|Local ag values to increase following statewide trends|
|Written by Holyoke Enterprise|
In early May, Phillips County real property owners will receive a 2011 Notice of Valuation, according to Phillips County Assessor Doug Kamery. This document is the result of a countywide reappraisal and reflects changes in market values over a two-year period.
Under Colorado law, county assessor offices throughout the state conduct a complete reassessment of all properties in their county every two years. The Colorado legislature sets the appraisal date and the annual calendar for the assessment process.
As a result, property tax assessments are always lagging behind current market conditions. The previous reassessment was done in 2009, with valuations based on a June 30, 2008 level of value, using market sales data from July 1, 2006-June 30, 2008.
The 2011 valuations will be based on a June 30, 2010 level of value, using market sales data from July 1, 2008-June 30, 2010. Any recent market conditions that have occurred between June 30, 2010 and today will not be taken into consideration when establishing the new 2011 valuations. These factors will not be recognized until the 2013 reappraisal cycle.
Another important factor to understand is the difference between a decrease in the volume of sales activity versus a decrease in the selling prices of property.
During the two-year period between June 2008 and June 2010, there was a definite decrease in the overall number of transactions; however, the sale prices of these transactions did not decrease. In most cases, prices actually remained stable. The commercial market also remained stable this appraisal cycle.
This year there will be a substantial increase in ag land values. Appraisal of agricultural land for ad valorem taxation purposes involves an “agricultural landlord formula.” In the formula, the net income to the landlord is calculated using a 10-year average (2000-2009 for 2011) published commodity price or grazing rental rate multiplied by the local production yield.
This yield is based on soil classification or carrying capacity. Typical landlord expenses are also averaged over the same 10-year period and subtracted from the landlord’s gross income to arrive at the landlord’s net income. This net income is capitalized by the statutory capitalization rate of 13 percent to arrive at the ad valorem value.
For the 2011 reappraisal, the average commodity prices increased anywhere from 15.8 to 27 percent statewide. The grazing rental rate also increased by approximately 5.5 percent compared to the prior reappraisal year.
Expenses for the 2011 reappraisal have also increased, though not as significantly as commodity prices. Published expenses increased anywhere from 4.9-9.3 percent from 2009 to 2011.
Due to the substantial increases in agricultural commodity prices and an expected lesser increase in published expenses during the current 10-year average time period, an increase in agricultural land values for the 2011 revaluation has occurred.
Taxes are based on three factors: market valuation, assessment rate and mill levy.
Market Value x Assessment Rate = Taxable Value x Mill Levy = Taxes.
The assessor’s office is solely responsible for establishing valuations, not taxes. The county assessor is responsible for valuing all property in the county as directed by state laws. The assessor’s goal is to equalize property values and ensure the tax burden is distributed fairly and equitably among property owners.
Currently, the assessment rate is 7.96 percent for residential improved properties, and 29 percent for most all other property types.
The last component used to calculate taxes is the mill levy. Mill levies are established by the county commissioners, school districts and the boards of the various taxing entities (fire, recreation, hospitals, cities, towns, etc.).
A summation of these various individual levies is applied to the taxable value to determine the taxes due.
After receiving their new notices of valuation in May, property owners are asked to review the change in value. If they disagree with the revised valuation, there are detailed appeal procedures on the back of the notice. Kamery notes they regret no phone appeals can be accepted.