Written by: Charlie Young
We are rapidly approaching the Colorado biennial reappraisal with the upcoming assessments applying to both the 2023 and 2024 tax years. The previous reappraisal occurred in 2021 with a valuation date of 6/30/2020 – very near the height of the pandemic. As such, this will be Colorado assessors’ first attempt to capture the post-COVID asset gains, and we are anticipating significant increases across the commercial real estate spectrum.
Most assessors plan to release their 2023 valuations the final week of April, with a statewide appeal deadline of June 8, 2023. This quick turnaround makes appeal planning imperative ahead of values being released.
We have seen significant disruptions in the CRE market since June 2020, and a knowledge of the local markets will be crucial in establishing effective valuations. Immediately leading up to the 2023 valuation date of 6/30/2022, we were amid rapidly increasing borrowing costs and market indicators heading in different directions based on asset type. We expect assessors to continue to rely on a valuation based on sales over the previous two years. We expect them to employ this approach despite a June 2022 environment that looked drastically different than June 2021. This discrepancy will likely lead to a heightened appeal volume and a high-stakes battle to get the value right.
With an additional layer of review compared to “look back” abatement appeals, appealing during this traditional appeal window gives taxpayers the best chance of a timely, successful appeal. The traditional property tax appeal has three administrative levels: the assessor, the County Board of Equalization, and the CO State Board of Assessment Appeals. Compare this to the look back abatement appeal that is first heard by a property’s Board of County Commissioners and then the CO State Board of Assessment Appeals. This additional assessor level of appeal can present an unmatched opportunity to present new information to the assessor before they have “dug in” to their proposed valuation. Assessors are very receptive to new information at this level, whether it be actual financials that challenge their assumptions or a correction to a property record card that influences their cost approach.
With such a consequential valuation and moving metrics at the time of value, we anticipate a historic number of appeals brought ahead of the deadline. The sheer number of appeals and persistent hiring difficulty motivates the assessors to work and settle cases upon this initial appeal level to lighten their hearing obligations at future levels. Securing a correct valuation at this initial level of appeal will result in a correct tax bill when they are released in December. A lack of planning and a drawn-out appeal process can instead result in overbilling and refund, sometimes 12-18 months after payment.
Now is the best time to act in preparing your property’s valuation, ensuring proper documentation is ready, and setting up site tours to be familiar with all the details of your operation.