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March 19, 2026 Get Citation Alerts Download PDF Add Note

Sheltair v. Jefferson County

Colorado Court of Appeals

• Citations: None known
• Docket Number: 25CA0219

• Precedential Status: Non-Precedential

• Opinion

• Authorities (12)

• Cited By (0)

• Summaries (0)

• Similar Cases (64K)

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Combined Opinion

25CA0219 Sheltair v Jefferson County 03-19-2026

COLORADO COURT OF APPEALS

Court of Appeals No. 25CA0219
Jefferson County District Court No. 23CV31597
Honorable Christopher Zenisek, Judge

Sheltair Denver, LLC,

Plaintiff-Appellant and Cross-Appellee,

v.

Jefferson County Board of Equalization and Scot Kersgaard, in his official
capacity as the Jefferson County Assessor,

Defendants-Appellees and Cross-Appellants.

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART,
AND CASE REMANDED WITH DIRECTIONS

Division VII
Opinion by JUDGE PAWAR
Johnson and Gomez, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced March 19, 2026

Larry D. Harvey, P.C., Larry D. Harvey, Sara A. Zalkin, Denver, Colorado, for
Plaintiff-Appellant and Cross-Appellee

Kimberly Sorrells, County Attorney, Amber J. Munck, Assistant County
Attorney, Ben Longnecker, Assistant County Attorney, Golden, Colorado, for
Defendants-Appellees and Cross-Appellants
¶1 This is a property tax dispute about the assessment of Sheltair

Denver LLC’s (Sheltair) interest in land and buildings at a county-

owned airport. We affirm the district court’s denial of Jefferson

County’s (the County) motion for directed verdict. And we reverse

the court’s judgment upholding the assessment because we

conclude that the assessor used incorrect standards when valuing

Sheltair’s interest. We therefore remand the case for a new

assessment.

I. Background

¶2 Rocky Mountain Metropolitan Airport is owned by the County,

which is a tax-exempt government entity. In 2018, Sheltair leased

land at the airport from the County. The terms of the lease

required Sheltair to construct, at its expense, several buildings and

structures on the leased land. The lease referred to the leased

property as the “Premises” and the buildings and structures

Sheltair was required to build as “Improvements.” The lease said in

1
multiple places that the Improvements, once constructed, become

part of the leased property.1

¶3 The lease also provided that at the end of the lease term, “title

to the Premises and Improvements shall, at the option of the

County, vest in the County.” The parties do not dispute that at the

end of the lease term, regardless of whether the County elects to

take title to the buildings and structures Sheltair constructed,

Sheltair will not receive any compensation for them.

¶4 By 2023, Sheltair had constructed the following

Improvements: a terminal, two hangars, roads, and a fuel storage

farm. For that tax year, the County sent Sheltair two separate

notices of valuation for two purportedly separate properties. One

was for Sheltair’s possessory interest in all the land Sheltair leased

at the airport, including the land underneath the Improvements.

The other was for Sheltair’s purported ownership of the

Improvements themselves, not including the land underneath them.

1 “The County leases to [Sheltair] and [Sheltair] leases from the

County, the real property, including . . . any Improvements . . . .”
“Any Improvements erected or constructed on the Premises shall be
permanently and inseparably attached to the Premises . . . .”

2
¶5 Sheltair protested both valuations to the assessor, and the

assessor upheld the Improvement-only valuation and reduced the

land-only valuation. Sheltair appealed to the Jefferson County

Board of Equalization, which denied the appeal.

¶6 Sheltair then appealed both assessments to the district court,

which held a bench trial. Before the district court, Sheltair argued

that (1) it was improper to separate Sheltair’s property interests at

the airport into two separate interests; (2) it held the same

possessory interest in both the land and Improvements on the land

at the airport; and (3) the value of its possessory interest in the

Improvements had been assessed incorrectly.

