MONTROSE – “Did someone check the guns at the door?”
The man speaking, Montrose County Assessor Brad Hughes, while he was obviously kidding, had good reason to believe he was addressing a hostile crowd. The topic of his talk was property taxes, and why, despite the economic hard times and corresponding real-estate slowdown, those taxes would be higher again this year.
Hughes spoke at the informal Wednesday 8 a.m. forum at Heidi’s Deli in Montrose to a full house of concerned taxpayers.
He began by explaining the three elements that go into calculating the annual property tax bill (which came out last week). The first is the valuation process, how the county decides the value of each piece of property. The second is the assessment, the rate at which property of different kinds is taxed. And the third is the mill levy, or rather mill levies, the 41 taxing jurisdictions (school, county, fire, library, etc., each of which gets a slice of the overall pie) and how they affect the bottom line for each taxpayer.
Hughes is a young man despite having already devoted 20 years to the assessor business in five different Colorado counties, including Mesa, Routt and Jefferson. He grew up in the Denver area and has been in Montrose since 1993.
As for the 2010 tax bills (due in April of this year), Hughes was apologetic but clear that his office was in no position to ease the pain. The biggest misconception, he said, is probably the valuation. Properties are currently selling, when they are selling, for about 80 percent of what they were commanding before the financial crisis hit in 2008. Then why is my valuation still so high?
The answer is in the two-year valuation cycle, Hughes said. Article 39 of the state constitution requires all 64 Colorado counties to re-valuate every two years. The valuation used to calculate 2010 taxes is based on sales data from calendar year 2007 and the first half of 2008, when values were still high. “The valuation is always two years behind,” Hughes said. Next year’s tax bill (for 2011) will use a new set of data, based on sales through the first half of 2010. “Valuation for all categories of property will go down,” Hughes said.
But the bill for the individual property owner may not go down with the valuation, he admitted, glancing nervously around the room. The reason is the other two factors, assessment and mill levies.
The constitution says that all properties will be taxed at 29 percent of valuation, except for improved residential property – that is lots with homes on them. The residential assessment rate can fluctuate. It is currently at 7.96 percent, Hughes said, the same as last year. “I have chosen to leave it there. Commercial and undeveloped residential continue to be taxed at 29 percent. Holding vacant land is very expensive in this state.”
The third factor is the mill levy. “Sixteen of the 41 taxing entities in Montrose have raised their levies this year,” Hughes said. “Five others have decreased theirs. The rest have stayed the same.”
In response to a question about the Tabor (tax-limiting) amendment, Hughes replied, “Even with Tabor you can raise your levies, up to certain limits, without a vote of the taxpayers.
“There will be an increase of about 5 percent in your property taxes this year because of increases in mill levies,” primarily from the county and the RE-1J school district, which together account for about 70 percent of the total tax.
Another citizen had a question: The state is required to make up any shortfall in school funding; couldn’t the assessor simply lower valuations, and property taxes, and have the state make up the difference?
He could try to do that, Hughes answered, but it wouldn’t work out. “We’ve got to follow the market. The state can come in and audit, and if you are too low they can raise the value, bring it up to where it should have been in the first place, and charge the county for the work.”
What about 2011 valuations?
Next year, Hughes estimated, he would see vacant land valued at 20 percent less than current, based on about 300 sales. Improved residential, he guessed would decrease but “not as much,” based on about 500 sales in the period, “half the sales we saw in the period before.” He expected commercial to see “some decline” as well. “I had to go back 30 months to get qualified sales” on which to base the new commercial valuations.
What is a qualified sale, someone asked?
“Bank sales [from foreclosures] we have to consider on an individual basis. If the copper has been stripped from the house, no we will not consider that a qualified sale.”
What about challenges to ones valuation? Can I get you to lower my valuation and therefore my taxes?
“On average in a valuation year, we will get 500-1,000 appeals,” Hughes said, “out of 26,000 parcels in Montrose County. And maybe 80 get adjusted. You have to bring in documented evidence, that we got the size of your house wrong, for example, and not just ‘my neighbor’s house sold for only this amount.’” He said that an average of 60 appeals are heard by the Board of Assessment Appeals, and after that cases go to district court and binding arbitration. “It’s expensive for the county and for the taxpayer. We try to work it out before that point.”
He said that “maybe five or six appeals get to arbitration. “Most of these are substantial tax bills, in the $20-50,000 range. I have to fight these. You can’t just lower somebody’s valuation because they come into my office.”