Douglas County is suing a state board that last month blocked the county’s creative attempt to offer a $28 million property tax break to homeowners by making an across-the-board reduction in previously determined home values.
The 15-page lawsuit was filed Tuesday in Denver District Court against the State Board of Equalization. It argues that the board didn’t have the authority to block the tax break and that it didn’t follow Colorado’s open meetings laws in doing so.
The county is asking a judge to overturn the board’s unanimous decision to stop the reduction in home values.
The Douglas County Commission voted in September to reduce the county’s valuations, determined in May, of single-family homes, townhomes and condominiums by 4%. Assessed property values must be within 5% of the properties’ market value to comply with state law.
Property valuations, which are done every two years in Colorado, are one of the key factors in determining how much a homeowner pays in property taxes. A lower property valuation means a lower property tax bill.
Douglas County’s commissioners were acting as the county’s board of equalization, which is supposed to correct errors in property valuations. The county’s assessor said housing market conditions were fluctuating in June 2022, when the valuations were dated. But the commissioners said they also acted in the name of tax relief after home values rose an average of 48% in 2022 for calculating tax bills in 2023 and 2024.
When the State Board of Equalization reviewed the value reduction last month, the panel said the reduction was unwarranted and expressed anxiety about how approving the change could set a precedent followed in other parts of the state. They also worried about how the decision could pose a drag on state finances by requiring that more money be routed to the county’s schools.
There are some 300 local districts in Douglas County whose revenues would have been affected by the change.
In its lawsuit, Douglas County said the board doesn’t have authority to make decisions based on property tax revenues and should only be narrowly focused on whether corrections made by county boards of equalization comply with state law.
It’s unclear how long it may take for the lawsuit to play out. In the meantime, the Douglas County Commission reduced its mill levy rate to offer a break in the county’s 2023 property tax bills due in April. The reduction will apply to both residential and commercial property, but it would only affect the county’s budget, not those of local districts and schools.
The commission estimates the rate cut will reduce the county’s property tax revenue by $38 million.
State Sen. Chris Hansen, a Denver Democrat who sits on the State Board of Equalization, said it’s the panel’s job to make sure property valuations are standardized across Colorado and he believes it was doing that work when it reviewed Douglas County’s decision.
The Colorado Attorney General’s Office, which represents state boards and officials in court, declined to comment on Wednesday.
“Because this is active litigation, the attorney general’s office has no comment,” said Lawrence Pacheco, a spokesman for the office.