¶7 During the trial, the County moved for a directed verdict on

the ground that Sheltair owned the Improvements. The district

court denied this motion, ruling that it was not clear whether

Sheltair owned the Improvements. Then, acting as the fact finder,

the court concluded that issuing two separate assessments was

proper and rejected Sheltair’s challenge to the methodology used to

value its interest in the Improvements.

¶8 Sheltair appeals and the County cross-appeals. Sheltair

argues that the district court erred by condoning the two separate

3
assessments and upholding the valuations. The County argues

that the court erred by denying its directed verdict motion.

¶9 We address the County’s challenge to the directed verdict

motion first and conclude that the court properly denied that

motion. We then agree with Sheltair’s appeal that the unit

assessment rule required a single assessment of Sheltair’s single

possessory interest in the leased land plus the Improvements on

that land.

II. Directed Verdict Motion: Ownership of the Improvements

A. Although the Court Issued Two Rulings on Whether Sheltair
Owned the Improvements, Only One is at Issue Here

¶ 10 As we understand it, the parties agree that Sheltair had a

possessory interest in the leased land. They disagree, however,

about whether Sheltair had the same possessory interest in the

Improvements or instead owned them. The district court addressed

this disagreement in two separate rulings. We explain our

understanding of those two rulings to make clear what is and is not

at issue in this appeal.

¶ 11 The court first addressed the nature of Sheltair’s interest in

the Improvements when ruling on the County’s directed verdict

4
motion. The court declined to hold that Sheltair owned the

Improvements as a matter of law and therefore denied the directed

verdict motion.

¶ 12 The court also addressed the nature of Sheltair’s interest in

the Improvements in its judgment resolving Sheltair’s appeal from

the Board of Equalization. The court delivered this judgment in a

lengthy oral ruling, which the court memorialized in a single-

sentence written order. Understanding where the court landed on

the nature of Sheltair’s interest in the Improvements requires some

parsing.

¶ 13 In its oral ruling, the court applied the test from Board of

County Commissioners v. Vail Associates, Inc., 19 P.3d 1263 (Colo.

2001). This test is applied to determine whether a private party

that holds a possessory interest in tax-exempt property owned by

another can be taxed on that possessory interest. Id. at 1278-79.

Such a possessory interest is taxable if it exhibits “significant

incidents of ownership.” Id. at 1279 (citation omitted). The district

court ruled that the Vail Associates test was satisfied, thereby

rendering Sheltair’s possessory interest in the Improvements

5
taxable. Indeed, the court referred to Sheltair’s “possessory interest

in these structures” (i.e., the Improvements).

¶ 14 However, in both the oral and written rulings, the court

referred to Sheltair’s interest in the Improvements as the

“substantial equivalence of ownership.” And a possessory interest

is defined as a right to use property that is “less than the

substantial equivalent of complete ownership.” Cantina Grill, JV v.

City & Cnty. of Denv. Bd. of Equalization, 2012 COA 154, ¶ 7

(emphasis added), aff’d on other grounds, 2015 CO 15. The court’s

repeated substantive conclusion that Sheltair’s interest in the

Improvements was possessory is incompatible with its reference to

the nature of that interest as the “substantial equivalence of

ownership.” We square this circle by presuming that the court

simply conflated two similar sounding phrases but never strayed

from its conclusion that Sheltair’s interest in the Improvements was

a possessory interest.

¶ 15 Recall that the crux of the Vail Associates test is whether a

possessory interest exhibits “significant incidents of ownership.”

Vail Assocs., 19 P.3d at 1278-79 (citation omitted). In ruling that

this test was satisfied here, the court said, “[T]here is, indeed, the

6
substantial equivalence of ownership required in Vail [Associates] to

provide a taxed value of the [I]mprovements.” (Emphasis added.)

The court’s single-sentence written order repeated this phraseology,

saying that Sheltair’s interest in the Improvements was the

“substantial equivalence of ownership.”

