Garfield County sees property values fall by as much as 30 percent
Post Independent staff
Glenwood Springs, CO Colorado
GLENWOOD SPRINGS, Colorado – The values of most of the roughly 25,000 properties in Garfield County have fallen by as much as 30 percent compared to previous years’ values, according to Assessor Jim Yellico, who sent out notices of valuation to property owners at the end of April.
But that is not true of oil and gas production values, Yellico reported. That means the county is not going to take the kind of fiscal hit on tax revenues it was expecting in 2012.
Yellico said the value of oil and gas production is likely to reach $2.2 billion or more this year, which is about the same valuation recorded for the year before the recession of 2008 hit the industry and the world.
But for most property owners, the picture is a little less positive.
“I think that the best way to put it would be that property values have all dropped,” he said, for commercial and residential real estate.
The assessed values for next year’s tax bills are based on real estate market prices on June 30, 2010, and the tax bills themselves will not be sent out until early 2012, a two-year lag-time that is built into each year’s property tax.
The assessment rates for properties are 7.96 percent of value for residential property, 29 percent for commercial and other property, and 87.5 percent for oil and gas production, according to Yellico.
Tax bills themselves come from multiplying the actual value of a property by the assessment rate to get the assessed value, and then multiplying the assessed value by the mill levy of taxing district or districts.
Recession caused drop in values
“Everybody has been expecting it,” Yellico said of the decrease in valuation. At this point, the new values can be used only to estimate next year’s tax bills.
“The surprise factor isn’t as great as when they got their notice of valuation in 2009,” he noted wryly.
In 2009, a year into the ongoing recession, taxpayers learned their property was being assessed based on market values from June 30, 2008, at the height of the real estate boom that immediately preceded the recession.
So, even though the value of most properties fell dramatically, the assessments for that year were based on the old, higher value.
Yellico said there will be no final numbers available on this year’s mass valuation until after a valuation protest period ends, on June 1. After that date, he will publish the final county assessment abstract.
But based on preliminary numbers, he said, vacant land has seen the biggest drop in value throughout the county.
“Sales are slack, and it’s hard to get funding” to build, he said.
He said some parts of the county saw a greater decline in values, and some areas saw an increase in values. And by sector, commercial property values took a bigger dive than residential property.
County tax revenues expected to hold up
Even though residential and commercial property values have fallen, Yellico said, Garfield County’s revenue picture for 2012 is nowhere near as bleak as once anticipated.
At one point in 2009, county finance officials were predicting that county-government property tax revenues to plummet to $33 million this year, compared to a high of $70 million in 2010, and remain below $40 million until 2013.
But on May 9, Garfield County manager Ed Green reported that the county’s revenue projections now call for property tax income of $45 million this year and $50 million next year.
That is because the values assigned to oil and gas production, which are counted as property, have risen over the same period, and are anticipated to surpass last year’s totals, Yellico said.
Oil and gas production values climbing
Production valuations depend on the price of natural gas at the point of sale, and are tracked by auditors to ensure that taxing entities get their rightful payments.
“I think it’ll be more than in 2007,” Yellico said of this year’s production values. He explained that in 2007, oil and gas production in the county reached $1.9 billion.
One year later, in 2008, gas production values hit their peak of $3.8 billion.
One result of this seeming anomaly is that the county’s tax revenues from the industry actually may rise next year, instead of falling, as predicted by county officials.
Because of the procedural delays inherent in the tax system, exact numbers are not available for the coming year, although the assessor is upbeat about the prospects.
As the assessed value for oil and gas production climbs, so does the share of property tax revenues from the oil and gas industry compared to other sources.
In 2010, Yellico said, oil and gas production was at about $2 million, and accounted for around 60 percent of the county’s property tax revenues.
“That number is going to increase to close to 70 percent,” he said about 2011.
The same sort of increase is possible in the other taxing districts that contain oil and gas properties, he said, such as Colorado Mountain College, various fire protection districts and the Re-2 School District.
But, Yellico stressed, the final tax bill sent to the county’s taxpayers will depend as much on decisions by tax districts’ boards of directors as much as on the assessed valuations.
He urged county residents to check this year’s tax bill to see which districts levy a tax on their property, and then attend the county’s budget meetings to make their feelings known concerning matters of taxation.
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