84% of Jefferson County Is Unincorporated But Has “City” Addresses

As a Realtor and resident of Jefferson County, I wince when I see a listing that’s many miles outside the City of Golden advertised as being “in Golden.” It may have a Golden address, but it’s in unincorporated Jefferson County.

Another example of this confusion is Evergreen. Evergreen is not a city or town, it’s just a postal address with its own ZIP code, 80439, serving 177 square miles of unincorporated Jefferson County — and a portion of Clear Creek County. Residents could use “Upper Bear Creek CO 80439” (or similar) in their address if they wanted, because the ZIP code is what matters to the Postal Service, but that’s not common. It doesn’t make your neighborhood a “city,” either.

It’s understandable that the Post Office wants to use a city name for every address, no matter how remote. After all, what’s the alternative?  All mail has to go through post offices with city addresses, but that doesn’t mean the address is within city limits.

 

Littleton is another example. Although Littleton is Arapahoe County’s county seat, much of south Jeffco has Littleton addresses.  Littleton 80127 and 80128 cover 70 sq. miles and 30,000 homes, all of them in Jeffco and virtually none of them in the City of Littleton! 

 

As we all know, Littleton’s reputation was damaged by the 1999 mass shooting at Columbine High School, when in fact that school is a mile from the city limits of Littleton and is part of Jeffco Public Schools.  Such is the power of postal addresses!

 

At right is a graphic from Jefferson County’s website showing the incorporated and unincorporated areas of Jefferson County.

 

It may surprise you to know that Golden’s two ZIP codes – 80401 and 80403 -- cover more square miles than the entire City and County of Denver. The City of Golden itself,  covers only about 10 square miles – about 5% of the area and just one-third of the homes which have been assigned Golden addresses.

 

Golden addresses span 187 square miles compared to Denver’s 155 square miles.. If you exclude the airport, Denver, with its 41 ZIP codes, covers only 101 square miles – about half the size of “Golden” with its two ZIP codes, and smaller, too, than “Evergreen” with its one ZIP code.

 

Because ZIP codes with large rural components are so big, statistics about individual neighborhoods are not generally available, and statistics for the ZIP codes as a whole are meaningless. Some marketing companies, including Zillow, promulgate statistical reports by ZIP code as if they were neighborhoods, which works fine when the ZIP code is one square mile, but not when it’s 20, 50, 100, or 150 square miles! As I was writing this article, I got an email with the following meaningless information about my ZIP code:

Fortunately, REcolorado.com, which is our local MLS, allows real estate professionals like me to draw boundaries around actual neighborhoods when generating statistics or searching listings. I do that a lot.

 

There are pros and cons of being in unincorporated vs. incorporated areas of the county.  The county has no sales tax, but many of the cities do.  At the Golden King Soopers, you pay 3% city sales tax on groceries which you don’t pay in other King Soopers.

 

Property tax is another matter. In unincorporated areas you have separate mill levies for law enforcement, fire protection, and other taxing jurisdictions.  Golden, as one example, provides all those services for a single mill levy that is much lower than those combined levies.

Beware of Less Obvious Costs of Ownership When You Buy a Home

When you buy a home, your lender will factor in several obvious costs of your purchase when approving your loan, but there are other less obvious costs which the lender doesn’t consider, but which you should definitely investigate.

The costs your lender considers are your projected mortgage payments (consisting of Principal, Interest, property Taxes and Insurance, or “PITI”) plus Mortgage Insurance Premium (“MIP”) and HOA fees.

Let’s look at those obvious costs first.

Regarding property taxes, don’t make the mistake of assuming that unincorporated areas have lower property taxes than incorporated cities. The City of Golden, for example, has the lowest mill levy I’ve found anywhere in Jefferson County, and many newer subdivisions, such as Candelas, have mill levies that can be twice that of Golden. (See my Dec. 17, 2015, and July 21, 2016, columns about Metropolitan Tax Districts at www.JimSmithColumns.com.)

 

Regarding insurance costs, shop around! I have observed substantial variation among insurers. Use an independent insurance broker to get competitive quotes from different carriers, or, if you get quotes from “captive” insurance agents, get quotes from three or more different carriers. If the home is in a flood zone, flood insurance can be another major expense.

 

Regarding mortgage insurance premiums, don’t assume that you must pay MIP if you have less than 20% down payment. We can refer you to lenders who offer work-arounds regarding MIP with much less than a 20% down payment.

 

Regarding HOA fees, some HOA’s require “working capital contributions,” “document fees” and “move in fees” that may take you by surprise.  Ask about these.

 

Now let’s look at some other, less obvious costs of home ownership.

 

What about energy costs? These can vary substantially from one house to another. Find out what the current owner is paying for gas and electricity each month, and factor in whether the number of members in your household will vary from the seller’s when projecting what your energy costs will be.

