Ski towns could benefit from real estate tax
SUMMIT COUNTY – Citizens, business owners and government watchdogs like the Taxpayers’ Bill of Rights, known as TABOR, because it keeps taxes down and means refund checks in good years.
But TABOR is also keeping some ski towns from reaping the benefits of a healthy real estate market. And as budget crunches force state legislators to rethink the wisdom of TABOR, the school-funding Amendment 23 and property tax-apportioning Gallagher Amendment, there might be a crack in the door.
The Colorado Association of Ski Towns (CAST) recently surveyed voters statewide about how amenable they would be to amending TABOR. The CAST survey was prompted by ski towns. For many such towns, TABOR eliminated the possibility of excises such as a real estate transfer tax. Towns that already had a tax when TABOR was enacted in 1992 were grandfathered in.
“I think most of the ski towns in CAST feel that, given we tend to be real-estate communities, and the second-home market tends to create impacts and drive the economy, a tax on the transfer of real estate is probably necessary,” said Nick Teverbaugh, a real estate agent, mayor of Winter Park and president of CAST’s board of directors.
Of the 24 member towns in CAST, 13 have real estate property taxes, including Breckenridge and Frisco.
Breckenridge collected the highest amount ever from its transfer tax in 2002 – $3,161,498 – even though sales tax figures for that year were down 4.5 percent. The tax collected (1 percent of every real estate transaction) has increased gradually since the tax was enacted in 1987.
The town uses the tax mostly for capital projects such as street improvements or recreation center expansion, but the town council reserves the option to spend it on operating expenses.
Breckenridge audit and report administrator Lance Hillis said the real estate transfer tax is difficult to predict in budgets, but it provides beneficial revenue for the town.
In Frisco, the one percent transfer tax is used to improve the Nordic center, the disc golf course and for special projects such as marina dredging. Each year, the town earmarks $300,000 of the tax for an open space fund.
Frisco’s tax peaked at $1,130,896 in 1998 and has fallen off in recent years. The town collected $786,568 in 2002, up 3.6 percent from the previous year. Frisco enacted the tax in 1989.
Dillon’s town council considered a real estate transfer tax in the early 1990s but was prevented from doing so once TABOR passed.
Likewise, Silverthorne never enacted such a tax.
“We’re not necessarily looking for one, but it is our policy to look at it whenever an annexation is proposed,” said Silverthorne Town Manager Kevin Batchelder. “Those communities that were grandfathered in because they passed it before TABOR are doing some pretty nice things.”
With the proposed annexations related to the Silver Mountain Village and Blue River Club developments, Silverthorne would stand to add about 350 acres to the town. The current developers of the project and local appraisers would not offer an estimate of the land’s value or the amount that Silverthorne could collect if it had a transfer tax.
Passing a vote from the town council or Silverthorne voters isn’t the simple answer, however. The change to TABOR would require a statewide ballot initiative, something that “would take a huge educational push,” Winter Park’s Teverbaugh said.
“What we would be trying to do is provide communities with a tool, and we’d have to overcome the benefits of TABOR in the minds of voters who have no stake in a real estate transfer tax,” Teverbaugh said. “A fairly heavy amount in the survey were undecided on this.”
Full results of the survey will be released at CAST’s meeting this month in Denver.
Reid Williams can be reached at (970) 668-3998, ext. 237, or email@example.com.
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