Properties v. Eagle County Board of Equalization

     The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.


                                                                 SUMMARY
                                                         September 17, 2020

                               2020COA138

No. 19CA0266, Lodge Properties v. Eagle County Board of
Equalization — Taxation — Property Tax — Actual Value —
Income Approach — Intangible Personal Property Exemption

     A division of the court of appeals considers, for the first time,

whether condo net income generated from rentals of individually

owned condominium units to transient guests should be included

in a real property’s actual value under the income approach

valuation method. Because such income qualifies as a stream of

revenue and not an intangible asset, the division concludes that

condo net income should be included under the income approach.

The Eagle County Board of Equalization appeals the ruling of the

Board of Assessment Appeals in favor of Lodge Properties, Inc.,

reducing Lodge Properties’ property tax assessment for its luxury

resort facility. Because the division concludes that the Board of
Assessment Appeals abused its discretion when it excluded condo

net income from the resort’s actual value, the division vacates the

order and remands the case for determination of the resort’s actual

value with the inclusion of condo net income.
COLORADO COURT OF APPEALS                                        2020COA138


Court of Appeals No. 19CA0266
Board of Assessment Appeals Case No. 70454


Lodge Properties, Inc.,

Petitioner-Appellee,

v.

Eagle County Board of Equalization,

Respondent-Appellant,

and

Board of Assessment Appeals,

Appellee.


                           ORDER VACATED AND CASE
                          REMANDED WITH DIRECTIONS

                                    Division II
                            Opinion by JUDGE PAWAR
                           Román and Tow, JJ., concur

                          Announced September 17, 2020


Brownstein Hyatt Farber Schreck, LLP, Justin L. Cohen, Julian R. Ellis,
Denver, Colorado, for Petitioner-Appellee

Bryan Treu, County Attorney, Christina Hooper, Assistant County Attorney,
Eagle, Colorado; Hoffmann, Parker, Wilson & Carberry, P.C., M. Patrick Wilson,
Ruth H. Goff, Denver, Colorado, for Respondent-Appellant

Philip J. Weiser, Attorney General, John August Lizza, First Assistant Attorney
General, Denver, Colorado, for Appellee
¶1    In this property tax assessment case, we consider for the first

 time whether income generated from rentals of individually owned

 condominium units to transient guests of an adjoining hotel should

 be included in the hotel’s actual value under the income approach

 valuation method. Because such income qualifies as a stream of

 revenue and is not an intangible asset, we conclude that this

 income should be included under the income approach.

¶2    Respondent, the Eagle County Board of Equalization (BOE),

 appeals the ruling of the Board of Assessment Appeals (BAA) in

 favor of petitioner, Lodge Properties, Inc. (Lodge), reducing Lodge’s

 property tax assessment for its luxury resort facility. The BOE

 argues that the BAA abused its discretion when it excluded the

 additional income from the resort’s actual value and, as a result,

 the BAA improperly valued the property for tax purposes. We agree

 and vacate and remand the BAA’s order.

                            I. The Property

¶3    Lodge, a subsidiary of Vail Resorts, Inc., owns a luxury resort

 known as the Lodge at Vail Resort and Hotel (LAV). The LAV

 property is located at the base of Vail’s ski-area and consists of

 approximately 160 guest rooms. The guest rooms include eighty


                                    1
 “traditional” hotel rooms owned by Lodge and seventy-four privately

 owned residential condominium units, established in 1970 through

 a declaration of covenants. Because the condo units are physically

 connected to and integrated within the LAV property, LAV regularly

 uses them as hotel rooms, with transient guests unaware of the

 rooms’ actual owners.

¶4    Vail Resorts has other subsidiaries: RockResorts International,

 LLC (RockResorts), and Vail/Beaver Creek Resort Properties, Inc.

 (VBC). RockResorts manages LAV’s day-to-day hotel operations, as

 well as LAV’s homeowner association (HOA), which collects dues

 from the condo owners to cover costs associated with certain

 common areas shared with LAV. RockResorts provides

 administrative and management services to the HOA and does not

 charge Lodge a fee for doing so.

¶5    RockResorts and VBC provide rental management services to

 more than two-thirds of LAV’s condo owners, with the remaining

 condo owners either not renting at all or engaging a third-party for

 this service. VBC contracts with condo owners to rent their condos

 to transient guests, and RockResorts manages the “LAV Rental

 Program,” under which the condos are managed and operated “as


                                    2
 rental units within the hotel.” Per the terms of the “LAV Rental

 Program” contracts, if Lodge were to sell LAV, VBC may assign its

 rights under the contracts to the purchaser of LAV without the

 condo owners’ consent.