¶ 16 We believe the court meant to say, in both the oral and written

rulings, that Sheltair’s possessory interest in the Improvements

exhibited significant incidents of ownership (not that its interest

was the substantial equivalence of ownership), thus rendering that

interest taxable. Indeed, this is consistent with the court’s repeated

characterization of Sheltair’s interest as possessory, the County’s

colloquy with the court after the oral ruling in which both agreed

that Sheltair should be taxed on its possessory interest in the

Improvements, and the parties’ understanding of the court’s ruling

during appellate oral argument.

¶ 17 In sum, we understand the district court to have made two

separate rulings on the nature of Sheltair’s interest in the

Improvements. First, it declined the County’s invitation to rule as a

matter of law, pursuant to the directed verdict motion, that Sheltair

owned the Improvements. Second, acting as the fact finder, the

7
court concluded that Sheltair had a taxable possessory interest in

the Improvements.

¶ 18 In its cross-appeal, the County challenges only the directed

verdict ruling — it does not challenge the court’s ruling, as the fact

finder, that Sheltair held a taxable possessory interest in the

Improvements. Consequently, the only issue properly before us

related to the nature of Sheltair’s interest in the Improvements is

the County’s argument that the trial court should have granted its

directed verdict motion by ruling that Sheltair owned the

Improvements as a matter of law. We address that argument next.

B. The County Was Not Entitled to a Directed Verdict

¶ 19 We review the denial of a directed verdict motion de novo.

State Farm Mut. Auto. Ins. Co. v. Goddard, 2021 COA 15, ¶ 26. We

also interpret the lease de novo, seeking to give effect to the intent

of the parties. See Dinnerware Plus Holdings, Inc. v. Silverthorne

Factory Stores, LLC, 128 P.3d 245, 246-47 (Colo. App. 2004). We

construe the document as a whole, giving meaning to every

provision. See id. at 247.

¶ 20 Directed verdicts are disfavored. Tisch v. Tisch, 2019 COA 41,

¶ 50. They should be entered only if the evidence, considered in the

8
light most favorable to the nonmoving party, establishes no grounds

upon which reasonable people could find for the nonmoving party.

Id. We affirm the denial of the directed verdict motion here

because, based on the evidence, we cannot say that all reasonable

people would have found that Sheltair owned the Improvements.

¶ 21 The lease does not definitively establish who owns the

Improvements. The County correctly points out that the lease

required Sheltair to construct the Improvements, required Sheltair

to bear all costs associated with them, and allowed Sheltair to

operate them exclusively for its own financial benefit. The County

is also correct that it may elect to take title to the Improvements at

the end of the lease, suggesting that Sheltair holds title during the

lease term.

¶ 22 However, the lease does not explicitly provide that Sheltair

holds title during the lease term. And other lease provisions

suggest that Sheltair did not own the Improvements. As mentioned

above, the lease says that the Improvements are permanently and

inseparably attached to the leased property, suggesting that they

become leased, not owned, by Sheltair — just like the land.

Moreover, the parties do not dispute that Sheltair will receive no

9
compensation for the Improvements at the end of the lease term.

The lease also gives the County some authority over how Sheltair

can assign, sublease, and encumber the Improvements. We

therefore conclude that the lease was ambiguous as to who owned

the Improvements.

¶ 23 The County argues that we may consider extrinsic evidence to

resolve this ambiguity in the lease and that extrinsic evidence

showed that Sheltair owned the Improvements. See E. Ridge of Fort

Collins, LLC v. Larimer & Weld Irrigation Co., 109 P.3d 969, 974

(Colo. 2005) (courts may consider extrinsic evidence to resolve

ambiguity in a written contract). But the extrinsic evidence

identified by the County, viewed in the light most favorable to

Sheltair, does not clearly establish Sheltair’s ownership of the

Improvements.

¶ 24 The County’s extrinsic evidence consists of Sheltair’s

statements in other contracts and documents that it holds

“indefeasible title” to the Improvements and that Sheltair

depreciated the Improvements on its tax returns and financial

statements. The County does not explain how or why Sheltair’s

representations in other contracts would determine its rights under

10
the lease. Indeed, it is possible that Sheltair misrepresented its

interest in the Improvements in these other contracts and

documents.