 

Once you’re under contract, you’ll be hiring a home inspector to evaluate that home. Make sure it’s an inspector who is qualified to assess the home’s energy efficiency as part of his inspection (at no extra cost). We can recommend such an inspector.

Your inspector can also assess how much deferred maintenance there is on the house you buy. Get his advice on how much you might need to budget in coming years for maintenance and repairs, which can vary greatly from one home to another.

Water consumption is big cost to consider, especially if the home has a lot of Kentucky bluegrass, which requires lots of water.

Here’s a hidden expense you may not have thought of — health expenses due to bad indoor air quality. You recognize the smell of new carpeting, right? It’s not as innocuous as you might think. You might well be smelling VOC’s — volatile organic compounds. Some paint also contains VOC’s, and they’re less expensive than paint labeled “low in VOCs.” Ask your inspector to assess how many VOC’s might be in the air that could literally make you sick. Mold is another sickness-causing consideration. Your inspector will tell you whether a separate mold inspection is called for. He (or we) can recommend mold inspectors. Radon tests, costing $100-150, are also a good idea, since naturally occurring radon gas is a known carcinogen.

 

Older homes have clay sewer lines that are prone to root intrusion and collapse, which is the homeowner’s responsibility. A $100 sewer scope could identify the need for a 4-figure repair that you might be able to get the seller to absorb, saving you that expense later.

Published June 15, 2017, in the Denver Post's YourHub section and in four Jefferson County weekly newspapers.

Here’s What You Need to Know About Appealing the Jeffco Assessor’s Valuation of Your Home

This column was published in the Denver edition of YourHub from the perspective of Jefferson County property owners.  See other blog posting for same article from the perspective of Denver property owners.

By the time this column appears in print, all Colorado homeowners will have received in the mail a letter from their County Assessor declaring the “Actual Value” of their real estate holdings in that county. I own both a commercial property (Golden Real Estate’s office) and my personal residence, so I will be receiving two such letters. 

The letters give taxpayers until June 1st to file an appeal of that valuation which, if successful, could lower the “Assessed Value” (explained below) against which taxes will be levied for 2017 and 2018.

Property taxes in Colorado are paid in arrears, which means that the property tax for 2017 isn’t payable until April 2018, and the property taxes for 2018 will be payable in 2019. The valuation you just received in the mail, however, is not a statement of your home’s current value.  Rather, it is a statement of your home’s market (or “Actual”) value as of June 30, 2016, based on its condition on January 1, 2017.

 

In other words, if your house was significantly improved between last June 30th and January 1st, the assigned value should be what your home in its new condition would have been able to sell for on June 30, 2016, based on what comparable homes did sell for prior to that date. (You may need to read these two paragraphs a few times!)

 

The good news is that even though your home’s value has continued to increase since last June and will continue to rise for the next year or two, you will only pay property taxes for both 2017 and 2018 based on what it might have sold for in June 2016.

 

Nevertheless, many of us (me included) are going to be shocked at how much the assessor claims our homes have increased in value.

 

Additional good news for homeowners is that, because of both TABOR and the Gallagher Amendment — too complicated for me to explain here — the percentage of “Actual Value” against which your local mill levy will be applied, has reduced by almost 10% — from 7.96% of actual value to 7.2%.  That creates the “Assessed Value.”

 

To keep it simple, here’s an example using round numbers. If the assessor says the market value of your home for the last two years has been $500,000, your “Assessed Value” was 7.96% of that, which equaled $39,800.  If your mill levy is 100, then your tax bill was $3,980 (100 x 39.8).  Let’s say your home’s “Actual Value” as of last June 30 rose to $600,000, a 20% increase. Your “Assessed Value” will be 7.2% of that, or only $43,200. Thus, your tax bill, at 100 mills, will be $4,320, an 8.5% increase in taxes despite a 20% increase in market value.  By the way, this is the first reduction in the assessment percentage since 2003.  Great timing!

 

And it gets even better. Unless the voters in a particular tax district voted to “de-Bruce” the mill levy, that tax district must lower its mill levy as much as necessary to keep its revenue from increasing beyond TABOR limits based on population growth plus any increase in the cost of living. For example, the City of Lakewood has lowered its mill levy a couple times since 2011 to comply with  TABOR limits. That’s not the case, however, with our biggest mill levy, Jeffco Schools, which “de-Bruced.”

 

Nevertheless, since your property taxes are the sum of multiple mill levies from various districts, that hypothetical rate of 100 mills that I used above might actually be lower this year, further reducing your property tax bill.

 

To guide Jeffco homeowners through the appeal process, I created a website which you may find helpful. It’s at www.HowToAppealValuations.info. Meanwhile, let me give you some key advice.

 

1) You can only appeal the assessor’s valuation by citing comparable sales during the 24 months prior to June 30, 2016. Unless your home was mischaracterized (wrong neighborhood, style, etc.), all eligible comps are listed under “Neighborhood Sales” on the assessor’s web page for your home, so don’t bother looking elsewhere.

