## Facts

- Colorado Arlberg Club, a private club, owned real property consisting of clubhouse facilities and a much larger area of vacant land.
- For ad valorem taxation, the county assessor valued the property by considering development potential for the vacant acreage.
- On the Club’s appeal, the Board of Assessment Appeals (BAA) conducted de novo review and valued the property’s “actual value” by factoring in the land’s reasonably probable future use (future development) as its highest and best use.
- The Club challenged the valuation as an improper reliance on speculative future development rather than present use.
- The Colorado Court of Appeals reversed, concluding future use could not be considered because property is reassessed periodically and could be revalued if use later changed.
- The BAA sought and obtained review in the Colorado Supreme Court.

## Issues

1. Whether “actual value” for Colorado property-tax purposes may include a property’s reasonably probable future use (highest and best use), rather than being limited to present use.
2. Whether courts reviewing a BAA valuation decision must uphold it when supported by competent (substantial) evidence.

## Decision

- The Colorado Supreme Court reversed the Court of Appeals.
- The Court held that assessors and the BAA may consider a property’s reasonable future use as part of its current “actual value” because present market value reflects what willing buyers and sellers consider, including realistic development potential.
- The Court rejected a categorical rule barring future-use consideration and distinguished market-grounded future use from remote or conjectural speculation.
- The Court reaffirmed that judicial review of BAA valuation determinations is limited; a court may not set aside the BAA’s decision if it is supported by competent (substantial) evidence.
- The disposition reinstated the BAA’s approach to valuation (or required further proceedings consistent with upholding reasonable-future-use valuation).

## Legal Principles

- “Actual value” in Colorado property-tax law is a market-value concept based on what a willing buyer would pay a willing seller in an arm’s-length transaction.
- Highest and best use may include reasonably probable future uses that the market would recognize in present pricing; valuation cannot be confined to current use if a different use is realistically probable.
- Future-use consideration is improper only when it is remote, conjectural, or purely speculative and not supported by objective market indicators.
- Periodic reassessment does not justify excluding reasonably probable development potential from current valuation where that potential affects present market value.
- On judicial review, BAA determinations must be affirmed unless there is no supporting competent evidence; in this context, competent evidence is equivalent to substantial evidence.

## Conclusion

The court held that Colorado property-tax valuations may reflect reasonably probable future development as part of present market value and that courts must sustain BAA valuation findings when supported by substantial (competent) evidence.


Bd. of Assessment Appeals v. Colo. Arlberg Club, 762 P.2d 146 (Colo. 1988)