¶6    VBC pays all marketing and administrative costs of the rental

 management program and, in return, retains a 40% share of the

 gross rental proceeds from the condos it manages. Some revenues

 from the condo rentals, such as parking, LAV food and beverage

 services, and hotel resort fees, are the “sole property of VBC” and

 are not included in the split of gross rental proceeds.

¶7    Neither RockResorts nor VBC maintains separate financial

 statements for the condo operations at LAV. And the revenues from

 Lodge, RockResorts, and VBC all contribute to Vail Resorts’ net

 income.

¶8    Due to the contiguous nature of the LAV condos and hotel

 rooms, reciprocal easements exist for utilities, structural support,

 and access between the two structures on the property.

 Additionally, LAV hotel employees serve the condos and, to do so,

 have the right to access the service, linen, mechanical, and storage

 rooms located in the condo building.


                                   3
¶9     Through a development agreement executed in 2006, all LAV

  guests, whether they are staying in a “traditional” hotel room or a

  condo, have the right to access all of LAV’s amenities. These

  amenities include food and beverage services, internet access,

  pools, hot tubs, exercise facilities, spas, and other facilities. Lodge

  collects a nominal “hotel resort fee” from all transient guests to

  cover the costs it incurs in providing these amenities. Hotel resort

  fees are collected separately and are not part of the “LAV Rental

  Program.”

                       II. Procedural Background

¶ 10   For the tax year 2017, the Eagle County assessor assessed

  LAV’s taxable real property at $41,104,470. For its valuation, the

  county included VBC’s net operating income from the rental

  management services it provides to the LAV condos (hereinafter

  referred to as condo net income). Lodge contested the assessment,

  and the BOE denied its petition. Lodge then appealed the

  assessment to the BAA, arguing that the inclusion of condo net




                                     4
  income in determining the actual value of LAV was improper and

  that the applied capitalization rate was incorrect.1

¶ 11     At a hearing on the matter, the BAA considered expert

  testimony from Lodge and the BOE regarding the actual value of

  LAV. Lodge’s appraiser placed the actual value of LAV at

  $20,477,400 ($22,800,000 minus $2,322,560 of personal property,

  rounded). He excluded all amounts he considered intangible

  property and “property management revenue,” including condo net

  income and the hotel resort fees collected by Lodge. The appraiser

  opined that condo net income is an intangible asset that must not

  be included in a property tax valuation. In order to arrive at an

  actual value that excluded condo net income and hotel resort fees,

  Lodge’s appraiser adjusted LAV’s financial statements “to reflect a

  free-standing hotel operation without influence from the third-party

  rental agreement.”

¶ 12     Separately, the BOE’s appraiser asserted that the actual value

  of LAV is $44,335,840 ($46,658,395 minus $2,322,560 of personal

  property, rounded). This value includes condo net income (condo



  1   The capitalization rate is not at issue on appeal.

                                       5
  rental revenues of $3,626,383 minus “property management

  expenses” attributable to the condos). The BOE’s appraiser

  included condo net income because, as he explained, it is derived

  from ownership of the LAV property and is, therefore, a direct

  benefit to the owner of LAV that would transfer with a sale of the

  property.

¶ 13   In support of its valuation, the BOE also presented Peter F.

  Korpacz as an expert appraiser on the analysis of market behavior

  in connection with hotel valuation and proper evaluation

  methodologies. Mr. Korpacz testified to findings he made in his

  2016 “Resort-Hotel Valuation Methodology Study for Eagle County,

  Colorado” (Valuation Study), as well as the application of an article

  he co-authored with a committee of the International Association of

  Assessing Officers (IAAO), Understanding Intangible Assets and Real

  Estate: A Guide for Real Property Valuation Professionals (IAAO

  Guide). Mr. Korpacz opined that condo net income is a real estate

  ownership benefit that is properly factored into acquisition pricing;

  it is not a business income or an intangible asset.

