Values used for Eagle County property tax bills rising
What’s the system?
In Colorado, property is valued for tax purposes every two years. The notices of value in the mail now reflect market conditions as of June 30, 2014. Those values will be used to calculate property taxes paid in 2016.
The delays in the system mean that taxable values are usually behind current market conditions. For instance, the values issued in 2009 reflected market conditions in the summer of 2008, while local real estate market was at the end of its most recent boom.
EAGLE COUNTY — Calculating values used to determine property taxes is a complicated business. But the simple story behind the most recent round of valuations is that values, and probably property taxes, will rise next year.
Eagle County Assessor Mark Chapin said that the notices of value recently mailed to property owners show an overall increase. Using median figures, the increase is about 12 percent. Your value can and probably will be different.
Chapin said downvalley areas have seen the biggest increase since the last notices of value were mailed in May 2013. Some neighborhoods have gained 30 percent or more in value since the 2013 notices were issued.
On the other hand, resort areas have seen less-dramatic increases, sometimes just a few percentage points.
EVALUATING SALE DATA
The way Chapin’s office calculates value is through evaluating sale data. When prices are going up and the market is active, there’s plenty of data. When the market is in a down cycle, finding that data can be tricky.
During times when many homes are being sold through foreclosure or other bank sales, those values are reflected in the values throughout a neighborhood.
What that means is that property tax revenues, which declined significantly after the 2011 and 2013 notices were sent, may be on the way back up.
For instance, Eagle County’s property tax revenue makes up a large part of that government’s general fund. The county’s general fund peaked at about $40 million in 2008 and dropped to roughly $32 million by 2012. Tom Hyatt, of the county’s finance department, said that revenue is expected to be about $36 million in 2016.
The county is just one of many entities that collect property tax. The biggest part of most property tax bills goes to schools. The most recent estimate from the county’s finance department showed schools taking 36 percent of most residents’ property tax bills. Fire districts, recreation districts, metropolitan districts and similar agencies take another 29 percent. The average town takes 10 percent.
In all, there are 82 taxing agencies in the county, from schools and governments to cemetery districts.
Most of those districts collect virtually all of their operating budgets from property taxes, which means there have been some deep cuts. When property values rise, the boards that set tax rates — commonly known as mill levies — sometimes cut those rates in order to maintain revenues.
TAXPAYER BILL OF RIGHTS
A 1992 amendment to the state constitution called the Taxpayer Bill of Rights put limits on how much revenue local and state governments could collect and mandated voter approval of any increases in tax rates. The amendment also limits how much government revenue can increase. But the amendment also allows voters in a county, town or special district to override the amount of revenue raised, as long as tax rates stay constant. Voters in Eagle County, the Eagle County school district and many other towns and districts have approved lifting those limits.
That means that Eagle County, which hasn’t adjusted its mill levy since 2004, collected more revenue than the amendment’s strict limits during the boom of the previous decade.
While the Eagle County school district has been able to collect more money from property taxes, that hasn’t really affected the amount of money available for every student.
The state has limited the amount of money districts can spend, so increased revenue from local sources means, mostly, that the amount of money the district receives from the state will decline.
REFLECTS STRENGTH OF REAL ESTATE MARKET
In short, the change in values will probably mean higher tax bills in 2016 and beyond. On the other hand, the rise in values also reflects growing strength in the real estate market.
Chris Neuswanger is a mortgage broker at Macro Financial Group in Avon. He said the rise in county-determined values seems to reflect what he’s seen in the business.
And while the rise in property values may result in higher tax bills for owners and higher prices for buyers, Neuswanger said that some homeowners are already starting to tap new equity in their homes for improvement projects and other uses.
And, Hyatt said, “We’re nowhere near the levels we saw (before the crash).”
Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, firstname.lastname@example.org and @scottnmiller.