Larimer’s commercial tax-assessment hikes: Fair or ‘egregious’? - Reporter-Herald --- BizWest
Thomas Clayton
Larimer’s commercial tax-assessment hikes: Fair or ‘egregious’?
Appeal deadline looms at midnight Monday
The Larimer County Administrative Services Building, 200 W. Oak St. in Fort Collins. Christopher Wood/BizWestFORT COLLINS — Are sharp hikes in assessed value of commercial properties in Larimer County an outlier in Northern Colorado, or do they simply reflect the region’s rapid growth?
Depends on whom you ask.
With the approach of Monday’s deadline to appeal property-tax assessments, many owners of commercial parcels in such booming cities as Fort Collins and Loveland are howling about what they see as unwarranted increases that don’t jibe with the market or rates in surrounding counties.
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But county assessor Bob Overbeck told BizWest that, so far, the number of appeals his office is fielding is “at a record low.”
As of Thursday, he said, “for all appeals, I have 7,750, with just 1,150 commercial, That’s a multi-decade low. To see anything at this level, you have to go back to 1997.”
In comparison, he said, his office handled 2,650 appeals in 2023.
And yet Ann Hutchison, president and CEO of the Fort Collins Area Chamber of Commerce, told members that the valuation notices sent out by Overbeck’s office on May 1 reflected “annual appreciation of 30% to 100% or more.”
Reached Thursday, she told BizWest that “we are definitely hearing from a number of businesses that if they don’t get relief through the appeals process, they’re looking hard at whether they can continue to be an active business in Northern Colorado.”
Pete Kelly, senior vice president at CBRE, said the increases in Larimer County “aren’t reasonable; they’re egregious.”
Most businesses that lease their space “operate in triple-net fashion,” Kelly said, referring to agreements in which the tenant promises to pay all expenses, including real estate taxes, building insurance and maintenance, in addition to the cost of rent and utilities.
“It puts a big burden on a tenant or business owner, and increases the burden on property owners for any vacancies,” he said. “Why it’s happening, we are trying to figure that out.”
Chad Hirschfield, who owns Signal Car Wash at 1705 N. College Ave. in Fort Collins, said his assessment went up from $1.3 million to $1.8 million.
“The land isn’t worth $750,000,” he said. “The $300-a-foot range is the same value you’d put on an office building, and we’re just open bays and cinder blocks.”
Gerard Nalezny, chairman and CEO of Verus Bank of Commerce in Fort Collins, called the increases “arbitrary.”
“Some businesses are seeing little or no increase, and others substantial increases of 150% to 200%. It’s all over the board,” he said. “I know of two businesses that, if they’re unsuccessful in their protests, are considering shutting down. They’re going to be making decisions about whether to litigate or close.”
Restaurants, especially, operate on profit margins that have always been tight, he said. “Food costs and labor costs continue to go up, so their ability to price is under pressure. So in many cases, these assessment increases are a substantial threat to their ability to run profitable businesses.”
With many restaurants operating on a 2% to 5% profit margin, Hutchison said, “some of these increases will mean their property taxes are more expensive than their rent per square foot.”
And in a four-page letter sent last Sunday to Overbeck’s office, Northern Colorado Commercial Association of Realtors board president Rico Devlin and vice president Jamie Globelnik wrote “to formally express significant concerns regarding the recent property reassessments conducted across Larimer County in the 2025 cycle. These concerns are shared widely by our membership, their clients, and many tenants, which represents a substantial cross-section of the commercial real estate community in Northern Colorado.
“We have observed many commercial property owners who have received reassessed valuations reflecting increases of 60% to over 200%,” they wrote. “These adjustments are not only dramatic, but in many cases, appear to lack alignment with current market realities. Such increases create undue financial pressure on property owners and tenants alike, particularly in a time of persistent economic uncertainty, higher interest rates and increasing inflationary pressure from rising insurance rates, utility rates and overall higher operating expenses. All these factors put downward pressure on valuations and moreover create substantial financial challenges for business owners who own or lease property in Larimer County.”