¶ 14   In its order, the BAA concluded that Lodge presented sufficient

  probative evidence and testimony to prove that the BOE’s 2017 tax


                                    6
  valuation of LAV was incorrect. In so concluding, the BAA

  determined that condo net income should not be included for

  valuation purposes because it is an intangible asset that must be

  excluded from the calculation of LAV’s actual value. The BAA

  ordered the BOE to reduce the 2017 actual value of LAV to

  $26,245,000 ($28,567,335 minus $2,322,560 of personal property,

  rounded). The BOE now appeals the BAA’s decision.

¶ 15   On appeal, the BOE asserts three main challenges to the

  BAA’s order; specifically, the BAA erred when it (1) determined that

  a real property’s actual value is different from its market value for

  tax valuation purposes; (2) concluded that condo net income is an

  intangible asset and therefore excludable when establishing a real

  property’s actual value; and (3) relied on Lodge’s expert appraiser’s

  adjusted financial statements that separated the “traditional” hotel

  room operations from the condo operations and excluded hotel

  resort fees collected from LAV guests. We agree and, consequently,

  vacate the BAA’s order.

                         III. Standard of Review

¶ 16   We review the BAA’s factual findings for abuse of discretion

  and its legal conclusions de novo. Cantina Grill, JV v. City & Cty. of


                                     7
  Denver Bd. of Equalization, 

, ¶ 15. The BAA, not the

  reviewing court, is tasked with weighing the evidence and resolving

  any conflicts.

may be set aside, however, if it is

  unsupported by substantial evidence in the record or reflects a

  failure to abide by the statutory scheme for calculating property tax

  assessments. Bd. of Assessment Appeals v. E.E. Sonnenberg &

  Sons, Inc., 

, 34 (Colo. 1990).

       IV. LAV’s Actual Value Is Synonymous with Its Market Value

¶ 17    The BOE initially contends that the BAA erred in its valuation

  of LAV when it incorrectly created a separate standard for

  calculating the actual value of real property for tax purposes. We

  agree.

¶ 18    Property valuations for tax assessment are based on the

  property’s actual value in a statutorily mandated base year and the

  property’s character. § 39-1-103(5)(a), C.R.S. 2019; Bd. of

  Assessment Appeals v. Colo. Arlberg Club, 

, 148 (Colo.

  1988). “[A]ctual value is the guiding principle for the taxation of

  real property in Colorado.” San Miguel Cty. Bd. of Equalization v.

  Telluride Co., 

, 1383 (Colo. 1997).




                                     8
¶ 19   A property’s actual value is synonymous with market value.

  Bd. of Assessment Appeals v. Sampson, 

, 203 (Colo.

  2005). “[M]arket value is ‘what a willing buyer would pay a willing

  seller under normal economic conditions.’” 

(quoting May Stores Shopping Ctrs., Inc. v. Shoemaker, 

, 110, 

, 683 (1962)). In other words, market

  value is

             [t]he most probable price in cash, terms
             equivalent to cash, or in other precisely
             revealed terms, for which the appraised
             property will sell in a competitive market
             under all conditions requisite to fair sale, with
             the buyer and seller each acting prudently,
             knowledgeably, and for self-interest, and
             assuming that neither is under undue duress.

(quoting American Institute of Real Estate Appraisers,

  The Appraisal of Real Estate 21 (8th ed. 1983)).

¶ 20   In its determination of value, the BAA reasoned that condo net

  income is an intangible asset excludable from LAV’s actual value

  because, “while it might be considered in the valuation of a property

  outside of taxation, [it] did not reflect additional value to the subject

  real estate.” (Emphasis added.) In so reasoning, the BAA erred.




                                      9
¶ 21   The BAA derived a standard for calculating the actual value of

  property for tax purposes that is separate from the standard used

  for other financial purposes. However, our legislature “has never

  indicated that it intended the words . . . ‘market value’ to be given

  any special meaning for tax purposes.” 

.

  And because market value is synonymous with actual value,

  

, the BAA is not permitted to assign a

  special meaning to actual value for tax purposes. In doing so, the

  BAA failed “to abide by the statutory scheme for calculating

  property tax assessments.” See E.E. 

.

¶ 22   It follows that the actual value of LAV must be measured by its

  market value — “what a willing buyer would pay a willing seller

  under normal economic conditions.” 

  (quoting 

, 376 P.2d at 683). Therefore,

  to determine LAV’s market value, we must ask whether the stream

  of income generated from the operation of the condos “as rental

  units within the hotel” would be a factor considered by a willing

  buyer and willing seller of LAV.

