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AGENDA
INFORMATION UPDATE
September 8, 2020
5:00 PM,
I.INFORMATION UPDATE
I.A.Gallagher Amendment
I.B.Memo of Authorization
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INFORMATION ONLY MEMORANDUM
TO:Mayor and City Council members
FROM:Tara Nelson, Sr. Paralegal
THROUGH:Sara Ott, City Manager
MEMO DATE:September 1, 2020
MEETING DATE:September 8, 2020
RE:Colorado Amendment B, Gallagher Amendment Repeal and Property Tax
Assessment Rates Measure (2020)
______________________________________________________________________
REQUEST OF COUNCIL:No request of City Council at this time. Information only.
SUMMARY AND BACKGROUND: SCR20-001 will be on the November ballot.
Submitting to the registered electors of the state of Colorado an amendment to the
Colorado constitution to repeal the requirement that the general assembly periodically
change the residential assessment rate in order to maintain the statewide proportion of
residential property as compared to all other taxable property valued for property tax
purposes and repeal the nonresidential property tax assessment rate of twenty-nine
percent.
BILL SUMMARY: Property tax in Colorado is generally equal to the actual value of
property multiplied by an assessment rate, and the resulting assessed value is multiplied
by each applicable local government's mill levy. The assessment rate for residential real
property is established by the general assembly in accordance with a provision of the
state constitution that is commonly known as the "Gallagher Amendment" and is limited
by section 20 of article X of the state constitution (TABOR). Under the Gallagher
Amendment, there are 2 relevant classes of property for the purposes of determining the
residential assessment rate: residential property and nonresidential property. The
assessment rate for most nonresidential property is fixed in the state constitution at 29%.
The residential assessment rate was initially set at 21%, but the rate has been adjusted
prior to each 2-year reassessment cycle to keep the percentage of aggregate statewide
assessed value attributable to residential property the same as it was in the year
immediately preceding the new reassessment cycle. Currently, the residential
assessment rate is 7.15%.
The concurrent resolution repeals the Gallagher Amendment so that the general
assembly will no longer be required to establish the residential assessment rate based
on the formula expressed in the Gallagher Amendment. The resolution also repeals the
reference to the residential rate of 21%, which last applied in 1986 prior to the first
adjustment required by the Gallagher Amendment. Finally, the resolution repeals the 29%
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assessment rate that applies for all nonresidential property, excluding producing mines
and lands or leaseholds producing oil or gas.
BALLOT LANGUAGE: The ballot title for Amendment B is as follows:
Without increasing property tax rates, to help preserve funding for local districts
that provide fire protection, police, ambulance, hospital, kindergarten through
twelfth grade education, and other services, and to avoid automatic mill levy
increases, shall there be an amendment to the Colorado constitution to repeal
the requirement that the general assembly periodically change the residential
assessment rate in order to maintain the statewide proportion of residential
property as compared to all other taxable property valued for property tax
purposes and repeal the nonresidential property tax assessment rate of twenty-
nine percent? ”
DISCUSSION: Property tax in Colorado is generally equal to the actual value of property
multiplied by an assessment rate, and the resulting assessed value is multiplied by each
applicable local government's mill levy. The assessment rate for residential real property
is established by the general assembly in accordance with a provision of the state
constitution that is commonly known as the "Gallagher Amendment" and is limited by
section 20 of article X of the state constitution (TABOR). Under the Gallagher
Amendment, there are 2 important classes of property for the purposes of determining
the residential assessment rate: residential property and nonresidential property. The
assessment rate for most nonresidential property is fixed in the state constitution at 29%.
