First, I had to share the joke above. For anyone that lives or spends time…
First, happy belated Halloween. For all the parents out there that think they have the best costume, try topping this one that I saw while trick or treating. A real horse in costume cruising the streets 🙂 This will be tough to beat! On to the blog. What does the 2021 Colorado Election mean for you? Are your taxes going up? How high? What does the election mean for property owners?
There were several important questions on the ballot and based on the voting some very apparent trends have emerged. Here are some highlights:
Statewide 2021 Colorado Election measures
All the statewide measures failed. The biggest item impacting real estate was proposition 120:
Projected to Fail: 42.79% Yes; 57.21% No
The statewide proposition would lower the property tax for multi-family housing (from 7.15 percent to 6.5 percent), as well as the tax assessment rate for lodging properties like hotels and AirBnB rentals (from 29 percent to 26.4 percent). The proposition was originally intended to apply to single-family homes, though the state legislature passed laws this summer that reduced the scope of Proposition 120.
Unfortunately proposition 120 was doomed when the legislature gutted the bill by passing a short term measure reducing property taxes on all residential property owners. Proposition 120 then became narrowly focused on lodging and multifamily properties and voters were not interested in giving tax breaks just for these two specific property types.
Although 120 did not win, I think there will be a big push in the 2022 election for a similar measure that is more broad to give relief to residential property owners who are now facing big jumps in taxes due to huge appreciation the last several years.
2021 Denver election Real Estate measures
Denver voters continue their pattern of spending for almost anything which will substantially increase property taxes in the future. The price tag for this election 260 million that will be paid by property owners through taxes. I’m always amazed that voters continue to pass initiatives for affordable housing, but one of the key reasons housing is so unaffordable is the tax burden on lower income households continues to rise. I don’t think voters fully understand the implications of the increased spending. Here are four that passed in Denver:
Projected to Pass: 62.52% Yes; 37.48% No
The first of the RISE Denver measures would allow the City and County of Denver to borrow $104 million for improvements to public facilities including the Denver Zoo, the Denver Museum of Nature and Science, and the Bonfils Theater Complex. The initiative would also provide funding to build two new libraries and fund upgrades to help several Denver facilities accommodate people with disabilities.
Projected to Pass: 60.14% Yes; 39.86% No
Question 2B asks voters to allow the city to borrow $38.6 million to purchase and redevelop buildings, and turn them into shelters for people experiencing homelessness. The funding would be expected to provide 200 to 300 individual shelter rooms across the city.
Projected to Pass: 60.36% Yes; 39.64% No
Question 2C asks voters if the city can borrow $63.3 million for transportation projects including expanding the city’s sidewalk network, renovating and building bike lanes, and creating neighborhood bikeways and a commuter trail around downtown. Additionally, Question 2C would allow the city to repair stretches of Morrison Road to establish a cultural and arts district.
Projected to Pass: 61.31% Yes; 38.69% No
A yes vote on Question 2D would allow the city to borrow $54 million to build two new public parks and repair the facilities—including playgrounds, bathrooms, and athletic courts—at existing parks.
The resort communities (Colorado ski towns) Real estate measures
The elections in resort/ski communities throughout Colorado had some resounding themes that will drastically alter the real estate landscape. Here at the three major themes in order:
- Nightly rentals: This was the key issue in every resort town. The push to regulate, tax, and prohibit short term rentals in areas is just beginning. As new city councils/boards are sworn in because of this election, this issue will continue to get supercharged with big changes coming down the pipe. Here are a few of the changes
- Crested Butte: A lodging tax of 2.9% applied to all short term rentals
- Leadville: 70% of voters approved a 3% tax on nightly rentals
- Vail/Avon: 2% tax on nightly rental (non-commercial)
- Telluride had 3 initiatives:
- Increase lodging tax
- Increase short term rental license fees
- Cap the number of short term rentals to 400( as of writing this one did not pass)
- Affordable housing: The overwhelming majority of fees collected above will go to affordable housing projects to help residents cope with the huge increases in prices
- Focus more on residents than tourism/ greater balance: As I watched the council elections. Almost every candidate brought up quality of full-time residents’ quality of life. Here is a quote from a recently elected council member in Steamboat that won despite her opponent (a realtor considerably outspending her)
- Gail Garey : “Right now, our community is at a crossroads. I am running to ensure that present and future generations have the same opportunity we did to live and work in this community and enjoy all it has to offer. We need to grow in a way that balances our quality of life, our economic vitality and the preservation of our natural environment and community character. (Steamboat today)
Summary: What does the 2021 election mean for Colorado property owners?
In Denver, the march higher in property taxes continues with no abatement in sight. When properties are revalued in 2023, there is going to be a huge wake up call as taxes jump even further. In the mountain towns there has been a seismic shift on nightly rentals, affordable housing, and prioritizing residents’ quality of life. Look for increased restrictions and taxes on nightly rentals. If property owners are banking on the income from a nightly rental, this could drastically change very quickly with bans in certain areas or on certain property types.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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