Douglas County this week sued a state board in charge of evaluating property assessments, claiming officials overstepped their authority and wrongfully stopped the county from providing substantial tax relief to thousands of homeowners.
Last month’s board decision and the appeal to a judge to step in come amid a fierce statewide debate over how to blunt the impact of ballooning property tax bills across Colorado this year.
The affluent suburban county filed its lawsuit against the state Board of Equalization late Tuesday in Denver District Court, characterizing its unanimous decision to deny Douglas County’s proposed $4 billion reduction in residential home values as “arbitrary and capricious.” With reduced valuations, homeowners would have seen lower tax bills as various taxing entities’ mill levies, or tax rates, were applied.
The suit alleges that the state board singled out Douglas County for denial even as it approved other counties’ requests for even larger valuation reductions. The county also noted that its assessment adjustment had already received the blessing of state tax officials and a third-party auditor, only to be shot down by the equalization board.
Douglas County had calculated that its revised valuations would have saved Douglas County homeowners an average of $223 on their 2023 tax bills, which get mailed out at the end of this month.
“Due to the decision of this board, the residents of Douglas County will have to pay tens of millions of dollars more in property taxes,” the county’s attorney, Jeff Garcia, said in an interview with The Denver Post. “I don’t think our county taxpayers should be put in this situation.”
State Sen. Chris Hansen, who sits on the five-member Board of Equalization, said he couldn’t speak to the particulars of Douglas County’s complaint because it is now in litigation. But the Democrat told The Post that the board “did its job” in ensuring that property valuations had been treated in an equal fashion across Colorado.
State House Speaker Julie McCluskie, who also sits on the equalization board and is a Democrat, declined to comment on the lawsuit by Douglas County, which is led by Republicans.
The board’s denial of Douglas County’s request received sharp criticism from Gov. Jared Polis, a Democrat, who last month said he was “very disappointed” by its determination. The governor has been encouraging local governments to lower their mill levy rates to provide relief to Coloradans, and he called the state legislature into a special session in November to pass several bills aimed at easing the burden of property taxes and housing costs.
In September, Douglas County trumpeted a plan to cut assessments on single-family homes by nearly 4% — heralding the move with this headline on a press release: “Property tax relief is coming.”
In its lawsuit this week, the county noted that it saw a property valuation increase of 47% over the last two years, a jump at least 5% higher than the next highest metro Denver county.
“This led to a record number of assessment appeals in Douglas County, specifically 59,416
appeals,” the suit reads.
The circumstances prompted county assessor Toby Damisch to reexamine the “data underlying” the county’s initial assessment calculation. His staff found two errors that had inflated values in the county.
Both a third-party auditor, East West Econometrics, and staff members at Colorado’s Division of Property Taxation determined that the county’s proposed 3.87% downward valuation adjustment “complied with all applicable standards, including state laws and regulations,” according to the lawsuit.
But the Board of Equalization came to a different conclusion, the suit says — even though Adams County was granted a valuation decrease of 5.7% for commercial property, Crowley County got a cut of 5.81% for commercial property and Costilla County was permitted to cut values by 9.52% on residential property.
“The (board’s) job is to make sure that assessments across the state come to similar valuations,” Garcia said.
The suit faulted members of the board for focusing improperly on how a valuation decrease might impact revenues for schools and fire districts since the valuation change would apply to all taxing entities in the county. Hansen, the lawsuit says, feared that granting Douglas County’s request could cost public schools in the county $8 million.
And if other counties followed Douglas’ example, it could create a $90 million statewide shortfall in school funding that the state would have to backfill — a concern the lawsuit attributes to Hansen at the Dec. 18 meeting.
The role of the Board of Equalization, Douglas County states, is restricted to examining how county assessors establish property valuations and cannot consider the implications of those assessments for tax revenues, up or down.
“They should never ask how this might affect a school district — that’s not their job,” Garcia said. “They should be only looking at the valuation of properties. I think (Hansen) might not have been clear about his duties.”
The suit also alleges that the board violated the Colorado Open Meetings Law because two items included in a Dec. 20 order resulting from the action two days earlier were not discussed or voted on during a properly noticed meeting.
Douglas County’s lawsuit notes that state Rep. Bob Marshall, who represents Highlands Ranch and had served on the equalization board, didn’t attend the December hearing. Marshall, a Democrat, says he is McCluskie’s designee and that she can choose to attend meetings in person if she wants. That happened Dec. 18.
But the board’s decision raised questions, Marshall said.
“The only thing anyone (on the board) should be looking at was whether it was a proper valuation by the assessor, not whether it would raise taxes or lower taxes,” he said.
Marshall also was critical of Douglas County’s leaders, whom he said didn’t frame the issue honestly last fall.
“I never heard them say anything about a proper valuation but they did pat themselves on the back that they were giving a tax reduction,” he said.
Douglas County has since found another way to ease the tax burden for its residents.
Last week, the commissioners approved a nearly 19% reduction in the county’s own mill levy that will save property owners $37.8 million this year.
Garcia said it could be nearly a year before the judge makes a ruling in the lawsuit. But he said the case could ensure the state Board of Equalization sticks to its purview when it comes to evaluating property assessments.
“This is unique,” he said, “because we’ve never seen the (board) do something like this before, or someone challenge them like this.”
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