Montrose County’s 2021 reappraisal saw valuation increases for most properties, according to Montrose County’s Assessor’s Office, which conducted a complete revaluation of properties in the county, a process that’s done every two years.
The revaluations are based on a level of value from mid-2020, with the new values found using market sales data starting from 2019. Sales transactions after June 30, 2020 can’t be considered until the reappraisal in 2023.
The reappraisal encompassed nearly 23,000 properties in Montrose County, excluding business personal properties and natural resources, Montrose County Assessor Brad Hughes told the Montrose Daily Press.
The residential subclass of properties experienced some of the highest increases, with vacant land experiencing an average valuation increase of approximately 20%, with residential improved properties (single-family residences, condos and townhomes) increasing around 15% to 20%.
The market for vacant land has been hot for quite some time now in Montrose, with lots being cooped up by locals and out-of-state residents before the home is built. (The majority of vacant land considered in the reappraisal are residential land home sites, but it can include land that doesn’t have improvements on it.)
One of the numbers that stood out the most, Hughes said, was the 30% to 35% valuation increase in the residential market for the West End of Montrose County — the Nucla, Naturita and Paradox area.
It was unclear how the market would respond after the closure of the Nucla coal-fired plant in 2019, considered the region’s largest employer. The closure led to the loss of dozens of well-paying jobs.
The area’s economy, though, had been helped by a grant from the Economic Development Administration that led to the birth of the West End Economic Development Corporation (WEEDC), which has helped open several new businesses in the area, recently creating 25 jobs.
“You would think the economy over there would have gotten diminished, but valuations on the West End were higher than eastern Montrose County,” Hughes said. “Values are relatively low over there and a lot of people have moved in there from other areas, and it’s still inexpensive to purchase land or homes in that area.”
People from other areas moved to Montrose, too, before the end of the valuation period in mid-2020 — some for change of scenery and others for business opportunities. The latter was reflected in the rise in valuation increases for commercial and industrial properties in Montrose County, though much more modest compared to the residential subclass.
On average, commercial properties experienced an increase between 5% and 10%, though it varied property to property — location, age of the property and property type were factors that were considered when determining the rate of change.
Additionally, there was about a 30% increase for irrigated farmland in Montrose County, but agricultural land is based on the earning capacity of the land, and the valuation uses a 10-year model, a statewide average of commodity prices. But the primary reason for the increase was the removal of two “low” years of commodity prices, switched out for two higher prices commodity years.
The valuation also used the decade model for irrigated farmland because there’s other factors to consider, such as droughts, crop production and other weather conditions.
The reappraisal is the first domino in what could determine what people’s taxes will be for next year. Last November, after Coloradans voted to repeal the 38-year-old Gallagher Amendment, which ties residential property tax rates to commercial rates, requiring homeowners pay no more than 45% of property taxes (a 45/55 split), there was no certainty as to what the future of property taxation in Colorado would be.
But with the reappraisal showing an increase in valuation for residential properties, and the Gallagher Amendment no longer protecting homeowners from a rise in property taxes (assessment rates for residential and non-residential will be frozen under a moratorium, made possible by Amendment B’s passage), all eyes are now set on the mill levies — established by county commissioners, school districts and boards of taxing entities, like fire districts, libraries and recreation — and where those tax jurisdictions will set the levies when deciding later this year.
If the mill levies go down, there won’t be much of a change in taxes, since the decrease offsets the increase in assessed value. But if the mill levy stays the same, an increase in home value could raise a homeowner’s annual taxes.
An example: If a home’s market value saw a 15% increase, and there was no change in the total mill levy, the calculated property tax, for a home with a market value at $345,000, would be $1,652.
Now, if the home value, at $345,000 with a 15% valuation increase, coincided with a 10% decrease in the mill levy, the calculated property tax would total $1,487. It’s similar for 5% and 15% decreases in the mill levy.
Some homeowners could see in an increase in property tax, dependent on previous valuations, but ultimately, the mill levy will help decide the total property tax.
As mentioned, the statewide residential assessment rate is frozen at 7.15%, which factors into the final estimated calculation.
Though the market for commercial properties didn’t see as much of an increase as the residential subclass, there was still an increase in that sector for most accounts. That means commercial properties, too, are dependent on where the mill levies are set to estimate the changes in taxes next year.
The commercial assessment rate has historically been 29% of market value.
Josue Perez is a staff writer for the Montrose Daily Press