Steamboat 700 property tax rates would be highest in county
January 17, 2010
■ Learn more about local property tax rates, including how to calculate them, at the Routt County assessor’s Web site. Follow the “levies and revenues” link near the bottom of the page.
Vote on 700
■ Ballots for the mail-only election will be sent to registered Steamboat Springs voters between Feb. 15 and 19. The election ends March 9.
■ Steamboat 700 is a proposed master-planned community on 487 acres adjacent to the western city limits of Steamboat Springs. The project proposes about 2,000 homes — from apartments to single-family home lots — and 380,000 square feet of commercial development that would be built to the standards of new urbanism (dense, walkable and transit-friendly).
Steamboat Springs — Property tax rates in the proposed Steamboat 700 annexation would be more than double those in Steamboat Springs and would top rates across Routt County, according to 2009 figures.
The difference boils down to about $100 per month between property tax payments for owners of a $350,000 home in an annexed Steamboat 700 and owners of a home with the same value in Steamboat's current city limits. The gap narrows, though, when comparing potential property tax rates at Steamboat 700 with rates in Steamboat II, Hayden and Oak Creek's Sierra View subdivision, annexed into the town in 2004.
As Steamboat's public vote on Steamboat 700 nears, residents including members of the Let's Vote committee, which opposes the annexation, have raised questions about whether higher property tax rates and other fees would put Steamboat 700 homes out of reach for working-class buyers.
Projecting property tax rates, like forecasting the real estate market, is an uncertain science.
Property tax rates, or mill levies, can vary annually according to property valuations and taxing entities. In Steamboat Springs, for example, property owners were charged for about 45 mills in the 2008 levy paid last year. But the 2009 levy to be paid this year charges Steamboat property owners about 32 mills, partly because of increased property valuations that, by state tax law, reduced corresponding mill levies. Steamboat property owners also are receiving a 4.1-mill credit this year from the Steamboat Springs School District, which over-collected property taxes in 2007-08 and 2008-09. Those mills will return to property tax rates next year.
A mill is a property tax increment equal to $1 per $1,000 of assessed property value. In Routt County, assessed property value for tax purposes is 7.96 percent of total market value for residences.
Routt County Assessor Mike Kerrigan said taking the 4.1 mills into account makes 36 mills, not 32, a more likely and stable estimate of Steamboat's property tax rates in coming years. At 36 mills, the owner of a Steamboat home valued at $350,000 would pay $1,002.96 annually in property taxes, or $83.58 per month. Property taxes often are paid monthly as part of a mortgage payment.
Danny Mulcahy, principal and project manager for Steamboat 700, said he expects an additional 42 mills for property owners in the potential annexation. About 37 of those mills, he said, are for Steamboat 700's capital costs, operations and maintenance. The remaining five mills would go to a city fund for capital projects. Using a levy of 36 mills for the city plus 42 assessed by Steamboat 700 creates a 78-mill total for theoretical properties in the proposed annexation.
The owner of a $350,000 home in an annexed Steamboat 700, at 78 mills, would pay $2,173.08 in annual property taxes, or $181.09 per month.
Mary Alice Page-Allen, asset/program manager for the Yampa Valley Housing Authority, said the potential difference in property tax payments could be significant.
"It means they can buy less house — that's really what it amounts to," Page-Allen said about potential buyers seeking affordable homes in an annexed Steamboat 700. "You only have so much money you can devote to your housing costs — that has to include principal, interest, taxes, insurance, HOA dues … you have to look at the whole thing, and $100 more (per month) in taxes means that you have less money to spend on housing costs."
The difference is less when comparing Steamboat 700 with other areas in the county.
An owner of a $350,000 home in the Steamboat II subdivision west of city limits, at 58 mills, would pay $1,615.88 in annual property taxes, or $134.66 per month. In Oak Creek's Sierra View subdivision, the owner of a $350,000 home, at 67 mills, would pay $1,866.62 annually, or $155.55 per month.
