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The cost of annexation

Jane Stebbins

BRECKENRIDGE<Lance Hillis has spent much of the last several weeks tapping numbers into a calculator. He’s trying to determine how much a typical Warrior’s Mark homeowner will pay in taxes each year if the neighborhood is annexed into the town of Breckenridge.”Everyone’s numbers are going to be different,” said the Breckenridge financial reporter and sales tax administrator. “There are so many unknowns, and no one is in the same boat.”Quite a few numbers have been bandied about in recent town council discussions, and their discrepancies lie primarily in the uncertainty of the cost of various parcels of land the town says it needs to buy to provide snowplow turnarounds on three cul-de-sacs in Upper Warrior’s Mark.Town officials have pinned a $200,000 price tag on the parcels, and say that is likely to be as high as it gets. But, it is possible the owners of those parcels could donate them to the town, which would cut down on the cost.Regardless, the town has said it will pay 50 percent of the actual cost of the parcels up to $100,000, and pick up the entire cost<estimated to be $70,000<to make the improvements. That leaves Warrior’s Mark homeowners with a bill of $100,000, or a one-time fee of $235 each.Homeowners also will pay an average of $60 a year in sales taxes for cable television, public service and telephone. But they will each pay $94.60 less each year for water.The rest of the cost of annexation<taxes<will depend on the assessed valuation of a house. The county mill levy is 12.15; the town’s is an additional 5.07.And, if a resident were to take full advantage of town amenities<one adult pass to the rec center, an eight-play season golf pass and two six-month ice rink passes<they would actually come out ahead by $140.71.Other variablesBut other factors come into play, noted Bob Behmer, an Upper Warrior’s Mark resident opposed to the proposed annexation.If the annexation is approved by voters in Warrior’s Mark<and a date has yet to be set for an election<properties used as short-term rentals will be subject to lodging taxes and Business and Occupational License Taxes (BOLT). The BOLT tax, which varies from $75 to $175 depending on the number of bedrooms in a rental unit, is often considered to be a “pass-through” tax<the costs are passed on to the users, much as a sales tax.And there would be lodging taxes that will vary depending on revenue generated by the property, Hillis said. Those, too, are considered to be a pass-through tax.The county currently taxes short-term rental units at 5.65 percent; joining the town would add another 4.9 percent to the bill. For a unit that’s rented 250 days a year at $100 a night, the homeowner could expect to see total taxes of $2,637.50, of which $1,225 would go to the town.The cost to buildIf a property owner wants to develop a parcel in Warrior’s Mark<and there are 49 vacant lots left<it will cost substantially more than developing land in the county, Behmer contends.According to county permit technician Kathleen Lyon, planning review fees and building, plumbing, mechanical and electrical permits for a 4,000-square-foot home would cost a county property owner $3,354. The cost of those same permits for the same house in the town of Breckenridge could cost as much as $7,002, said town finance director Judy Ferris. The cost of a water tap outside of town is twice the cost of one in town.And selling a house could be more expensive, as well, because the town charges a 1 percent Real Estate Transfer Tax (RETT) on the sale of property. For a $300,000 house, that would cost $3,000; for a $1 million house, the tax would increase to $10,000.Realtors, town officials and representatives of both sides of the annexation argument disagree who would be stuck paying the RETT, but most agreed it would depend on the economic conditions at the time of sale. Right now, when the economy is at an ebb and home buyers have more sway in setting the price, the bulk<if not all<of the RETT would likely fall to the seller.Another disadvantage cited by the opposition is the cost to the town to have the neighborhood annexed into town. Preliminary estimates put that figure at about $2.3 million over the next 10 years.Annexation opponents believe that will all fall to them, but Ferris said it will be spread throughout all taxpayers in the town limits. Furthermore, most town revenues are garnered through sales tax revenues, and as debt on amenities like the golf course and ice rink are paid off, those revenues are used for other projects in town.”Everyone’s got to make their own decision on this,” Behmer said. “This is a real nice area to live. We like things the way they are.”Jane Stebbins can be reached at 668-3998 ext. 228 or jstebbins@summitdaily.com.


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