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 April 1, 1996

Counterpoint: Wal-Mart assessment hammers governments

The parties had been unable to agree on its valuation for lack of existing comparable values — the facility is a warehouse of nearly 1 million square feet.

State law allows the assessor to use cost, market or income as approaches to determine value. The assessor had used building construction cost (about $35 per square foot) in prior valuations. Wal-Mart argued the property was not a specialty building. Thus, cost was not the proper method to determine value. It urged an income approach, which, according to the company, valued the property at $20 per square foot.

The parties have compromised at $22 million — reducing current year’s property taxes by more than $265,000 and prompting an additional $265,000 refund in last year’s taxes.

The next case in appeal is the valuation of Fort Collins and Loveland Hewlett-Packard Co. facilities. The assessor values these facilities at $65.7 million, and the company proposes valuations of $39.5 million. If the company’s valuation is upheld, its current-year tax burden would drop by $670,000, with rebates for earlier years exceeding another $1 million.

Can school districts, local governments and Larimer County afford to pay out another $1,670,000 to Hewlett-Packard on top of the $530,000 to Wal-Mart? Even if the parties agree just to split the difference, the aggregate government tax loss will be $875,000.

Will not every large business in Weld and Larimer counties be tempted to seek status as a common property type, instead of a specialty property? The Gallagher Amendment — assessing business at 280 percent of residential rates — is causing business to look closer at its property-tax burden. Fighting to have properties re-assessed at lower rates appears to be the next step in the never-ending battle.

A Windsor anomaly

If a Windsor resident buys a car from a Windsor business holding a sales-tax license, a 3 percent sales tax would be charged. However, if the same resident buys a car in Fort Collins, Loveland, or Greeley, would any tax be paid? No — because Windsor doesn’t levy a use tax.

A use tax allows a municipality to collect a tax to complement its existing sales tax. The most ironic twist to lack of a use tax is that most of the town’s new residential construction avoids taxation because the building materials are purchased outside of Windsor.

More payroll lost

On March 13, 1996, Taiwan Semiconductor announced a 500,000 square-foot plant in Camas, Wash. The $1.2 billion computer-chip facility will employ 250 people when it begins operating in 1998. About 800 workers are expected to be employed by 2000.

In late 1995, Mayor Ann Azari, City Manager John Fischbach and other city staff met with company officials to discuss a potential Fort Collins location. In announcing its decision, the company cited an incentive that lured it to Washington, where manufacturers are exempt from paying sales tax on the purchase of machinery and equipment used in manufacturing. With such missed opportunities, one wonders how long Fort Collins can prosper from its 3 percent tax on manufacturing equipment.

Former Fort Collins mayor John Knezovich is a certified public accountant.

The parties had been unable to agree on its valuation for lack of existing comparable values — the facility is a warehouse of nearly 1 million square feet.

State law allows the assessor to use cost, market or income as approaches to determine value. The assessor had used building construction cost (about $35 per square foot) in prior valuations. Wal-Mart argued the property was not a specialty building. Thus, cost was not the proper method to determine value. It urged an income approach, which, according to the company, valued the property at $20 per square foot.

The parties have compromised at…

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