The Good For Steamboat committee, which supports the annexation, has publicized material saying the owner of a $350,000 home in Steamboat 700 would pay about $500 more per year in property taxes than the owner of a similarly valued home in Steamboat II. That stands up to the $2,173 assessed in Steamboat 700 and the $1,615 in Steamboat II, using the above mill levies.
As the home value decreases, so does the gap between property tax rates.
The owner of a $200,000 home in Steamboat would pay $573.12 in annual property taxes for 36 mills, or $47.76 per month. The owner of a $200,000 home in Steamboat 700 would pay $1,241.76 for 78 mills, or $103.48 per month.
But the gap widens as home values increase.
For a $500,000 home, a Steamboat taxpayer would pay $1,432.80 annually for 36 mills, or $119.40 per month. The owner of a $500,000 home in Steamboat 700 would pay $3,104.40 annually for 78 mills, or $258.70 per month.
Kerrigan said no matter how you run the numbers, whatever the location or home value, one pattern is clear: property taxes at Steamboat 700, he said, would "be higher than anybody else around, in the entire county."
Stagecoach's Meadowgreen subdivision in South Routt County charges property owners $3,817 annually to fund its improvement district. According to documents prepared by John Eastman, former planning services manager for Steamboat's Planning and Community Development Department, that amount alone equates to 78 mills, giving Meadowgreen a 2008 total levy equivalent to more than 154 mills. Although that figure would by far be the highest property tax rate in the county, Kerrigan said the flat payment rate and allocation of funds make Meadowgreen's improvement district payment different from a traditional property tax and skews comparisons with other tax rates in the county.
The Alpine Mountain Ranch subdivision just south of Steamboat Springs would assess about 72 mills this year if the 4.1 mills from the school district were included, creating a total mill levy that is close to Steamboat 700's theoretical levy of 78 mills.
But Kerrigan said the broad difference between property taxes in current city limits and at Steamboat 700 would be "a tough pill to swallow" for homebuyers and could have a negative effect on the market for Steamboat 700 properties.
"Districts that have high mill levies traditionally have lower values, because the demand is just not there," he said.
Despite those numbers, and despite the gamble involved with whether the market will generate enough sales to fund phased infrastructure and development at Steamboat 700, Kerrigan said he plans to vote for the annexation because, in his opinion, it gives the city an opportunity for growth, whether it occurs in years or decades.
"If you annex it and nobody does anything, you still have the annexation," he said. "It gives you the flexibility to figure out all the issues as they develop … and that's life. If you don't jump in the pool, you never figure out how to swim, right?"
Opponents of Steamboat 700 don't think now is the time to jump in that pool.
"Costs of the development, when including water, highway and sewer costs, are very high," said Tim Rowse, of the Let's Vote committee. "One way or the other, the future homebuyers will end up paying these costs through land price, special retail sales fees, transfer fees, property tax, mill levies and tap fees. When you look at all the numbers, affordability of homes certainly comes into question."
Rowse's comment points out that property tax rates are not the only cost to consider.
Tom Leeson, director of the city's Planning and Community Development Department, also listed Steamboat 700's proposed real estate transfer fee, public improvement fee for commercial sales and tap fees. The real estate transfer fee of 1.2 percent of the sale price would be paid at the closing of every sale at Steamboat 700. Of that 1.2 percent, 0.5 percent would go to a city affordable housing fund, 0.5 percent would go the Steamboat Springs School District — to provide half the cost of a new elementary school and half the cost of future renovations at Steamboat Springs High School, Mulcahy said — and the remaining 0.2 percent would go to the city's capital fund.
Leeson said the 2 percent public improvement fee would be collected as sales tax on retail sales in Steamboat 700, would fund projects related to the annexation and would sunset upon completion of its infrastructure.
City Public Works Director Philo Shelton said he was awaiting the results of a rate study by consultants to help project potential tap fees at Steamboat 700.
Mulcahy acknowledged the gamble of whether homebuyers would accept the costs as an appropriate price for Steamboat 700's location and amenities.
"That's the risk we have to take," Mulcahy said. "If that's going to change things, we have to either lower the price of the house accordingly or change the property taxes."