A state tax official required to be a neutral arbiter is instead advising Colorado luxury resort hotel owners on how to minimize their property taxes, according to officials in the counties who have lost millions of dollars in revenue.
A batch of personal emails uncovered by Eagle, San Miguel and La Plata counties detail a cozy relationship between the state tax official and the hotels’ fee-based property tax attorney. The three Colorado counties are asking for an audit of the state Division of Property Taxation, claiming the deputy director coached the property tax agent involved in legal fights over the valuation of commercial properties.
JoAnn Groff, the longtime head of the Division of Property Taxation, dismissed their detailed complaints. The Colorado Independent Ethics Commission rejected their plea for an investigation. The State Board of Equalization refused to take action.
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A last-ditch campaign to sway lawmakers to request a performance audit of the division may work. And the counties are digging into their fight, filing dozens of open records requests and lobbying lawmakers for support over what they call a “gross violation of the public trust.” Meanwhile, Groff, the Division of Property Taxation boss, said she sees “absolutely nothing inappropriate” in the relationship between Settle and Cartwright.
Eagle County Commissioner Kathy Chandler-Henry said only 15% of property tax revenue goes to the county, so the fight is for the local school district, Colorado Mountain College, libraries and many special taxing districts “who are severely impacted by changes in property valuations.”
“We believe our values are right and the Division of Property Taxation is supposed to assist county assessors and this looks like they are assisting private businesses instead,” Chandler-Henry said. “It just doesn’t look right.”
“Ripe” for corruption
It all begins with a collegial relationship — maybe even a friendship — between Curt Settle, the deputy director of the state Division of Property Taxation, and Bruce Cartwright, the managing director of tax services for consulting firm Duff & Phelps. Commercial property owners in Colorado often hire lawyers like Cartwright to help them appeal valuations determined every odd year in Colorado by county assessors. The assessments set the property tax bills paid by businesses.
In 2017, more than a dozen high-end hotels in Vail and Beaver Creek contested their appraised valuations. A sudden spike in assessed values were based, in part, on big sales of local hotels, like the record-setting $145 million paid in 2017 by a Dallas firm for the 190-room Park Hyatt in Beaver Creek and the $121 million sale of the 134-room Four Seasons in Vail.
The argument raised by the hotels involves privately owned units, which the hotels say should be assessed as residences, not commercial properties. At question is whether the income earned from those privately owned units should be included in the income-based assessment of a hotel’s value.
The county argues that since the units often are rented like hotel rooms, they should be part of an assessment as a commercial property. The distinction can mean millions in tax payments. Counties set property tax bills for commercial properties like hotels at 29.5% of assessed value, while homeowners pay taxes on only 7.15% of assessed value.
For example, Vail Resorts is arguing its slopeside, 150-room Lodge at Vail is worth $14 million, Eagle County Attorney Bryan Treu said, noting that the county’s 2019 assessed value was $36.5 million. The county and Vail Resorts settled that valuation dispute after 18 months of litigation, reaching a value of $32 million. The fight between Vail Resorts and Eagle County over the Lodge at Vail’s 2017 assessed value, which involves a handful of privately owned chalets and suites, remains in litigation.
“And this guy Cartwright is helping them with that argument,” Treu said. “This tax agent pushes novel theories for ridiculously low values and now appears to be doing it with the assistance of a high level DPT employee.”
(When asked to comment on his interactions with Settle, Cartwright said he consulted with Duff & Phelps’ counsel “and it is our policy that we do not comment on such inquiries.” Groff also declined to comment for this story.)
In a letter sent to Groff in December 2020, the Eagle County commissioners outlined hundreds of emails between Settle and Cartwright in 2019 and 2020 where the two discussed ongoing cases involving the county, division policy positions and interpretations of court decisions. The county secured the correspondence through Colorado Open Records Act requests.
The emails show a friendship between the two men. Cartwright invited Settle to “sit on our side of the aisle” during oral arguments on a property taxation case heard by the Colorado Supreme Court in 2019, “just like you’re at a wedding.” They agreed to meet at their “usual Starbucks.” At a lunch in August, Cartwright discussed — and subsequently emailed Settle — a confidential filing in an ongoing case in Eagle County District Court. (Settle told the Board of Equalization in March that he missed the fact that the document was marked confidential.)
