Wave of homeowners scramble to dispute property values

PERFECTION IS EFFORTLESS

BY NINA JOSS AND ELLIS ARNOLD COLORADO COMMUNITY MEDIA

In much of the south Denver metro area, the disputes that property owners led with their county o cials over whether their property values should be lowered for tax purposes has outstripped recent years by thousands of lings.

Douglas County property owners led disputes, or appeals, for about 20% of the properties that received new property values this year — the highest percentage of appeals in recent history for the county, according to Toby Damisch, who heads Douglas County’s property valuation o ce.

“And I don’t expect for this to ever happen again,” said Damisch, the county assessor, adding: “It’s a complete anomaly.” e numbers mean many homeowners face a double-digit percentage increase in their property tax bill for next year. e property valuation homeowners received around early May is based on data as of June 2022, near the recent peak in the real-estate market.

In appeals, owners argue their property value should be lower — and tens of thousands in the south Denver suburbs have taken that step. Driven by a costly real-estate market, home values have spiked since the last time homeowners received notices of value two years ago. In Douglas County, residential properties saw increases in value between 30% and 60%, with a median of 47%.

Arapahoe County saw almost a 42% increase in residential values, according to County Assessor PK Kaiser.

Property taxes partly fund county governments, but they also fund school districts, re and library districts, and other local entities.

Even though home prices have declined since then, property values from the assessor’s o ce re ect last year’s exceptional highs.

“People are very, very worried about their property taxes next year because of what the values have done,” said Corbin Sakdol, director of the Colorado Assessors’ Association.

Skyrocketing appeal rates

In Arapahoe County, about 13% of the properties that received a new value this year have had their value appealed, according to Kaiser’s o ce’s count in mid-June. In raw numbers, that’s about 29,000 appeals — and counting, Kaiser’s o ce said on June 16. at number dwarfs the nexthighest year for appeals in Douglas County — roughly 13,500 in 2009, according to Damisch.

Over in Douglas County, the appeal rate is much higher than usual, Damisch said.

“We typically expect 5% of properties to appeal,” though that number uctuates through the years, Damisch said.

As of early June, his o ce had received about 28,000 appeals, but Damisch expects the number to total more than 30,000, as the deadline has passed but lings still trickle in by mail.

In Arapahoe County, this year’s appeal rate was more than three times the next highest appeal rate in the past decade, which was about 9,000 in 2019.

Possible relief

In Douglas County this year, the “vast majority of appeals” are for residential property, said Damisch, who didn’t know the exact percentage as of June 16.

Assessors’ o ces are working in the coming weeks to nish processing thousands of appeals. And many property owners may see some measure of relief.

In rough early numbers, so far, the Douglas County assessor’s o ce sta are adjusting and thus decreasing value for about half of the appeals, Damisch said.

In the past, “we’ve adjusted between 25% and 40% of appeals” in any given year, Damisch said.

He added: “ at’s a huge range, and that has a lot to do with current economic conditions.”

“We’re taking a more light-handed approach to our appeal reviews this year, and if we nd there’s evidence to lower the value, we’re going to do that. It’s a slightly di erent approach” than in previous years, Damisch said. “We’re more so than ever before looking for: Is there cause to adjust the value downward?”

He’d be surprised if his o ce ends up adjusting below 40% or above 60% of appeals given how the pro-

cess has gone so far.

In Arapahoe County, 92% of appeals at this point are for residential properties.

Kaiser’s o ce, still processing many appeals, could not yet provide numbers on how many have resulted in lower property values.

What decides an appeal

So how much relief could the appeal process give homeowners?

Typically, when an appeal succeeds, the Douglas County Assessor’s O ce decreases a property’s value by 5% to 10%, according to Damisch.

But that amount varies widely.

A successful appeal can stem from something small: e assessor’s ofce could have some characteristic wrong, like incorrect information about the deck of a house. Other wrong information in the records could relate to the bathroom count, square footage or garage, Damisch said.

Kaiser said his o ce considers several factors when a property value is appealed, including errors in lot size, age and condition.

Assessors’ o ces use what are called “mass appraisals” because there are so many properties in a county and limited numbers of workers to analyze them.

at means the assessor’s o ce looks at properties built around the same time with a similar construction style, location, size, age and amenities. It uses an algorithm to help value them.

“State law requires assessors to use sales (information) to value residential property,” said Sakdol, the Colorado Assessors’ Association director and a former Arapahoe County assessor. Data from property sales are used to value all the unsold properties, Sakdol said.

For some appeals, the assessor’s o ce may nd that the valuation model used for the mass appraisal just doesn’t work for the property.

Take, for example, a neighborhood that contains mostly two-story homes and a handful of ranch-style homes, but imagine that none of the ranch homes sold in the period of data the assessor’s o ce examines.

“Maybe that model didn’t value the single-story ranches very well, and so we have to go in and adjust,” Damisch said.

Perfect storm County assessors’ o ces are tasked with establishing accurate values of homes and other properties to determine how much property owners will owe government entities in taxes — a process meant to ensure that the amount of taxes people pay is fair and equitable.

Counties are required by Colorado law to revalue properties every two years, according to Sakdol. e assessor doesn’t set the tax rate but determines the value of the property that the tax rate then gets applied to. Local government entities like counties and school districts set the tax rates. Property tax rates are o cially called “mill levies.”

Another culprit of this year’s perfect tax storm: e recent repeal of the Gallagher Amendment, a former part of the state constitution.

Colorado voters in 2020 repealed the Gallagher Amendment, a policy that prevented residential property tax bills from getting too big. But when combined with the e ect of the Colorado Taxpayer’s Bill of Rights, it strangled local government budgets, e Colorado Sun reported.

(Along with the property value and the property tax rate, a number called the “assessment rate” is another factor that helps determine how much in property taxes a person owes. With the Gallagher Amendment gone, the state legislature sets the assessment rate.)

If Colorado voters had not gotten rid of the Gallagher Amendment, the tax landscape this year would be much di erent, Sakdol said.

“We wouldn’t be in a panic of our property taxes going up substantially because the assessment (rate) would fall much lower, which would keep our property taxes somewhat in check to previous years,” Sakdol said. e rub with the Gallagher Amendment was that for rural counties, where property values haven’t gone up as much as they have been on the Front Range, the property tax equation meant rural government entities faced reduced revenue that a ected their services — a problem Sakdol acknowledged.

One proposal that has popped up in the past: having di erent assessment rates for di erent regions of Colorado.

SEE TAXES, P24

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