10th ed. 2014) (defining title as “[t]he union of all

elements (as ownership, possession, and custody) constituting the legal right to control

and dispose of property; the legal link between a person who owns property and the

property itself”). Third, the membership agreement at issue in Roaring Fork is wholly

unlike the record fee ownership of the Ranch parcels held by Respondents here. The golf

club membership agreement in Roaring Fork stated that it was “a revocable license” to use

the club and its facilities, and not “an equity or ownership interest” in the property. ¶ 7,

342 P.3d at 469. It made clear that members did not receive any property or ownership

interest in the club or its property, and that membership in the club did not convey an

entitlement to “vote or participate” in the club’s management. Id.



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¶44    Respondents’ fee interests in this case are not mere licenses. The Ranch owners

purchased their Ranches via general warranty or quitclaim deeds and hold record title to

their ranch parcels in fee simple. In short, Respondents hold vested property rights in

land. Even under the restrictive covenants and bylaws, the Club cannot revoke their

rights in fee simple or inhibit their ability to sell their parcels and retain the proceeds.

¶45    And in any event, as recognized by the BAA, the restrictions on the Ranch owners’

use of the property are self-imposed. Indeed, these restrictive covenants and bylaws

purposefully facilitate the Ranch owners’ collective use of their Ranch properties for

hunting, fishing, and other recreational purposes. It is undisputed that Respondents had

notice of the restrictive covenants when they purchased their respective parcels. It is also

undisputed that the Ranch owners may vote to amend or repeal the restrictive covenants

and bylaws or even terminate the Declaration. Moreover, Club members in good

standing may run for seats on the Board of Governors, and may vote for and remove

Board members, and thus have a say in management of the Club. If anything, the record

before us indicates that Ranch owners have chosen to ensure the collective recreational

use of their hunting and fishing grounds by voting to amend the Declaration to prohibit

the construction of a residence on any individual Ranch. In short, by purchasing deeds

to their Ranch parcels with notice of the restrictive covenants and bylaws, Respondents

got what they bargained for, and we hold that they cannot rely on these same restrictive




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covenants and bylaws to avoid property tax liability that flows from their record title

ownership.5

¶46    Finally, by holding that the determination of ownership of real property requires

looking beyond legal title to the nature of restrictive covenants or other encumbrances

that run with the land, we note that the court of appeals’ approach could have unintended

consequences for real property owners, county assessors, title insurers, and homeowners’

associations because it injects uncertainty into who “owns” taxable real property in

Colorado. The opinion below could significantly burden county assessors, who often

have limited resources. The uncertainty of ownership may also create problems for title

insurers to assess risks. Finally, homeowners’ associations and similar entities that

enforce restrictive covenants could face uncertainties about whether they have crossed

the line into the role of “true ownership” of property for tax purposes. These policy

implications further convince us not to apply a substance-over-form approach to the facts

of this case.

¶47    In sum, we hold the court of appeals erred in concluding that the Club is the

“owner” of the Ranch parcels and that the Ranch owners’ rights amount to mere license




5 Respondents also claim that the “floating membership” demonstrates the irrelevance of
the record title form. They argue that the floating membership enjoys “exactly the same
rights,” even though such membership holds no title to the land. We are unpersuaded.
The single floating membership—unlike deed ownership—is a contractual right to use
Club grounds created by the Club’s bylaws. In contrast to Ranch ownership, Club
members can vote to terminate the floating membership by amending the bylaws.

                                           23
to use Club property, not fee ownership, and in concluding that the Assessor therefore

improperly valued the Ranch parcels.

                   D. Colorado Common Interest Ownership Act

¶48    The court of appeals held that CCIOA section 38-33.3-105(2), which governs

taxation of common interest community properties, applies to common interest

communities created only after June 30, 1992, unless they have elected CCIOA treatment.

HDH P’ship, ¶ 39. Since the Club was created in 1979, the court concluded that section

38-33.3-105(2) was inapplicable to its analysis. Id.

¶49    However, section 38-33.3-117(1)(c), C.R.S. (2018), titled “Applicability to

preexisting common interest communities,” lists CCIOA section 38-33.3-105 as applying

to “all common interest communities created within this state before July 1, 1992, with

respect to events and circumstances occurring on or after July 1, 1992.” (Emphasis added.)

We agree with the parties that the court of appeals erred in holding that CCIOA section

38-33.3-105(2) applies to common interest communities created only after June 30, 1992.

But because we have already concluded that individual Ranch owners—not the Club—

are subject to taxation, we need not decide whether CCIOA otherwise applies to the Club

parcels.

                                     IV. Conclusion

¶50    For the foregoing reasons, we reverse the judgment of the court of appeals and

reinstate the BAA’s order.

JUSTICE GABRIEL concurs in the judgment, and JUSTICE HOOD joins in the
concurrence in the judgment.


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JUSTICE GABRIEL, concurring in the judgment.

¶51     Although I agree with much of the majority’s analysis in this case, as well as with

the result that it reaches, for two reasons, I cannot subscribe to the majority’s discussion

in Part III(B) of its opinion of the cases that look beyond “forms and labels” to determine

actual property ownership.

¶52     First, I am not persuaded that the doctrine is necessarily limited to cases involving

“questionable transaction[s]” taken to minimize or avoid taxation, maj. op. ¶ 38, or in

which     private   concessioners    operate       businesses   on   otherwise   tax-exempt,

government-owned land, and I fear the unintended consequences of what I believe may

be an overly broad limitation.

¶53     Second and perhaps more important, in my view, the majority’s discussion of this

issue is unnecessary. The conclusion that the majority reaches in this case is amply

supported by the fact that Respondents took record title voluntarily and with knowledge

of the restrictive covenants and bylaws on which they now seek to rely to disclaim

ownership. In these circumstances, I would adhere to the “cardinal principle of judicial

restraint” of which then-Judge and now-Chief Justice John Roberts has reminded us: “[I]f

it is not necessary to decide more, it is necessary not to decide more.” PDK Labs. Inc. v.

U.S. Drug Enf’t Admin., 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J., concurring in part

and concurring in the judgment).

¶54     For these reasons, I respectfully concur in the judgment only.

        I am authorized to state that JUSTICE HOOD joins in this concurrence.



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