The residential assessment rate was initially set at 21%, but the rate has been adjusted
prior to each 2-year reassessment cycle to keep the percentage of aggregate statewide
assessed value attributable to residential property the same as it was in the year
immediately preceding the new reassessment cycle. Currently, the residential
assessment rate is 7.15%. The concurrent resolution repeals the Gallagher Amendment
so that the general assembly will no longer be required to establish the residential
assessment rate based on the formula expressed in the Gallagher Amendment. The
resolution also repeals the reference to the residential rate of 21%, which last applied in
1986, prior to the first adjustment required by the Gallagher Amendment. Finally, the
resolution repeals the 29% assessment rate that applies for all nonresidential property,
excluding producing mines and lands or leaseholds producing oil or gas.
A "yes"vote supports the following:*repealing the Gallagher Amendment,
which set residential and non-residential property tax assessment rates in the
state constitution;
*allowing the Colorado State Legislature to freeze property tax assessment
rates at the current rates (7.15% for residential property and 29% for non-
residential property); and
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*allowing the state legislature to provide for future property tax assessment
rate adjustments through state law.
A "no"vote supports maintaining the Gallagher Amendment, which
requires which requires a residential to non-residential property tax ratio of
45% to 55% and requires the state legislature to adjust the residential
assessment rate to maintain the required ratio. Since 1982, the residential
property tax assessment rate has dropped from 21% to 7.15% under the
Gallagher Amendment.
RECOMMENDATIONS:As part of Gallagher Education Month, City Manager Sara Ott
has invited you, via email on Friday August 28, to series of panel discussions with
representatives that will discuss impacts on rural Colorado, why you should care about
Gallagher, the future of fiscal health and the unintended consequences of the statewide
amendment which has adverse impacts on Colorado’s rural communities. Feel free to
register for any webinars that fit with your schedule.
CITY MANAGER COMMENTS:
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INFORMATIONAL MEMORANDUM
TO: Mayor and City Council
FROM: Hans de Roos, Capital Asset Director
THROUGH: Sara Ott, City Manager
DATE OF MEMO: August 25, 2020
RE: Funding for City Offices authorized by City Council
DECISION OF COUNCIL: The Council work session conducted on July 27, 2020 focused upon the
new city office building and funding for the project following the receipt of 100% Construction
Documents (CDs). The Council’s direction was to proceed with the current project scope and to
fund the budgetary shortfall of $2M through a combination of existing contingency, REMP
funds, and to apply interest income from the debt proceeds issued for the project.
SUMMARY AND BACKGROUND: Following the receipt of the 100% CDs from the project
architect, staff determined that the initial project budget (developed using 50% CDs) did not
have sufficient resources to cover the remaining interior package and remodel of the Rio
Grande Building.
Based on this new information, staff brought forward three options for how to address the
delta at the July 27, 2020 work session. City Council elected to fund the project via Option 1a
(described below). Option 1b and Option 2 were not considered viable by the Council since
these options could delay the project and result in additional cost to the City.
Option 1a):
Fund the project budget gap of $2.0M. Of this amount, $500K can be absorbed within the
existing project contingency and does not require a new appropriation. The current balance in
contingency is approximately $1.4M; therefore, a $500K commitment to fund the budget
shortfall will leave roughly $900K for any unforeseen items that could still occur through project
completion.
The remaining $1.5M will require an increase in spending authority.
Of this total, $1.0M is proposed to be funded through the application of REMP fees held by the
City. As the city offices project incorporates many significant energy efficiency upgrades that
will total over $1.5M, it is recommended that application of these REMP resources to the
project (but not at the full $1.5M level) is appropriate and beneficial to the community and
consistent with environmental goals. The current balance in the REMP fund is over $4M.
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Finally, $500K is proposed to be funded through the application of interest earnings on COP
proceeds that are funding the construction of the project. These dollars, if not used towards
project construction costs, must be applied to the debt service on the project - they cannot be
used for other purposes beyond these two options.
FUTURE ACTION: Staff has clear direction to move forward with the existing project scope and
will bring forward a Fall Supplemental request for the $1.5M increase in spending authority for
the project, to be funded by a combination of REMP Fund balance and interest on the COPs.
This Fall Supplemental will formalize the funding that Council has approved at the July 27
meeting.
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