Home builders, others concerned with proposed town tax hikes

Council approves 1st reading of ordinances slated for Nov. ballot

Thelma Grimes
tgrimes@coloradocommunitymedia.com
Posted 7/26/21

As the Castle Rock Town Council continues to take the required steps to ask voters to approve four new revenue streams in the November election, residents, officials and organizations are starting to …

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Home builders, others concerned with proposed town tax hikes

Council approves 1st reading of ordinances slated for Nov. ballot

Posted

As the Castle Rock Town Council continues to take the required steps to ask voters to approve four new revenue streams in the November election, residents, officials and organizations are starting to weigh in on the proposed tax increases.

During the July 20 meeting, council members approved the first reading of four ordinances planned for the Nov. 2 ballot, asking voters to approve four separate tax measures:

New home construction tax — If approved, the tax would require homebuilders to pay $7 per square foot on permits for new single- and multi-family homes built in Castle Rock. The increased revenue from the tax would fund 75 police and fire positions over the next five years.

Lodging tax — A 6% tax on overnight stays of less than 30 days in town. The revenue would go toward the town's parks and recreation services and maintenance operations.

Sales tax increase — An additional tax of one penny on every $10 taxable purchase to use solely for open space and trails purposes, including preserving open space. The town currently has a 4% sales tax. If approved by voters, sales taxes would increase to 4.1% in April of next year.

10-year TABOR timeout — If approved, this would implement a 10-year timeout from the revenue restrictions of the state's TABOR law. The extra revenue would be used for police and fire services and help fund the construction of the interchange at Interstate 25 and Crystal Valley Parkway

Morgan Cullen, director of government affairs for the Home Builders Association of Metro Denver, spoke out against the proposed new-home construction tax.

Cullen said if voters approve the proposed tax, it could add another $15,000 to $20,000 to the cost of building a home in an already strapped housing market.

Add that to the increased cost of lumber and building supplies, and Cullen said by this time next year, potential Castle Rock homebuyers could be paying $50,000 more on a home.

“This new tax increase will put the dreams of homeownership out of reach for tens of thousands of Coloradans and calls into question whether the town's projected revenue will actually materialize,” he said. “Where do you propose people of modest means should live here in Castle Rock? Where do you propose housing these additional police officers and firefighters that you wish to hire? They won't be able to afford to live in Castle Rock.”

Cullen said homebuilders already pay “considerable” impact fees, while noting the association is not in favor of placing Castle Rock's current financial dilemmas on the shoulders of future residents. Additional police and fire resources benefits the entire community, Cullen said, and everyone should help pay the cost through other revenue streams such as added property taxes.

Douglas County Commissioner George Teal spoke in an official capacity and as a Castle Rock resident. Teal raised concerns with the measure asking voters to pause TABOR refunds for 10 years.

Town Manager David Corliss said part of the need for a TABOR pause is to pay for the construction of the Crystal Valley interchange at Interstate 25. Teal said in preparing the upcoming year's budget, Douglas County commissioners are planning to help pay for the costs of the project.

While the final dollar amount has not been decided, Teal said the assistance to help the town will be “substantial.”

As a resident, Teal said he understands the dilemma the Castle Rock council is facing in trying to overcome funding shortfalls to meet police and fire department staffing needs. Teal asked councilmembers to “turn away from doing a TABOR timeout.”

Castle Rock couple, Wayne and CarynAnn Harlos, spoke out against all four of the proposed tax measures on July 6 and again at the July 20 meeting. Wayne took issue with town officials saying the TABOR timeout is not a tax increase. Wayne said under state law, the TABOR refund is part of returning excess revenue back to residents. Wayne said those refunds are tax dollars, which means if the town keeps them, it is a tax increase.

For those who are “affluent” in the community, Wayne said the proposed tax increases may mean nothing, but for those struggling, even a minimal sales tax increase will make a big difference.

In a presentation to the council, Corliss said residents continue to submit more questions regarding the proposed tax measures. Corliss stressed that questions are welcome and will continue to be answered on the town's website through Aug. 17 when the council is slated to approve the final ordinances.

Residents can submit questions through the comment form at CRgov.com/2021Election.

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