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— Property Management Quarterly — October 2016
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impacted the magnitude of the 2015
assessments.
For some historical perspective,
in 2005, the high-water mark was
about $120 a square foot in value,
said Matthew Poling, a commercial
property tax principal with Ryan.
Since then, we’ve seen some big
increases in each reassessment year
with the exception of 2011, when
the value went down because we
were at the trough in the market,
he said. Additionally, in 2012, when
Measure 2A passed and the city
began to “deBruce,” taxes rose 18
percent.
However, even with this upward
trend, the 2015 values shocked
many. When Poling ran his numbers
to examine the change in value for
properties from 2014 to 2015 for a
majority of the downtown Class A
and B properties, there was roughly
a 39 percent increase in value.
When he eliminated buildings that
were under construction in 2014
and finished in 2015, it dropped
slightly to a 36 percent increase in
property value.
“A 40 percent increase, on aver-
age, is high,” he said. “I think 2013
was probably closer to 20 percent.
But when you combine those, that’s
close to a 60 percent increase in
value over a four-year window. It’s a
big number.”
This year has not seen as many
of the purchase-price records as
the past assessment cycle did, so
there’s an expectation that while
property values will continue to
increase, the 2017 assessments val-
ues will not increase as much, he
said. These new values will impact
the 2018 property taxes.
The second component is the mill
levy, which is made up of all the
taxing jurisdictions. In the city and
county of Denver, these jurisdic-
tions include the school general
fund, school bond fund, capital
maintenance, city bond fund, police,
fire, urban drainage, developmen-
tally disabled and the general fund.
The current mill levy for the city
and county is about 78.13 for all
areas that don’t have additional
special districts.
The mill rate went down just
under 6 percent in 2015, so the
average net increase in taxes was
about 30 percent for 2015 – the 36
percent increase in property value
minus the 6 percent decrease in the
mill levy, said Poling.
On the ballot this November,
Denver Public Schools is asking for
additional revenue that equates to
about 4 mills. If you look at 4 mills,
divided by the current base rate,
property owners will be looking at
about a 5 percent increase in their
rates in 2016, payable 2017.
However, Poling is predicting there
will be a decrease in rates in 2017
because of all the value added to
the area, he said. “So I’m estimating
that the mill levy is going to go up
5 percent for 2016, payable 2017 (if
the DPS initiative passes); and then
I’m using a 2 percent decrease in
2017, payable in ’18, because of the
value that is going to be added.”
Affordable housing.
The affordable
housing initiative, which passed
City Council Sept. 19, adds a ½ mill
levy and an impact development
fee in order to raise revenue for the
first permanent, dedicated fund for
affordable housing. Mayor Michael
Hancock’s plan calls for generat-
ing $150 million over the first 10
years to produce and preserve 6,000
affordable apartments, condos and
homes.
The ½ mill increase on property
taxes will start Jan. 1, as will the
development fee. The mill increase
for a typical homeowner will be
about $1 a month and for commer-
cial owners it will be about $145 for
every $1 million worth of property
value, according to the Denver May-
or’s Office.
“While the ½ mill levy doesn’t
seem like that much, it’s just addi-
tive,” said Poling. “It’s not a huge
dollar amount, in the grand scheme,
although when you have a $300
million building, a ½ a mill can add
up.”
Revenue from property taxes will
be augmented by revenue from a
new one-time development fee that
will be imposed on new construc-
tion on a per sf basis. Fees will
range from 40 cents to $1.70 per sf
based on the type of development.
Energize Denver.
In December 2015,
Mayor Hancock convened a task
force to examine and recommend
ways for Denver to reduce energy
consumption in large commercial
and multifamily buildings by 10
percent in 2020 and then double it –
to a 20 percent deduction – by 2030,
said Elizabeth Babcock, air, water
and climate manager with the city
and county of Denver.
Over the course of the task force’s
eight meetings from January to July,
the team worked to come up with
a set of recommendations. In the
city and county of Denver, there are
3,091 commercial and multifamily
buildings that are 25,000 sf or larger,
which would be required to adhere
to the program. Of the 3,000-plus
buildings, only about 5 percent are
located in the central business dis-
trict, said Babcock.
The first part of the recommen-
dation recognized that you can’t
manage what you don’t measure,
Management
“While we’re all in favor of funding schools
and in favor of affordable housing, we have to
be cognizant of the fact that our tenants are
paying those tax bills and it has real impacts
to their businesses and their bottom lines.”
– Dan Simpson, Denver Metro BOMA