¶ 23   The BAA implicitly answered “no” to this question when it

  found that “any contributory value of [condo net income] . . . would


                                     10
  not transfer with [LAV] in the event of sale” because VBC, “which

  generates revenue from rental management for outside

  condominium owners[,] is a separate legal entity from [Lodge].” We

  conclude that this finding is unsupported by substantial evidence

  in the record.

¶ 24   As we noted above, the rental contracts between individual

  condo owners and VBC are assignable. That is, if Lodge sells LAV,

  VBC can assign the rental contracts to the purchaser without the

  condo owners’ consent. And although Lodge’s expert in lodging

  accounting testified that, upon sale of LAV, VBC “could retain those

  contracts or the new owner of the hotel could also pursue them,” we

  are hard-pressed to believe that a purchaser of LAV would agree to

  the sale without also securing the rental contracts that would allow

  it to collect over $3.6 million in rental revenue. Condo net income

  therefore provides an income stream to VBC, and ultimately to Vail

  Resorts, that can transfer with a sale of the LAV property.

¶ 25   Moreover, the BOE’s expert appraiser testified that, based on

  his market research, condo net income is properly included under

  the income approach for calculating actual value because condo net

  income is derived from ownership of the LAV property and is,


                                   11
  therefore, a direct benefit to the owner of LAV. He opined that if

  LAV were to be placed on the market for sale, condo net income is

  “a stable income stream that a buyer and seller would each

  consider as a benefit to the owner of the real property.” In support

  of this, the appraiser testified that there have been a “number of

  sales transactions where they have marketed [the hotel/resort] for

  sale, including [the condo net income] real estate stream, and the

  buyer of that property paid the seller for the right to that income

  stream.” He also testified that condo net income is not the only

  benefit for the owner of LAV but that, “[b]esides the management

  fee, all the other returns that that property generates goes to the

  owner of the real property.” He explained that these other returns

  include revenues generated from amenities such as LAV’s spas,

  restaurants, and room service.

¶ 26   Given this evidence — that condo net income would be

  transferable with the sale of LAV — we conclude that condo net

  income should be included in LAV’s actual/market value for

  financial purposes, including property tax calculations.




                                    12
¶ 27   With that in mind, we next turn to the question of whether

  condo net income is an intangible asset and therefore must be

  excluded from the actual value determination.

              V. Condo Net Income Is Not an Intangible Asset

¶ 28   The BOE contends that the BAA erroneously classified condo

  net income as an intangible asset. Instead, the BOE asserts,

  because it is an identifiable, measurable, and continual source of

  revenue, condo net income is not an intangible asset, and the BAA

  failed to abide by the statutory scheme for calculating property tax

  assessments by excluding it from the actual value determination.

  We agree.

                            A. Applicable Law

¶ 29   The actual value of real property is determined by “appropriate

  consideration of the cost approach, the market approach, and the

  income approach to appraisal.” § 39-1-103(5)(a). However, one or

  more of these three approaches may not be applicable in a

  particular case. E.E. 

. It is undisputed

  that both appraisers in this case used the income approach as their

  valuation method.




                                   13
¶ 30   The income approach “is a common method for calculating the

  value of commercial properties, especially apartment buildings,

  office buildings and shopping centers.”

n.8. This method

  “generally involves calculating the income stream (rent) the property

  is capable of generating, capitalized to value at a rate typical within

  the relevant market.”

classified as

  intangible is to be excluded from the actual value calculation under

  the income approach. § 39-3-118, C.R.S. 2019.

                               B. Analysis

¶ 31   We conclude that the BAA erred when it excluded condo net

  income — a measurable, identifiable source of income for LAV —

  from its actual value calculation, as an intangible asset. Condo net

  income is clearly an “income stream (rent)” that LAV “is capable of

  generating,” E.E. 

n.8, and is not an

  intangible asset that adds no value to the property.

                      1. The Appraisers’ Testimony

¶ 32   As noted above, both expert appraisers utilized the same

  methodology to value LAV — the income approach. Where they

  diverged was in their determinations as to whether condo net

  income should be included in the income that was capitalized to


                                     14
  reach a value.2 Lodge’s experts excluded condo net income, and the

  BOE’s experts included it.

