Lakewood Associates, Robert G. Moore, Tax Matters Partner - Page 16

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            failed attempt to rezone the property for residential purposes                            
            during the year in issue.  The Planning Commission and staff                              
            opposed residential zoning of the property, recommending to the                           
            City Council to deny the rezoning request.  In 1989, Lakewood's                           
            proposed rezoning of the Elbow Lake property was overwhelmingly                           
            defeated by 95 percent of the voters in the referendum.                                   
            Petitioner has not presented a persuasive reason to believe that                          
            the City Council would ignore this near-unanimous, clear public                           
            objection to residential zoning of the Elbow Lake property and                            
            approve a subsequent rezoning application for the property.                               
            Moreover, at the time of trial, the Elbow Lake property was still                         
            zoned for agricultural use.  We conclude that a change in the                             
            zoning of the Elbow Lake property was not probable at the time of                         
            the claimed deduction or within a reasonable period of time                               
            thereafter.  Lakewood's proposed development of the Elbow Lake                            
            property was prohibited in 1989 because of the local zoning                               
            ordinance, which predates the 1989 Manual, regardless of the 1989                         
            Manual and MOA.  Accordingly, the 1989 Manual and MOA did not                             
            cause the $9 million reduction in the value of the Elbow Lake                             
            property claimed by Lakewood.                                                             
                  We find that the continued agricultural zoning of the Elbow                         
            property resulted in a $1 million value of the property in 1989.                          
            In that regard, we must determine whether Lakewood is entitled to                         
            deduct either the difference between the basis and $1 million or                          

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