Roaring Fork Valley businesses eye rec-center tax
October 7, 2013
Friends and foes of a proposed midvalley recreation center have focused on the property tax implications for homeowners — as most campaigns do — but it is commercial property owners that have much more at stake in the Nov. 5 election.
Colorado property taxes are arranged so commercial property owners face a much steeper assessment rate than residential property owners. The assessment rate is 7.96 percent for residential property and 29 percent for commercial property. In other words, a greater percentage of a commercial property's value is used to determine the annual property taxes.
"We pay an awful lot of money," said Bob Myers, owner of Myers and Co. Architectural Metals, a longtime business in Basalt. He said few people know that the tax burden is skewed so heavily against businesses.
"Unless you own a business, you don't care about it," Myers said.
The Crown Mountain Park and Recreation District is asking voters to approve issuing $25 million in bonds to construct the recreation center as well as approval of a property tax increase of 5 mills to pay off the bonds. Another 2.5-mill-levy increase is being sought to raise revenue for operations and maintenance of the facility.
The Crown Mountain Park and Recreation District's data show that a midvalley business with a market value of $500,000 will pay an extra $1,087.50 per year in property taxes if the recreation center is approved. The total tax bill for Crown Mountain facilities would be $1,421.58 because there is an existing tax levy for the development, operation and maintenance of the park.
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In contrast, a home with a market value of $500,000 would face an annual increase of $298.50 on the property tax bill, according to the recreation district. The annual tax bill for Crown Mountain would be $390.20 when the existing levy is considered.
Those numbers were verified by the Pitkin County Assessor's Office.
A commercial property with a market value of $1 million will face an increase of $2,175 in the property tax bill if the recreation center is approved. A house with a market value of $1 million would face an increase of $597.
Campaigns typically focus on the impacts to homeowners because every voter can relate. In the case of the recreation center, proponents contend that the increase is a small price to pay for a great community amenity. Opponents counter that Crown Mountain will account for one of the biggest segments of a midvalley property owner's tax bill if the new facility is approved. They urge voters to look at the tax bill as a whole rather than the isolated increase for the recreation center.
The impacts on businesses aren't a big part of the campaign. Myers said businesses pay a personal property tax in addition to the property tax. His company paid about $90,000 total in taxes last year. That hurts at a time when the economy is still sluggish after construction took such a hit during the recession, he said.
The expense of taxes, he said, naturally gets passed on to customers.
"It makes our prices a little bit higher," Myers said, adding that Roaring Fork Valley businesses also must account for a higher cost of living. "It's almost to the point where it makes us noncompetitive."
Cathy Moffroid, owner of Cafe Bernard in Basalt with her husband, Bernard, said an increase in property tax of $1,087.50 for a commercial property valued at $500,000 would have an effect on small-business operators.
"It's not going to make somebody close," she said. "It's just going to make it harder."
The tax cannot be considered as an isolated increase, Moffroid said. Business expenses are constantly rising, from utilities to supplies. Those have to get passed on at a time when many customers are more budget-conscious than ever.
Like Myers, Moffroid said the tax-increase proposal comes at a bad time — just as business is starting to recover.
Robert Kaufman and Laurie Soliday, members of the political action committee Friends of the Mid Valley Rec Center, said they understand that commercial property owners take a bigger hit in property taxes.
"Hopefully the community benefit will outweigh that," Soliday said. She noted that two midvalley business owners are on the Crown Mountain Park and Recreation District's board of directors and support the midvalley recreation center. In addition, several commercial property owners back the proposal, they said.
John Fitzpatrick, owner of High Tone Automotive in Basalt, is a commercial property owner who "strongly supports" the recreation center proposal even though it will mean paying more in taxes.
"I still support it. I think we're investing in ourselves," Fitzpatrick said. "I think we'll all benefit."
He said he understands the sentiments of people who are opposed because of the tax issue, but he urges them to look at the broader community benefit.
"There are other things that I pay taxes on that I don't use," he said.
Kaufman said the recreation center also would provide a benefit to many midvalley businesses. Currently, midvalley families travel to recreation centers in Aspen and Glenwood Springs, where they end up dining and shopping, as well. Those dollars will remain in the midvalley rather than leak out if a recreation center is built in El Jebel, he said.