b. A Notice of Determination (“NOD”) of the Assessor Appeal must be mailed to the Taxpayer, its Agent, or both on or before June 30.
c. A Taxpayer’s appeal of the Assessor’s NOD must be postmarked no later than July 15.
d. The County Board of Equalization (“CBOE”) or the Board of County Commissioners (“BOCC”) must schedule hearings and have them completed by no later than August 5.
e. An appeal of the decision by CBOE or BOCC must be filed within thirty days of receipt of the decision to either:
i. The State Board of Assessment Appeals (BAA),
ii. District Court, or
iii. Binding Arbitration.
The upshot is that between May 1 and August 5, the vast majority of the appeals of the Assessor’s Actual Value will be heard and either settled or dropped. 1st Net Real Estate Services, Inc. typically appeals to the BAA on 95% of the appeals that were denied in total or where the value reduction was found to be inadequate.
Please keep in mind that while the Assessor strives to value each property at its fee-simple “market” value, statutory requirements cause the Assessor, on many cases, to view various types of data differently from how a standard appraiser might view the data when completing a typical market value appraisal.
Moreover, the Assessor’s initial value is derived from a Computer Assisted Mass Appraisal (“CAMA”) software program that is subject to influence by the Assessor.
The process for challenging the Assessor’s Actual Value is prescribed by Article 39 of the Colorado Revised Statutes with policies and procedures promulgated by the Division of Property Taxation which fits under the Department of Local Affairs. The Board of Assessment Appeals is also part of the Department of Local Affairs. The law says the County Assessor must reassess the value of all real property with parcel number every two (2) years. This occurs on the “odd years” such as 2013, 2015, 2017, 2019 and 2021.
The Valuation Method
The value estimation process uses the three standard real estate appraisal approaches to value:
1) the Cost Approach;
2) the Market Approach, and,
3) the Income Approach (except for all residential classifications as seen below).
The value estimation received in the May 1 NOV is estimated as of January 1 of the NOV year. The comparable data that may be used for the January 1 value date can only come from an 18 month time period of January 1 through June 30 of the two years before. The January 1, 2013 value came from a data “base period” of January 1, 2011 through June 30, 2012.
For commercial income property, it is essential that the agent/attorney receive P&Ls and rent rolls for the entire two years prior to the January 1 date to produce a supportable value estimate.
Actual Vs. Assessed
Commercial: Pursuant to state statute, once the Actual Value is rendered, the Assessed Value is obtained. Commercial property is assessed at 29.0% of Actual Value. (Actual Value x 29% = Assessed Value) Commercial property is almost everything except multi-family rental real estate, single family homes and condominiums and the percentage of residential in a mixed use building or property.
Residential: Residential properties, which include single family homes, condominiums and multi-family rental real estate, are assessed at 7.96% of Actual Value.
Because of this lower assessment rate, the Income Approach to value, pursuant to state statute, may NOT be used in the value estimation of apartments. Just like a single family home, the apartment valuation is determined by the Market Approach. For residential rental real estate consisting of more than four units, the Gross Rent Multiplier estimate method may be used as well the price per square foot estimate or the price per unit estimate.
Mill Levy
The Mill Levy, which is a percentage ratio, is multiplied against the Assessed Value to produce the real property taxes. (Mill Levy x Assessed Value = Taxes). After most of the tax appeals are completed before the January 1 date when taxes become due, the County Government knows the approximate total Assessed Value of the taxable property in the county and can set the mill levy to determine the amount of taxes to be paid to fund the requirements of the County Budget. If there is a special taxing district within a county, its mill levy may be higher. The county electorate can, through referendum, instruct the County Commissioners to reject the County Budget.
The Mill Levy rate can seriously impact the property tax bill. Imagine there are two almost identical 70,000 sq. ft. office buildings developed by the same builder using the same design and size that are situated a few blocks apart from each other with roughly the same rents and NOI and are valued approximately the same by market approach at $4,900,000. They can have vastly differing tax bills because one is located in Denver County where the mill levy is .084071 and is taxed at $119,465 and the other property is located in Adams County (as an example) where the mill levy could be .124299 and taxed at $176,616, an increase of $57,151!
Property Tax Calculation
Please see the example below as an illustration of how the County Treasurer arrives at the property tax amount after getting the Assessed Value from the County Assessor.
$1,000,000 Actual Value x 29% (commercial) = $290,000 Assessed Value
$290,000 Assessed Value x .084071 (Denver County mill) = $24,380 in annual taxes.
If we missed a question you might have, please don’t hesitate to
e-mail us at info@1stnetre.com or call us at 720-962-5750.