The double- and triple-digit increases “appear to be central to Larimer County,” Hutchison said. “I’m hearing Weld County’s increases have been averaging around 5% to 7%, and other counties have had similar ranges of around 5% to 10%.”
Why does Larimer County appear to be an outlier?
“That question is being asked by a lot of people in the business community, and nobody seems to have an answer,” Nalezny said. “This is a Larimer County event. We’re not seeing the same thing in other counties in Colorado.”
Josh Guernsey, managing partner at Fort Collins-based Waypoint Real Estate, which manages more than 7 million square feet of commercial property, agreed that it “seems more drastic in Larimer than in other counties.” While acknowledging that “each county has their own approach and methodology,” Guernsey said “it does seem like our values increased much more drastically than in Weld or south Wyoming.”
Indeed, Weld County assessor Brenda Dones told BizWest that “we didn’t see significant increases, certainly nothing that caught us by surprise.
“And there’s definitely not an increase in appeals,” she said. “That number is lower than we have been for the last several cycles. A lot of commercial appeals will come in at the very end because they’ll hire a tax agent to represent them, but still we’ll be lower than we’ve been in the past several years.”
Weld County “hasn’t been much of a concern, even though we’re keeping an eye on it,” said Gage Osthoff, managing broker of Realtec Commercial Real Estate Services Inc. in Greeley. “Most assessments have been flat, in line with what the market did in that time period. We also took a look at some properties and thought the valuation they were given was not outside of the market value.”
He acknowledged that county assessors have a tough job. “It’s not an easy job to do what they do, but I think it’s pretty important to look at those data points,” he said. “It’s a challenge to do all that, but if you don’t do it correctly you’re going to have a lot of upset taxpayers.”
Jay Yamashita, assessor for the City and County of Broomfield, said he has seen a median increase in commercial assessments of around 5%, but added that, “no matter what, everybody’s going to appeal office values.”
Boulder County assessor Cynthia Braddock could not be reached for comment, but Becky Gamble, CEO of Dean Callan & Co. in Boulder, said she had seen some increases in Boulder County, but “particularly more city related.” And even when they don’t reflect a change, she added, it’s not good.
“Values have gone down, and assessments should reflect that, but they’re not,” she said. “And that’s across the board, for all property types.
“When you have downtowns with operating expenses collectively higher than base rents, that’s not good no matter what kind of market you have.”
Jim Ditzel, a partner and broker at Niwot-based Summit Commercial Brokers, said his company is working with one business, a 28,500-square-foot industrial building in Lafayette, for which the assessment was $4,397,400 in 2023 but ballooned to $8,504,500 this year.
“I hope it’s more of an outlier,” Ditzel said. “That was the most extreme one, but it’s real and we’re going to appeal it for them.”
Why such an increase?
“I don’t want to say there’s any insidiousness. I think it’s technology,” Ditzel said. “They’re relying on computers to determine these valuations based on things they find online. Some of these, like this one, it’s an error, and it’s up to property owners to catch that and appeal.”
In fact, the Larimer Small Business Development Center sent out an alert to businesses in the county on Friday morning, urging those impacted to take the appeal process before the deadline.
“Don’t wait! You have until midnight, June 9, 2025, to file a protest if your valuation is high,” the SBDC said in the email. “If you own your commercial property or you are leasing, we encourage you to check your valuation and engage in the appeals process.”
It makes sense for businesses to stand up and fight for themselves through this process, Huchison said.
“We’ve been on a messaging campaign over the last week and a half, strongly encouraging all in the business community who lease or own to get into the process of appeals,” she said. “I’m most anxious for lessors that don’t have a lot of contact with their owners.”
Overbeck, however, said the increases merely reflect the market.
“I can understand why people could be surprised,” he said. “I’m very sympathetic about sharp increases, but we’re reporting the market and following state statutes.”
He cited booming areas such as the blocks around the Foundry project in Loveland and improvements along North College Avenue in Fort Collins.
“That was a public-private partnership, and it’s creating what people wanted, that economic spark,” Overbeck said. “We’re just reporting the market.
“We value everything up until June of 2024. We don’t look at the 2025 market,” he said. “Under state law, our cutoff date is June of an even year. That’s all the sales and debt analysis we take in. Anything that happened recently wouldn’t count in 2025.