¶ 25 As for the depreciation evidence, federal tax law contemplates

a lessee depreciating the cost of constructing improvements on

leased land as a capital expenditure, regardless of whether the

lessee owns the improvements. 26 C.F.R. §§ 1.162-11 (b), 1.167(a)-

4(a) (2025); see Page v. Fernandina Harbor Joint Venture, 608 So. 2d

520, 523 (Fla. Dist. Ct. App. 1992) (“[F]ederal tax laws allow a

tenant to depreciate a tenant’s costs associated with a leasehold

interest, an intangible asset, which [sic] no requirement that the

tenant ‘own’ the tangible property constructed by the tenant as

improvements to that leasehold.”). Thus, we cannot say that the

lease, even when considered with the County’s extrinsic evidence,

establishes that Sheltair owns the Improvements.

¶ 26 The County’s reliance on two cases, Rare Air Ltd., LLC v.

Property Tax Administrator, 2019 COA 134, and Southard v. Board

of Equalization, 996 P.2d 208 (Colo. App. 1999), does not persuade

us otherwise. In both cases, a private party built improvements at

11
an airport on leased land owned by a tax-exempt government entity.

Rare Air, ¶¶ 7-8; Southard, 996 P.2d at 209.

¶ 27 In Rare Air, the division held that the private party that built

the improvements had a “taxable ownership interest” in them. Rare

Air, ¶ 23. But the lease in Rare Air explicitly gave the private party

that built the improvements title to those improvements during the

term of the lease. Id. at ¶ 21. There is no such provision in

Sheltair’s lease.

¶ 28 We recognize that the Rare Air division went on to express, in

dicta, its view about a hypothetical situation. The division said that

even if the private party did not hold title to the improvements, “tax

assessments on improvements are properly made even against mere

lessees when the lessee is, for all practical purposes, the owner of

the improvements.” Id. at ¶ 22. But the County is not arguing that

Sheltair is a lessee that, for all practical purposes, owns the

Improvements and should therefore be taxed as the Improvements’

owner. Instead, the County argues that Sheltair actually owns the

Improvements. The Rare Air dicta does not support that

proposition.

12
¶ 29 In Southard, the division held that the private party that

constructed the improvements on leased land had an interest in the

improvements that was “the substantial equivalent of complete

ownership for general property tax purposes.” Southard, 996 P.2d

at 211. “Most important” to that conclusion was that the private

party was “entitled to the cash market value of the improvements

upon termination of the lease.” Id. at 210-11. Sheltair had no such

entitlement here.

¶ 30 In short, neither Rare Air nor Southard establishes that a

lessee who does not have title to the improvements it builds on

leased land and is not entitled to compensation for those

improvements at the end of the lease nevertheless owns those

improvements.

¶ 31 Because the evidence, considered in the light most favorable to

Sheltair, did not compel the conclusion that Sheltair owned the

Improvements, we conclude that the district court properly denied

the County’s directed verdict motion.

III. Unit Assessment Rule: One Assessment or Two?

¶ 32 We next address Sheltair’s argument that the district court

erred by approving two separate assessments — one for Sheltair’s

13
interest in the land and the other for its interest in the

Improvements on that land. At the outset, we reiterate that this

analysis is entirely separate from our review of the directed verdict

denial. Here, unlike in our directed verdict analysis, there is no

dispute that Sheltair’s interest in both the land and Improvements

was a possessory interest. That is, in response to Sheltair’s

argument that the unit assessment rule required a single

assessment, the County does not challenge the district court’s

determination (explained above in Part II.A) that Sheltair had a

possessory interest in both the land and the Improvements.

Therefore, the propriety of that part of the district court’s judgment

is not properly before us. See McLellan v. Weiss, 2024 COA 114, ¶

10 n.2 (declining to address argument raised below but not raised

on appeal).

¶ 33 We review whether the unit assessment rule required a single

assessment as a mixed question of fact and law. See Rare Air,

¶¶ 14-15. We review the district court’s factual findings for clear

error and review its legal conclusions de novo. See id. We conclude

that the district court erred.

