Assessor Wins Contested Legal Showdown Against Creek Retail Owners

~ by Rick Langenberg ~

In a case that could have big implications for the Cripple Creek casino industry and for non-gaming retail business owners, the District Court last week ruled in favor of the Teller County Assessor’s Office, ending a year-long battle regarding a highly contested tax battle.

The case pitted Tim Braun, a high profile retail business owner and community leader in Cripple Creek, who also serves as the president of the RE-1 School District Board of Education, against Assessor Betty Clark-Wine. Closely watching the legal proceedings were officials from the RE-1 School District and the city of Cripple Creek, who questioned if they are getting a fair share of their allotted tax revenue.

But unless this case is appealed before the Court of Appeals, this battle has officially ended, a verdict that some political observers view as another big tax blow for the local non-gaming retail industry. Since the early 1990s, concerns have mounted about the health of the town’s retail store base due to escalating property values, spurred by the advent of limited stakes gaming.   

District Judge Theresa Cisneros last week concluded that Braun and his wife, Anita, owners of the Hitchin’ Post gift shop, located next to city hall at 333 Bennett Avenue, didn’t prove their claims regarding their proposed value reduction of nearly 40 percent for their store. The judge sided with the assessor’s office regarding the value of their retail property at close to $200,000 for the 2015 assessment period. The Brauns had sought a big reduction of their retail store value to the $125,000 level. 

“The petitioners have not met their burden of proof and they failed to provide the court with any other basis to determine a different value for the property,” said Cisneros, in a ruling filed on Aug. 1. “The court finds that her (Assessor Betty Clark-Wine) opinion based on the market approach is credible and supports the Teller County Board of Equalization’s value of $195,000.”  

At issue was whether the assessor’s office was unduly punishing a retail business owner for an old structure that experienced problems from natural aging and a slew of infrastructure woes.

Also, at stake, were serious allegations that the county was unduly favoring the casino industry in the way it assessed values. If the court ruled in favor of the Brauns, then big changes may have occurred regarding the future tax bills for local gaming establishments. 

“I am not asking for any special favors,” blasted Tim Braun, regarding the assessment of the couple’s gift shop during a county hearing last year. “I am asking for fair and equitable treatment. I don’t understand why the small business’ taxes were increased 60 to 70 percent when casinos’ (taxes) were reduced. There is nothing that makes sense here whatsoever.”

 Moreover, Tim Braun for the last year argued that retail shops are paying a dramatic increase in taxes on a square footage basis compared to casinos. According to a chart previously compiled by Braun, small shops are getting taxed at a rate as high as $2.43 a square foot, while casinos are seeing their taxes plunge to rates of .33 and .31 cents per square foot. As a result, he said their taxes are increasing by a hefty margin, while casinos are seeing their taxes decline. Plus, he cited the fact that many of these retail structures are quite old and not in the best condition.  

But Clark-Wine stated that making square-footage comparisons between Creek retail shops and casinos can’t be done, as they are vastly different commercial uses.  “You can’t compare retail stores with casinos. There are a lot of other factors involved,” said Clark-Wine, following last year’s hearing.

The judge, in her ruling, expressed similar findings. “The court does not engage in an equalization analysis based on values assigned to other properties, and instead the court determines whether the assessor’s valuation of the specific property at issue is correct based on its specific attributes.”  

“This was a decision we were expecting,” said Clark-Wine, regarding the verdict. “We felt that we had a strong case on legal grounds.”

Clark-Wine’s office had assessed a value of $202,242 for Brauns’ gift shop. Then following a county Board of Equalization hearing in July 2016, it was lowered to $195,000.

But the retail owners weren’t satisfied with this finding, and opted to take their case to the District Court level.

The battle between the assessor’s office and the Cripple Creek business owners escalated over the last year and culminated with a trial, held in the county courthouse last June.

And closely watching the proceedings were officials from other government entities in the district, who had a stake in the outcome.

 The Braun appeal got the attention of RE-1 District Superintendent Les Lindauer, who attended the original 2016 board of equalization hearing, as did Cripple Creek City Administrator Ray DuBois.  “There is no effective formula here. I might as well roll the dice with our budget,” said the district superintendent at the time.  

According to the superintendent, the RE-1 district is getting clobbered with much lower revenue. And with reports of an uptick in gambling activity, he questioned the process that some believe punishes nongaming retail properties and lets casinos off the tax hook. According to DuBois, this case didn’t really impact Cripple Creek because they receive so little money from property taxes.

 According to Clark-Wine, the Hitchin’ Post owners were the only Creek retail owners in the district who appealed their values.

She cited the fact that the Brauns purchased the property for $195,000 as probably a convincing factor for the judge. Clark-Wine stated that in valuing properties, such as the Hitchin’ Post, they must rely on the market approach that evaluates comparable sales in the area.

She stated that this legal case had one extremely positive impact for their office. She said they now have developed a better way to evaluate old, historic buildings that may get remodeled. Other retail businesses, such as The Creek restaurant, were changed during the 2017 assessment period, noted Clark-Wine   

The retail business owners may have lost this particular fight against the assessor. But the county commissioners agreed to give them a slight break for their most recent 2017 assessment, lowering their gift shop property value by $30,000. This followed a recent presentation by Braun during a county commissioners meeting last month. 

“That is as far as I am taking this case,” said Braun, in an interview last week, regarding the assessment fight. He said he wasn’t surprised by the court’s decision, based on the limited evidence accepted during the trial in June. He agrees with assessment critics, who view this court decision as a further legal signal that small non-gaming retail businesses aren’t welcome in Cripple Creek.   

 

Assessment Protests

In other property assessment news, Clark-Wine reported that the protests and appeals for 2017 property values have officially ended at the county level. 

And despite certain reports, the assessor maintains that Teller experienced considerably fewer protests and appeals before the county board of equalization than two years ago. (Property revaluations occur every two years during odd years.)

Based on 2017 values sent out to property owners, she stated that her office received 1,171 protests, which is down from 2,273 posted in 2015. As for appeals, the county had 153 appeals, compared to 281 two years ago.

Oddly enough, the county this year experienced a big increase in protests for agricultural properties, with 20 percent of the protest filed coming from ag owners. “That was a bit surprising, since agricultural rates are set by the state,” said Clark-Wine.

According to the assessor, if property owners are still unhappy with their values, they have the option of taking their claims before the state Board of Equalization, District Court or engaging in arbitration.