¶ 33   Lodge’s expert real estate appraiser testified that condo net

  income should be excluded as an intangible asset. He testified that

  he applied a four-part test outlined in the IAAO Guide3 to determine

  that condo net income is intangible, largely because it is separable

  and divisible from LAV, and the rental management contracts are

  transferable. In citing his appraisal report, the expert testified that

  condo net income is not attributable to the LAV real property, and

  “the revenues associated with the third-party rental programs


  2 Application of the income approach entails applying a
  capitalization rate to net income to achieve the taxable value of the
  property. Microsemi Corp. v. Broomfield Cty. Bd. of Equalization,
  

, 1125 (Colo. App. 2008). “Capitalization is simply a
  process of converting future monetary benefits of owning property
  into a value of present worth.”

  of Assessing Officers, Property Assessment Valuation 231 (1977)).

  3 The IAAO Guide “is intended to assist assessors in understanding
  and addressing intangible assets in property tax valuation.”
  International Association of Assessing Officers, Understanding
  Intangible Assets and Real Estate: A Guide for Real Property
  Valuation Professionals 1 (2017), https://perma.cc/ECU8-T7YG.
  The four-part test from the IAAO Guide states that an intangible
  asset should (1) “be identifiable”; (2) “have evidence of legal
  ownership, that is, documents that substantiate rights”; (3) “be
  capable of being separate and divisible from the real estate”; and (4)
  “be legally transferrable.”

  represent intangible interest, contractual rights only.” He further

  explained that he treated condo net income as intangible property

  for this appraisal because his firm has historically done so,

  pursuant to the direction of senior leadership.

¶ 34   Relatedly, Vail Resorts’ director of finance, who was offered as

  Lodge’s expert in lodging accounting, testified that condo net

  income is excludable under the income approach because VBC is a

  “property management segment that runs the third-party

  condos . . . separate from the hotel business” and that VBC, not

  Lodge, receives the condo net income.

¶ 35   Conversely, the BOE’s expert appraiser testified that condo net

  income is not an intangible asset because the condo operations are

  not separable or divisible from the LAV property. He went on to

  explain that excluding condo net income is an overly complex

  exercise to remove revenues that go to Lodge, as well as expenses

  that “are so intertwined throughout the entire hotel operation,”

  which ultimately results in “something that doesn’t represent the

  actual property at all.”

¶ 36   A co-author of the IAAO Guide, Mr. Korpacz, also testified on

  behalf of the BOE. He testified that the IAAO Guide’s four-part test


                                    16
  for identifying intangible assets, on which Lodge’s experts relied,

  “has to do with how accountants treat the subject” and not “how

  the real estate industry does.” But he explained that the IAAO

  wanted to include it in the guide “so assessors could understand

  what might be brought to their attention in terms of trying to reduce

  taxes in a way that’s not consistent with market behavior.”

  (Emphasis added.) Mr. Korpacz also testified to the results of his

  Valuation Study, explaining that the purpose of the study was to

  illustrate the use of industry-standard methodologies and real

  estate market behavior in valuing hotel/resort properties. Through

  his study, Mr. Korpacz ascertained that comparable hotel/resort

  market-participants consider condo net income to be real estate

  income, and not an intangible asset.

                          2. The BAA’s Findings

¶ 37   The BAA concluded that condo net income “constituted an

  intangible asset that, while it might be considered in the valuation

  of a property outside of taxation, did not reflect additional value to

  [LAV].” Having determined that the BAA erred in rejecting the

  principle that actual value and market value are synonymous for

  tax valuation purposes, we next consider whether the BAA erred in


                                    17
  finding that condo net income is an intangible asset and therefore

  excludable from the property valuation.

¶ 38   To resolve that question, we first look to the definitions of

  “intangibles” provided by Black’s Law Dictionary. In relevant part,

  Black’s Law Dictionary includes the following:

       1.   Intangible asset: “Any nonphysical asset or resource that

            can be amortized or converted to cash, such as patents,

            goodwill, and computer programs, or a right to

            something, such as services paid for in advance.” Black’s

            Law Dictionary (11th ed. 2019) (emphasis added).

       2.    General intangible: “Any personal property other than

             accounts, chattel paper, commercial tort claims, deposit

             accounts, documents, goods, instruments, investment

             property, letter-of-credit rights, letters of credit, money,

             and oil, gas, or other minerals before extraction. Some

             examples are goodwill, things in action, and literary

             rights.”

   Intangible property: “Property that lacks a physical

             existence. Examples include stock options and business

             goodwill.”