14
¶ 34 The unit assessment rule comes from section 39-1-106, C.R.S.

2025: “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.” Our supreme court has explained that this

provision creates a unit assessment rule. The rule deems an

encumbrance on an owner’s interest irrelevant for property tax

purposes. City & County of Denver v. Bd. of Assessment Appeals,

848 P.2d 355, 359 (Colo. 1993). In other words, an assessor must

issue a single assessment for the entire value of a taxable property

to that property’s owner without separating out the value of lesser

interests in that property, such as leaseholds. Vail Assocs., 19 P.3d

at 1278. After the tax is assessed to the owner based on the value

of the “land and improvements together,” the owner can pass on the

burden of that tax to holders of lesser interests in the property. Id.

¶ 35 But what happens when, as here, the property owner is tax-

exempt, and a private party holds a possessory interest in the

property? Our supreme court has been clear: “When the fee owner

is tax exempt, . . . the unit assessment rule . . . logically results in

15
the assessment of the private possessory interest in both the

government lands and improvements thereon, resulting ultimately

in one tax assessment covering both.” Id. at 1279 n.20.

¶ 36 Sheltair had a possessory interest in both the land and

Improvements. Vail Associates required those two interests to be

taxed together in a single assessment.

¶ 37 Neither Rare Air nor Southard suggests otherwise. The Rare

Air division upheld separate assessments for land and

improvements because the private-party interest in each was

different — the division held that there was private ownership of the

improvements but only a possessory interest in the land. Rare Air,

¶¶ 32-35.2 Again, Sheltair held a possessory interest in both the

land and Improvements that must be taxed as one under Vail

Associates.

¶ 38 The Southard division held that an improvement-only

assessment was proper because the possessory interest in the land

was not taxable at all; it was exempt. Southard, 996 P.2d at 210.

2 Rare Air is further distinguishable because one private party was

deemed to own the improvements and a different private party held
a possessory interest in the land. Rare Air Ltd., LLC v. Prop. Tax
Adm’r, 2019 COA 134, ¶¶ 4-7, 32-35.

16
But after Southard, Vail Associates partially invalidated that

exemption, 19 P.3d at 1280, and the legislature fully repealed it in

2002, Ch. 268, sec. 6, § 39-3-136, 2002 Colo. Sess. Laws 1009.

¶ 39 We therefore conclude that the district court erred by

concluding that the two separate assessments were proper.

Because Sheltair has established that the assessments were

incorrect, it is entitled to a remand for a new single assessment that

values its possessory interest in both the land and Improvements

together in accordance with section 39-1-103(17)(a), C.R.S. 2025

(setting out methodology for valuing possessory interests in tax-

exempt property).

¶ 40 We are aware that the district court suggested during the

bench trial that it might not matter whether the County issued one

assessment or two if each approach would have resulted in the

same aggregate tax liability. But issuing two assessments violated

the unit assessment rule. And employing incorrect methodology to

arrive at an assessment renders the assessment incorrect and

entitles the taxpayer to a new assessment that complies with the

law. See Bd. of Assessment Appeals v. Sampson, 105 P.3d 198,

207-08 (Colo. 2005) (holding that a taxpayer must demonstrate only

17
that an assessment is the product of noncompliance with the

applicable law to obtain relief; a taxpayer need not provide an

alternative valuation); see also Vail Assocs., 19 P.3d at 1276

(explaining that the Colorado Constitution requires that all

possessory interests must be taxed uniformly). This is true

regardless of how accurate the ultimate tax liability based on the

incorrect assessment might be. See Sampson, 105 P.3d at 207-08;

see also Vail Assocs., 19 P.3d at 1276.

IV. Disposition

¶ 41 The district court’s denying the motion for directed verdict is

affirmed, its judgment upholding the two assessments is reversed,

and the case is remanded to the district court with directions to

order a new assessment consistent with this opinion.

JUDGE JOHNSON and JUDGE GOMEZ concur.

18