Appraisals performed by the Assessor's Office are very similar to those performed by private, or "fee" appraisers. As Registered, Licensed, and Certified General Appraisers, employees of our Office are required to use the same professional appraisal methods as any other licensed appraiser in Colorado.
Since 1992, all Colorado Assessors and their staff appraisers have been required to obtain and maintain appropriate appraiser qualifications and licensure, as a condition of their employment. The Colorado Supreme Court ruled in 1994 elected Assessors do not have to be licensed, but our staff appraisers must continue to be licensed qualified appraisers. Our staff has demonstrated that we have obtained the skills, experience, and education necessary to produce professional appraisal products. We also must comply with Colorado law, guidelines, and the Uniform Standards of Professional Appraisal Practice (USPAP).
The Assessor's Office is audited annually by the General Assembly to ensure each county complies with the standards adopted by the State Board of Equalization for assessment level and uniformity. Colorado utilizes the Standards on Sales Ratio Analysis as adopted by the International Association of Assessing Officers (IAAO) for our criteria to measure compliance regarding assessment quality and uniformity. Penalties for noncompliance require the Assessor to reappraise the affected properties again, with state supervision, and to pay the state for their costs of supervision. In addition, the county must levy taxes to "pay back" any inappropriate school aid funding due to the inappropriately appraised properties.
What is an Appraisal?
An appraisal is an estimate of value based upon historical data, as of a specific date. A private "fee" appraisal and an appraisal performed by the Assessor each have a specific effective date. Our effective date for the 2021 reappraisal is June 30, 2020. In other words, we are estimating what your property was worth as of June 30, 2020. State law requires us to use the prior 18-month period of local market activity; time trended to June 30, 2020. If data is insufficient during this time period, the Assessor may consider data from the 5-year period ending June 30, 2020.
Vacant land and residential sales from a 48 month period ending June 30, 2020 were analyzed to arrive at our 2021 values.
Each odd numbered year in Colorado, appraisals for property tax purposes are updated to a new level of value. The values will generally remain the same in 2022, unless the use or a physical change has occurred to the property. Our values will be updated again in 2023.
Appraisal of Different Property Types
As you can see, we are mandated and prescribed by state law how and when we perform our appraisals. Different types of property are appraised consistent with their legal requirements. I would like to help explain the different appraisal methods, and how we apply them to Park County properties.
Vacant land is the first property type to be appraised. Since most property generally includes land, it becomes the basis of value. The Market (Sales Comparison) approach to appraisal is utilized in determining the actual value of both Vacant and Residential land, appraised if vacant. The Market approach uses sales of other similar properties within defined economic areas. These areas are then further segmented into "neighborhoods".
Sales of similar properties are analyzed to determine common and typical trends within the local real estate market. These sales are confirmed and verified with the buyer and/or seller to understand the terms and conditions of the sale. We physically inspect all vacant and improved sales, and as many sales of other property types as is possible. We verify our existing records for any errors or changes that may have occurred to property since our last visit. Accurate data inventory will result in a more equitable appraisal product for each and every taxpayer. It also helps to see first hand what people are buying and selling to better understand market activity.
Residential property can ONLY be appraised using the Market approach to appraisal, per the Colorado constitution. Only confirmed, verified, and inspected sales are used in our market analysis. Once the different building components that influence value have been identified, we "test" our valuation models using the actual sales from the appropriate time period, (January 1, 2019 through June 30, 2020 or greater if necessary). We continue to calibrate our market models until they reproduce local market conditions, and we meet our required performance standards for uniformity and equalization.
Once we have appraised all of the "improvements", (buildings), we add the value of the land to equal the total actual value of Residential property. Our Notice of Valuation forms will only list the total actual value. If you wish to contest your property value, state law limits your appeal to the total actual value, not one component or another.
Agricultural land is appraised using the Income approach. The income or productive capacity of the land is utilized to determine the land/soil classification type. Then, based upon soil types, the last ten year state wide averages of income (animal unit rent) minus the allowable expenses determines the net income per acre. The net income is then capitalized by a rate set by law (13.5%), not the local market to determine the actual value per acre. The values we place on Ag property are purposely calculated to reflect public policy decisions resulting in lower values for property tax purposes. These values do not reflect current market activity, or how people buy and sell these properties.
Commercial & Industrial Properties
Commercial and Industrial properties in Park County are appraised by the Market, Income, and Cost approaches:
- The Cost approach determines the actual value of a property by estimating what it would cost to replace or reproduce the building, minus accrued depreciation, (accounting for age and condition), as it exists today. The land value is added to the building to determine the total actual value.
- The Market approach to appraisal uses sales of other similar properties within Park County to develop typical trends in relationship to size, location, condition, and utility. Land values are also analyzed to determine the relationship between size and utility to reflect local sales activity. The sum of these two components equals the total market (actual) value as of the effective date of our appraisals.
- The Income approach to appraisal utilizes a typical income stream (rent), capitalized by a local rate into a total actual value estimate. This amount includes both the land and the improvement. We gather local income and expense data, and develop the capitalization rates from the local market. The Income approach does not use the profit and/or loss status of a business to determine the property value!
Natural Resource properties are valued by the Market and Income approaches to appraisal. Non-producing land is appraised using the Market approach using sales of similar properties. Producing natural resource properties are valued via the Income approach on the basis of their annual production, minus allowable expenses. Producing precious metal (gold and silver) properties are valued at 25% of their gross income, or 100% of their net income, whichever amount is greater.
Regardless of your property type, the total actual value is multiplied times the appropriate rate of assessment to determine your assessed or taxable value. The Residential assessment rate currently adopted is set at 7.15%. All other properties are generally assessed at 29% of their total actual value. Why do we use two different rates?
Amendment Number 1, passed by Colorado voters in 1982 contained a provision named the Gallagher amendment. It requires residential properties, based upon the aggregate value of taxable properties statewide, to pay no more than 45% of the total property tax burden. Non-residential properties will pay the other 55%. To maintain this awkward balance, the residential rate was designed to "float" up or down, to comply with this rule. Amendment Number 1, passed by the voters in 1992, in one of many provisions, does not allow the rate to increase-only decrease.
Determining Property Tax Amounts
Property tax amounts are determined by multiplying the total assessed value times the total mill levy. Mill levies are applied uniformly to all taxable properties within each jurisdiction. Where your property is located may have a direct correlation to the amount of property taxes owed. Each unit of local government sets a separate mill levy. The more "layers" of local government entities generally means larger tax amounts. Mill levies are determined by dividing the total entity budget by the total assessed value within the jurisdiction.
As Assessor, I am responsible to locate, identify, and value all taxable property within Park County. State law prescribes how and when we appraise property. We will provide to you our best efforts to reflect local market activity and conditions occurring in the various and vastly different areas of our county.