“There is absolutely no reason Mr. Settle, as deputy director at the DPT, should be meeting privately with Mr. Cartwright to discuss the parties’ disclosures and strategy in litigation pending in the Eagle County District Court,” reads the letter to Groff, which includes emails where Settle and Cartright also discuss property tax litigation in Boulder, Denver, Larimer and San Miguel counties. “It is beyond dispute that this sampling of emails demonstrates that Mr. Settle has been advising Duff & Phelps in connection with litigation commenced against Eagle County, and likely other counties throughout the state.”
Many hotels in Eagle, San Miguel and La Plata counties appealed their 2017 and 2019 assessments to the county’s Board of Equalization. Then they appealed to the state Board of Assessment Appeals and ultimately, some of them sued their counties in district court and the Colorado Court of Appeals. Some property tax disputes are even pending before the Colorado Supreme Court. Cartwright represents many of the hotels in the appeals and litigation.
Complaints to the state ethics commission about the Settle-Cartwright relationship show Eagle County spent more than $500,000 in outside legal services defending tax valuations between 2017 and 2020, largely involving those Vail and Beaver Creek hotel cases.
After Eagle County began asking state lawmakers to audit the division, Groff responded to the letter two months later, in February, saying she “procrastinated in formulating my answer.” She disagreed that Settle had done anything inappropriate, calling her deputy “one of my strongest, most trusted employees.”
“I believe it is erroneous in the perception that speaking or meeting with a representative of private property owners would be inconsistent with the division’s mission,” she wrote. “We must maintain strong working relationships with all constituents, including but not limited to county governments.”
Groff argued that “the facts simply do not bear out” that Settle is aligned against counties specifically to benefit Cartwright.
“To the contrary, he is committed to getting the right answer under the law — no matter who prevails,” she wrote, noting that when Settle has been asked to assist in three recent property tax disputes, two were resolved in favor of counties.
Groff told Eagle County she would be included in all responses Settle sends to Cartwright in the future. That wasn’t enough for Eagle County.
Eagle County Attorney Treu said the county was hoping Groff would recognize the issues and fix them. Instead, she only responded to the county after commissioners asked legislators for an audit.
A “chilling effect on the free flow of ideas”
At a March 26 hearing before the Board of Equalization, which oversees the Division of Property Taxation, Treu told board members that Cartwright had worked with Eagle County hotels in 2017, 2018 and 2019 to secure $20 million in tax refunds. Cartwright was looking to collect more than $2 million in fees for his work
“The world of for-fee tax agents is ripe for this type of corruption,” Treu said.
Treu told the equalization board that the emails between Cartwright and Settle as well as Groff’s response to the county’s concerns has left the county’s relationship with state tax authorities “tarnished, if not shattered.”
“I will unfortunately start off by saying Eagle County no longer trusts Curt Settle, the deputy director of the Division of Property Taxation. Eagle County no longer trusts Joann Groff, the appointed Property Tax Administrator. Eagle County no longer trusts the Division of Property Taxation,” he said during the hearing. “And we should trust them. We want to trust them, but we also feel our lack of trust is completely justified.”
San Miguel County Commissioner Chris Holstrom also spoke to the board of equalization, saying Settle’s conversations and meetings with Cartwright went “well beyond cooperation and providing information.
“If anybody in our organization engaged in that kind of behavior, we would be addressing it immediately and I hope you would do the same,” Holstrom said.
Groff told the board that the counties’ complaints revealed “a gross misunderstanding of what we do at the Division of Property Taxation.”
“I would not like to see the Division of Property Taxation restricted from having relationships … with any members of the public, be they assessment personnel, be they taxpayers or be they representatives of taxpayers,” said Groff, who served on the Board of Equalization from 1995 to 2006, when she was appointed as the division’s property tax administrator.
Groff said she looked into Settle’s relationship with Cartwright and found nothing inappropriate and determined that Settle had not received any kickbacks for his work with the tax agent.
Settle told the board the counties were peddling “baseless accusations, opinion and innuendo totally lacking any factual support.”
The 18-year employee of the Division of Property Taxation told the board that his 40 years of appraisal work in Colorado taught him that “the best solutions are always the result of open communication and a good understanding of all viewpoints on a topic.”
“What these three counties are doing and asking is wrong,” Settle said of the lawsuits. “This is nothing more than a blatant attempt to have a chilling effect on the free flow of ideas on property tax matters.”
The board ultimately decided not to take any action against Groff, Settle or the Division of Property Taxation. Groff did promise to write clear guidelines for employees and post them on the division’s website.
Holstrom told the board she was “on the fence” about ethical violations until she attended the board of equalization meeting, where members wholeheartedly agreed with Groff and Settle while being critical of Eagle County attorney Treu, even asking who in the county had been injured by the meetings between Settle and Cartwright. (Treu responded that county taxpayers, schools and special districts are on the hook for more than $10 million in revenue if Cartwright’s clients win their ongoing appeals.)
