A home is the most significant investment most people will make in their lifetime and often affords stability and security within one’s community. At the same time, second-home buyers and investors purchasing single-family homes can inflate the housing market, causing prices and property taxes to escalate. When this happens, longtime locals cash in or dig in. For many who try to stay in their communities, their American Dream will transform into the American Struggle. Often, the first stop is the county assessor’s office to protest the appreciation of one’s property valuation.
Gentrification — the transformation of a community by incoming wealth displacing previous or current residents — propelled me from my hometown of Aspen over a mountain range to a community an hour’s drive away, yet ironically within the same county. So, I am still subject to the same taxing authority. I felt secure, entrenched with my foothold of a 30-year fixed mortgage until I received my property tax valuation this year. My equity had increased by $315,000, evoking dread. In anticipation of heightened taxes, my lender rapidly increased my monthly payment by over $200 and I was left scrambling. I filed my appeal by the June 9 deadline, pleading with the assessor on behalf of the local community to reevaluate and received my notice of determination at the end of the month confirming the initial appraisal price.
This year, of the 16,800 properties assessed, Pitkin County received 4,724 residential appeals for their evaluation period of Jan. 1, 2021, to June 30, 2022. During that time, the housing market experienced a radical acceleration, with some properties doubling in value within a year. Assessments are performed on the odd year, making the valuations valid for two years. If the homeowner misses the appeal date, they can appeal the following year, but the time for the assessment remains for the same 24-month sale data collection period.
Dan Popish, deputy chief appraiser for the Pitkin County assessor’s office, said he tried to adjust the valuations within his purview. “We saw that homes that sold in the early part of the 24 months were getting such a large appreciation that, statutorily, we would use 18 months. If we could cut off six months of appreciation, that might help so it wouldn’t be even more drastic.” The State of Colorado binds assessors to use a time and market trend analysis for their appraisals, allowing them little agency for subjective valuation.
Popish said of the appraiser’s office, “We are just the data collectors and analyzers. It does take a change in the law at the state legislature to change the rules. We are just the agents following the Colorado state law.”
He admitted that the first valuation is done with a broad brush. “We break up Pitkin County into large economic areas,” Popish explained of the assessment process. “We have upvalley, single-family homes, Snowmass Village, Basalt and Old Snowmass. Then the Crystal Valley.”
First, the assessors establish the land value by looking at vacant land sales and lots where buyers have scraped older structures. Then they analyze factors including square footage, age, upgrades and the number of bedrooms and bathrooms. The assessors compare these aspects to similar residences sold in the same neighborhood during the evaluation period. They can expand the radius and use comparables from nearby communities if the neighborhood has none. Their goal is to get the home’s value for the appraisal date, which was June 30 of 2022 this round.
The initial assessments aren’t perfect. “It’s like a bell curve,” said Popish. “Some people will land on the high side, or right in the middle or the low side of the bell curve,” He said. During the reappraisal process, the assessor will run a mini appraisal more targeted to the subject property with a comparable grid to determine a more accurate evaluation. “If we feel like it needs even more of an adjustment, we will ratchet it down, and we will send out a notice of determination by June 30,” Popish said.
The County Board of Equalization (CBOE) oversees the second round of appeals, which can occur virtually or in-person. During these 20-minute sessions, an independent hearing officer listens to the petitioner. The goal is to find a fair and equitable valuation for the petitioner’s home within their neighborhood. Due to the influx of appeals this year, the CBOE extended its Aug. 7 hearing deadline and is conducting back-to-back hearings from 8:30am to 6pm, Monday through Friday, through Sept. 15.
Popish encourages the public to get involved with their taxing authorities. Taxes are based on appraisals and implemented by the mill levies of taxing authorities such as the school district, water and sanitation, the fire department and Roaring Fork Transportation Authority. The State of Colorado has caps on how much certain taxing authorities can collect, so mill levies have to drop if the values exceed what they expected.
Some states have thwarted gentrification through property tax laws like Florida’s “Save Our Homes” law. This law specifies that taxing authorities can’t increase property taxes by more than 3% or the inflation rate for a person’s primary residence. This law safeguards families from losing their homes due to rapid property tax increases while maintaining taxation levels based on property valuation for investors and second homeowners. Coloradans must go to the state legislature if they want to change property taxation laws at the state level. Until then, many risk losing their homes to a flood of outside wealth.