“We’re supposed to use comparable market sales,” Overbeck said, citing instances in which buildings were sold at more than their assessed value, including the Japango restaurant at 125 S. College Ave. and the one-story office building at 301 N. Howes St. near City Hall.
“Japango sold in 2024 for $4.8 million, and we had it assessed at $4.6 million, up from $3.36 million in 2023,” he said. The Howes building “sold last year for just under $2.3 million, which was a 45% increase from what we had assessed it at in 2023.
“We’re just recording the market and then applying it to the unsold,” he said. “It is understandable that these values have been surprising.”
Assessments vary, he said, because of size and location. “Something along busy College Avenue is probably in a premium market, with more market activity than somebody who’s further down and more rural.”
He said assessments rely on three approaches: an income approach for every business, “basically done by hand”; a cost approach, “what it costs to build”; and a market approach, “the time-adjusted sales price, and how properties are trending.
“We time-adjust it with all the other properties in that area, and use sales that have recently happened to apply them,” he said. Referring to capitalization rates, a number expressed as a percentage and calculated by dividing net operating income by the total cost of a property,” Overbeck said, “As far as what cap rates are being considered, we go down the middle.”
Tom Livingston, owner and president of Livingston Real Estate and Development, protested three properties in Old Town Fort Collins and said that “the problem is that the cost approach is always going to be higher because existing property values always lag behind new construction costs.
“If the market rents have not increased, or in fact decreased, and at the same time vacancy rates increase,” he said, “that clearly demonstrates demand is down. and therefore, based on the income approach for commercial real estate in general, the value should not increase.
“And yet I saw the assessment for a small Old Town property go up 74%. Same tenant and same rents for the last five years, but no increase in income other than consumer price index.
“Another one increased by 56%, also stable rents with no increases above CPI, which is about 3%.” A third one went up 25%.
“Those three were overvalued in a stable market with no increased rents and no new construction to speak of.”
The letter from the Northern Colorado Commercial Association of Realtors also challenged some of Overbeck’s formulas.
“We understand your office is in the midst of a demanding assessment season,” Devlin and Globelnik wrote, but “we respectfully request all county appraisers and appeal personnel to consider reasonable adjustments where inconsistencies exist. These valuations will have long-term implications for property owners, tenants and our local business community.”
They wrote to Overbeck that “the capitalization rates used by your office in many cases are significantly lower than what market participants are observing, creating inflated valuations. Across a range of product types, brokers are consistently seeing cap rates that are 100 to 200 basis points higher than those applied in the assessor’s valuations, considering most properties are purchased using debt financing with a cap rate spread over borrowing rates.”
They questioned how his office is defining and sourcing “market rent” figures and charged that they “seem to overlook critical factors that contribute to effective rents such as tenant-improvement concessions, rent abatement, lease incentives, elevated vacancy, and the softening of demand during the reassessment period.”
While they wrote that they “understand and appreciate that your office must operate within the framework of the state’s assessment guidelines, we encourage a more robust integration of real-time, local market data provided by commercial brokers who are actively engaged in transactions across Larimer County.”
They also wrote that the “commercial time adjustment tables provided seem to be arbitrary relative to commercial properties,” and that “some properties appear to be assessed at uniform rates, which often cite the higher end of comp sets available.”
Overbeck urged every property owner who disagrees with the approaches his office uses to “come to my office or do a phone conversation, discuss your valuation and appeal it.”
If their appeal is rejected, they can go before the Board of Larimer County Commissioners who sit as the county Board of Equalization, then to the state board of assessment appeals — or even to arbitration or District Court.
Guernsey acknowledged that “the county’s been great about encouraging us to submit protests along with good data for them to review,” and Hutchison added that “it makes sense for businesses to stand up and fight for themselves through this process.”
 | Tom Clayton Communication and Media Specialist, Public Affairs |
| Commissioners' Office 200 W Oak St, Fort Collins, 80522 | 2nd Floor W: (970) 498-7005 tcla...@larimer.org | www.larimer.org |