“I have to say this process has completely wrecked my trust in what is going on,” Holstrom said. “You are wanting us to prove what you guys are doing is wrong and I think the ethics of what has happened should stand on its own. I’m incredibly disappointed.”
Open records, meetings violations
San Miguel County commissioners have sent two letters to two of their legislators — Montrose Republicans Rep. Marc Catlin and Sen. Don Coram — as well as Board of Equalization members, Democrats Rep. Cathy Kipp and Sen. Chris Hansen, asking for an audit of the Division of Property Taxation. (The State Board of Equalization consists of the governor, designees from the state senate and house, and two governor-appointed members who must be an appraiser, former assessor or someone with experience in property taxation.)
A letter sent May 6 by the San Miguel County commissioners said Holman felt her input at the Board of Equalization meeting “was discounted and that important questions from the other counties on the call were completely ignored or made light of.” The letter notes a February email from Kipp, D-Fort Collins, telling other lawmakers that the counties’ concerns about the division had been handled “to her satisfaction” and saying they should talk to her before requesting an audit.
“The DPT, as a state agency, is intended to be a valuable resource for elected county assessors throughout the state and the public alike – but this only works if the DPT and its staff operate within appropriate legal and ethical jurisdictional boundaries and comply with their statutory mandate,” reads the letter.
San Miguel County commissioners have not received any response from lawmakers concerning their two requests for an audit. Coram told The Colorado Sun that the county commissioners “have a cause,” but declined to say whether he would request a review of the division by the State Auditor’s Office.
Eagle County in April filed a formal complaint with the Colorado Independent Ethics Commission, arguing Settle was “using his position to actively support a litigant against Eagle County, or otherwise undermine Eagle County in active litigation.” The complaint also points to emails and meetings where Settle requested Cartwright’s feedback on division policies, revisions to tax law, interpretations of appellate court decisions and course materials used by the division to train assessors.
“Through these conversations Mr. Settle gave Mr. Cartwright direct and private access to the inner workings of the DPT, a state agency that owes a duty to all assessors and taxpayers throughout the state,” county’s complaint reads. “This highly irregular conduct reflects preferential treatment of a single tax agent outside of regular channels creating an astonishing conflict of interest and violation of the public trust.”
In April, the commission dismissed the twice-amended complaint as “frivolous.” (The commission deems most complaints as frivolous: of the 80 complaints it considered in 2020, five were considered “non-frivolous.)
Treu called the Board of Equalization meeting “a kangaroo court.” He was convinced the board had spoken with Groff before the meeting and had aligned a defense against the counties’ complaints. Eagle County filed a CORA request with the Board of Equalization after the meeting asking for emails, texts and records shared between the board members and Groff before and during the meetings. The emails and texts showed the board had met before the public meeting and even urged lawmakers representing the three counties to ask their commissioners to drop the audit request.
“That meeting was so scripted I just had to ask for emails,” Treu said in an interview. “The response to our complaints is almost worse than the behavior we are pointing out. They violated public meeting laws. Their transparency is a joke.”
One text that was gleaned from the CORA request shows board of equalization member Kipp texting board member Barbara Brewer, Mesa County’s former assessor, during the public meeting in March, saying “JoAnn says in the chat she would like to ask for one piece of action on the part of the board.” The board did ask Groff to post her division’s employee interaction guidelines online.
Rep. Dylan Roberts fielded requests from Eagle County for a performance audit. As a member of the Legislative Audit Committee he said he is “strongly considering” asking the committee at its next meeting to order an audit of the Division of Property Taxation.
The division is audited on a regular schedule “but it may be warranted to move that audit up a few years in an attempt to address, or at the very least, get more information regarding these concerns from Eagle, La Plata and San Miguel counties,” Roberts told The Colorado Sun.
Earlier this month Eagle County informed the Colorado Attorney General’s Office that it planned to sue the Board of Equalization for violating both the Colorado Open Records Act, by withholding requested documents, and the Colorado Open Meetings Act, for arranging private meetings with board members to discuss the request for an audit filed by the counties.
The county also alleges the division and state Board of Equalization charged too much, took too long and redacted too much from the emails it requested under the open records act.
“I don’t think we are asking for much,” Treu said. “We just want to restore some confidence back in that office. This lack of trust is a statewide issue that impacts every taxpayer in the state. Something smells at the Division of Property Taxation and it needs to be addressed.”
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