YMCA tax payback has East Grand School District eyeing tax hike
February 21, 2017
Administrators from the East Grand School District are closely watching ongoing negotiations between Grand County government and YMCA Snow Mountain Ranch over the repayment of taxes improperly levied on the property between 2002 and 2004.
All told, various governmental entities and special districts in Grand County are on the hook for roughly $1.3 million in taxes and accrued interest that are owed to YMCA. Of that, the school district's repayment figure is the single largest individual share, totaling $646,434 and including $254,015 in previously taxed money and $392,419 in interest.
Because negotiations are ongoing, officials from East Grand do not know the exact figure they will be required to repay. Interest continues to accrue on the overall principle amount at a rate of seven to eight thousand dollars monthly. Additionally East Grand business manager Donette Schmiedbauer said she does not know if YMCA will require repayment of the total amount, including the originally taxed funds and the interest accrued, or if YMCA will forgive the interest and require only repayment of the principle.
Schmiedbauer said that when negotiations are completed East Grand's portion of the repayment funds will be dispersed to YMCA by Grand County government. The payment will be derived from property taxes that would normally go to the school district but will instead be withheld by the county and paid to YMCA. Schmiedbauer anticipates the process will occur this spring and said the district would be able to weather the brief storm and pay all bills because of the current level of reserves.
The school district may come to taxpayers some time over the next nine months to ask citizens to approve a tax increase to cover the lost revenues — increasing the mill levy rate within the district by 1.2441 mills. East Grand superintendent Frank Reeves said the District Board of Education must make its decision on that issue before Dec. 10, when the district's mill levy must be certified.
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Schmiedbauer calculated what such a potential tax increase would look like if the district asks citizens to recoup the lost funds. Residential property would see an additional $9.60 in taxes for every $100,000 in assessed property value. Commercial property would see an additional $36.08 in taxes for every $100,000 in assessed value.
Additionally, lost tax revenue complicates the entire situation. The state determines a total funding amount for each school district. If property taxes do not generate enough revenue to reach the state's funding total for a given district, the state, in theory, backfills the remaining portion.
The East Grand funding total is based on a capped number of mills and an assessed valuation of property within the district. After YMCA was granted tax exemption in 2004, the property remained on the district's assessed valuation but was not taxed.
Superintendent Reeves said that if YMCA had not been listed on the district's assessed valuations, other property owners within the district would have paid more in property taxes and the state would have been required to backfill a larger portion of the district's overall budget. District officials estimate the dynamic resulted in a loss of roughly $80,000 in tax revenue annually.
In 2002, 2003 and through half of 2004, property taxes were levied on the Snow Mountain Ranch property just south of Granby and another YMCA property in Larimer County. In December 2003, the YMCA of the Rockies applied for tax exemption on both of its Colorado properties, Snow Mountain Ranch and the Estes Park Center, for religious and charitable use purposes. Exemptions were granted for both properties; however, the Board of Assessment Appeals reversed the decision.
That decision was appealed to the Colorado Court of Appeals, which issued a ruling in April 2013 vacating the Board of Assessment Appeals' reversal. After the ruling the Board of Assessment Appeals reversed its previous decision conferring tax-exempt status on the properties once again.
In January 2015 the Colorado Court of Appeals reaffirmed the tax-exempt status of YMCA properties. The governments of Grand and Larimer County requested the Colorado Supreme Court review the lower court's ruling. In late 2016 the State Supreme Court declined to review the decision, finalizing the process and ensuring YMCA's continued tax exemption.