## Facts

- Twin Lakes Golf and Country Club owned an 18-hole golf course within a planned residential development in South King County, Washington.
- The development was approved as a planned unit development (PUD) under county zoning that required land be dedicated as “common open space.”
- County ordinances approving the PUD required the golf-course parcel to be constructed and reserved as common open space and a golf course for the benefit of development lot owners.
- Recorded deeds and covenants restricted the parcel to open-space/golf-course use for residents’ benefit and limited transfer except subject to those restrictions.
- The course consisted of land improvements (e.g., greens, sand traps, irrigation) and was surrounded by homes; it operated at substantial, apparently unavoidable losses.
- For the 1973 tax year (valuation date January 1, 1972), the county assessor valued the parcel at $660,600 using a replacement-cost approach that did not discount for the zoning and deed restrictions.
- The county treasurer levied $16,387.10 in real property taxes, which the club paid under protest.
- Administrative appeals upheld the assessment; on de novo review, the superior court found the parcel had no taxable fair market value and ordered a refund.
- King County appealed.

## Issues

1. Whether legally binding PUD zoning conditions and recorded conveyancing restrictions limiting land to common open space/golf-course use for others’ benefit must be considered in determining fair market value for ad valorem taxation.
2. Whether a parcel so restricted, and historically loss-producing, can have “fair market value” sufficient to support a separate property tax assessment.
3. Whether an assessor may rely on replacement cost where the property, as legally restricted, lacks a market of willing buyers.

## Decision

- The Washington Supreme Court affirmed the superior court.
- The court held the golf-course parcel, valued subject to the binding restrictions and its operating history, had no fair market value for ad valorem taxation.
- The replacement-cost valuation was rejected because it treated the property as if it were unencumbered and marketable.
- The assessment and levy were invalid, and the taxpayer was entitled to a refund of taxes paid under protest.

## Legal Principles

- Fair market value for property tax purposes is the price a willing buyer would pay a willing seller, neither under compulsion, with both fully informed, considering uses to which the property is adapted and may reasonably be applied.
- Enforceable zoning and conveyancing restrictions that run with the land and substantially limit permissible uses must be incorporated into valuation; property must be appraised in its legally restricted condition.
- Replacement cost is not synonymous with fair market value when no open market exists for the property as legally encumbered and when improvements do not translate into a price a rational buyer would pay.
- Amenity benefits conferred on neighboring parcels may be reflected in those parcels’ assessed values; they do not justify assigning an independent taxable value to the restricted open-space parcel beyond its own fair market value.
- Assigning a zero value to property that lacks fair market value is not an exemption; it applies the constitutional and statutory requirement that property be taxed in proportion to its value.

## Conclusion

Because binding PUD and deed restrictions committed the parcel to perpetual open-space/golf-course use for others’ benefit and the property lacked any realistic willing-buyer market, the Washington Supreme Court held it had no taxable fair market value and affirmed invalidation of the assessment and the refund order.


Twin Lakes Golf & Country Club v. King County, 87 Wash. 2d 1, 548 P.2d 538 (1976)