 

2) You must “age” every comp you cite in your appeal by about 1% per month, since Jeffco properties increased by an average 22.8% over that 24-month period.  Thus, if a comp sold in Jan. 2016 for $500,000, you can’t cite it as a comp at the price, but must increase that price by 6% to its theoretical value as of June 30, 2016.

 

To find your home on the assessor’s website, visit http://assessor.jeffco.us and click on “Property Records Search.”

 

As I write this, I haven’t seen the letter myself. Last cycle, the Jeffco Assessor stopped saying which comps they used to calculate each home’s value.  That’s unfortunately. By comparison, Denver’s assessor gives at least 3 comps and shows on their website how each one was used to establish value, much like in a formal appraisal.

Here’s What You Need to Know About Appealing the Denver Assessor’s Valuation of Your Home

This column was published in the Denver edition of YourHub from the perspective of Denver property owners.  See other blog posting for same article from the perspective of Jefferson County property owners.

By the time this column appears in print, all Denver homeowners will have received in the mail a letter from the Denver Assessor declaring the “Actual Value” of their real estate holdings in the City & County of Denver. The same is happening in all Colorado counties. The letters give taxpayers until June 1st to file an appeal of that valuation which, if successful, could lower the “Assessed Value” (explained below) against which taxes will be levied for 2017 and 2018.

Property taxes in Colorado are paid in arrears, which means that the property tax for 2017 isn’t payable until April 2018, and the property taxes for 2018 will be payable in 2019. The valuation you just received in the mail, however, is not a statement of your home’s current value.  Rather, it is a statement of your home’s market (or “Actual”) value as of June 30, 2016, based on its condition on January 1, 2017.

 

In other words, if your house was significantly improved between June 30, 2016 and January 1, 2017, the assigned value should be what your home in its new condition would have been able to sell for on June 30, 2016, based on what comparable homes did sell for prior to that date. (You may need to read these two paragraphs a few times!)

 

The good news is that even though your home’s value has continued to increase since last June and will continue to rise for the next year or two, you will only pay property taxes for the next two years based on what it might have sold for in June of last year.

 

Nevertheless, many of us (me included) are going to be shocked at how much the assessor claims our homes have increased in value.

 

Additional good news for homeowners is that, because of both TABOR and the Gallagher Amendment — too complicated for me to explain here — the percentage of “Actual Value” against which your local mill levy will be applied, has reduced by almost 10% — from 7.96% of actual value to 7.2%.  That creates the “Assessed Value.”

 

To keep it simple, here’s an example using round numbers. If the assessor says the market value of your home for the last two years has been $500,000, your “Assessed Value” was 7.96% of that, which equaled $39,800.  If your mill levy is 100, then your tax bill was $3,980 (100 x 39.8).  Let’s say your home’s “Actual Value” as of last June 30 rose to $600,000, a 20% increase. Your “Assessed Value” will be 7.2% of that, or only $43,200. Thus, your tax bill, at 100 mills, will be $4,320, an 8.5% increase in taxes despite a 20% increase in market value.  By the way, this is the first reduction in the assessment percentage since 2003.  Great timing!

 

And it gets even better. Unless the voters in a particular tax district voted to “de-Bruce” the mill levy, that tax district must lower its mill levy as much as necessary to keep its revenue from increasing beyond TABOR limits based on population growth plus any increase in the cost of living.

 

Nevertheless, since your property taxes are the sum of multiple mill levies from various districts, that hypothetical rate of 100 mills that I used above might actually be lower this year, further reducing your property tax bill.

 

Here are two key points you must keep in mind when appealing the valuation assigned to your home by the Denver (or other county) assessor:

 

1) You can only appeal the assessor’s valuation by citing comparable sales during the 24 months prior to June 30, 2016. Unless your home was mischaracterized (wrong neighborhood, style, etc.), all eligible comps are listed under “Neighborhood Sales” on the assessor’s web page for your home, so don’t bother looking elsewhere.

 

2) You must “age” every comp you cite in your appeal by about 1% per month, since the median increase in Denver residential property values was 25.9% over that 24-month period.  Thus, if a comp sold in early January 2016 for $500,000, you can’t cite it as a comp at the price, but must increase that price by 6% to its theoretical value as of June 30, 2016.

 

To find your home on the assessor’s website, visit www.denvergov.org/property and enter your address. When your property is displayed, then click on the address and you’ll be able to click on a “Comparables” tab where you’ll be able to see exactly how the value of your home (the “Subject” property) was determined against 3 or more comparable sales identified by address. 

 

If you feel that those comps are not truly comparable to your home, you can click on the “Neighborhood Sales” tab and choose three or more other comparable sales and cite those in your appeal. You have to file your appeal (most effective, I’ve found, is in person) by June 1st.