¶ 39   Evaluating the nature of condo net income under these

  definitions, we cannot conclude that it qualifies as an “intangible

  asset,” “general intangible,” or “intangible property.” Condo net

  income does not “lack a physical existence,” nor is it a “nonphysical

  asset or resource that can be amortized or converted to cash.” See

is, in fact, cash; it is a tangible, inherent

  benefit in the form of money that is a direct product of the core

  income-producing business of LAV. We do not perceive a readily

  identifiable and measurable stream of income such as condo net

  income as equivalent to things like patents, business goodwill,

  computer programs, literary rights, and stock options. All of this

  leads us to conclude that a revenue stream like condo net income is

  not an intangible asset for tax purposes. Moreover, excluding this

  tangible, measurable, and readily identifiable stream of income

  would undermine the foundation of the income approach to

  valuation — i.e., the capitalization of such income streams

  attributable to property ownership.

¶ 40   Not only is condo net income a measurable, identifiable

  revenue stream that contributes to Vail Resorts’ bottom line, but it

  is also an income stream that is directly attributable to the LAV


                                    19
  property. The ability of the LAV property, including the condos, to

  generate income is largely due to the integrated nature of the resort.

  The condos are physically connected to and integrated with the rest

  of the LAV resort to such an extent that transient guests are

  unaware of the distinction between the condos and “traditional”

  hotel rooms. All condo guests enjoy the same amenities and

  privileges as “traditional” hotel guests and, as undisputed by Lodge

  and the BOE, are likely attracted to LAV for this reason. To guests,

  the condos merely represent an extension of the LAV resort

  property. Indeed, LAV is specifically marketed to the public as a

  luxury resort with 165 guest rooms, despite the fact that almost

  half of those rooms are privately owned condos. Moreover,

  RockResorts and VBC manage the condos “as rental units within

  the hotel,” and the condo guests are not separately identified for

  RockResorts’ and VBC’s financial statement purposes.

¶ 41   Accordingly, the BAA’s finding that condo net income is

  intangible because it does not reflect additional value to LAV is not

  supported by substantial evidence. Nor does the BAA’s finding

  comport with the statutory scheme for calculating property tax

  assessments, as the evidence demonstrates that condo net income


                                    20
  is an identifiable and measurable stream of income attributable to

  the LAV real property. Finally, as we concluded above, condo net

  income should be included in LAV’s actual/market value valuation

  as it would certainly be relevant in determining “what a willing

  buyer would pay a willing seller under normal economic

  conditions.” 

(quoting 

, 376 P.2d at 683).

¶ 42   We therefore conclude that the BAA’s order must be vacated

  and remanded for the BAA to determine LAV’s actual value with the

  inclusion of condo net income.

           VI. Exclusion of Hotel Resort Fees Was Improper

¶ 43   The BOE also contends that the BAA erroneously excluded

  hotel resort fees from its valuation by relying on “free-standing hotel

  operation” financial statements from Lodge’s expert. We agree that

  the BAA should have included hotel resort fees as a revenue stream

  under the income approach to LAV’s valuation.

¶ 44   The BOE’s expert appraiser testified, and Lodge’s appraisal

  report concedes, that Lodge’s valuation of LAV was based on

  adjusted income and expense statements that, in part, excluded

  hotel resort fees. According to Lodge’s expert appraiser, Lodge


                                    21
  collects resort fees — a $30 additional charge on top of the nightly

  rate — from all LAV guests to cover the expenses Lodge incurs in

  providing the guests with free amenities like WiFi and access to the

  pool, fitness center, and ski valet. The resort fees go directly to

  Lodge and not through the “LAV Rental Program.” Moreover, the

  BOE’s appraisal expert testified that removal of resort fees paid by

  guests for the use of LAV is improper, and Lodge’s expert appraiser

  indicated that he was unaware that resort fees had been excluded

  from the financial statements.

¶ 45   Based on this evidence, it is clear that hotel resort fees are a

  revenue stream directly generated by LAV and should, therefore, be

  included under the income approach to LAV’s valuation. See E.E.

  

n.8.

¶ 46   We conclude, therefore, that the BAA erred in excluding hotel

  resort fees in its calculation of LAV’s actual value.

                             VII. Conclusion

¶ 47   We vacate the BAA’s order and remand the case for

  proceedings consistent with this opinion.

       JUDGE ROMÁN and JUDGE TOW concur.




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