Commerical reassessments hit Grand County businesses hard
May 14, 2009
The 2009 tax valuations released May 1 are hard to chew for commercial property owners already facing sluggish sales in a snail-pace economy.
Recent valuations were based on sales that took place in 2007 and the first half of 2008 ” prior to failing banks and federal bailouts.
Countywide, valuations reflect an overall 22 percent increase for commercial properties.
In Hot Sulphur Springs, for example, those valuations mean higher property taxes compounded by a recent water-rate increase impacting businesses the most.
Robert and Karen Vahling, owners of the Canyon Motel in Hot Sulphur, could see a $2,000 annual increase in property taxes if their preliminary 2009 valuation sticks.
With only until June 1 to do so, Vahling plans to protest the assessment, he said, suspecting some compared sales in the area included personal property.
“It’s coming at us from all angles,” he said, noting that customer traffic has decreased 25 to 30 percent in the past year.
And, like other commercial businesses in Hot Sulphur ” the Canyon Motel is being phased into a major water-rate increase this year. The Vahlings will see a 530 percent increase ” a flat rate jump from around $130 a month to $692 per month.
On top of that, utility costs have doubled in recent years despite efforts to save on usage, Robert Vahling said. “We just have to tighten our belts and do whatever we can.”
A recent refinance for improvements, he said, may go toward maintaining operations instead.
But some business owners may not have that safety net. The Vahlings have heard of at least one Hot Sulphur business owner who may have to simply walk away.
Residential commercial mix
Since residential properties in Colorado have outpaced the increases in value of commercial properties in the past 20 years, residential properties account for 75 percent of the state’s total property value. But the 1982 Gallagher Amendment limits residential property owners to paying 45 percent of the state’s total property-tax burden.
Meanwhile, commercial property accounts for 25 percent of the state’s total property value, yet its owners are responsible for 55 percent of the state’s total tax burden, subject to a set 29 percent commercial assessment rate similar to vacant land.
For residential properties, the assessment rate has sunk from about 21 percent in 1982 to around 7 percent today, according to http://www.coloradobudget.com.
Residential valuations reflect a 16 percent increase in Grand County since 2007. The 2009 preliminary assessment of countywide residential property was up around 7.75 percent from 2008.
But not everywhere.
In various pockets of the county, according to Grand County Assessor Tom Weydert, home valuations declined. Declining residential values, evident in the Three Lakes Area for example, could adversely affect government and district budgets (translated into services) due to the so-called TABOR Amendment, which requires voter approval to increase tax rates.
Weydert said foreclosures in the county did not affect this year’s valuations but could in 2011 if the current market trend continues.
” Tonya Bina can be reached at 887-3334 ext. 19603 or e-mail email@example.com.