State Legislature offers tax relief for property destroyed by flooding

HB 14-1001 will keep Boulder County taxpayers from shelling out nearly $600,000 in taxes for unusable property

Property taxes are still due on homes so flood-damaged they\'re unlivable.

For Terry Mayes, the past five months have been filled with hours of often circuitous phone calls with insurance companies, banks, restoration services and countless other federal, state and local entities. Her home of 19 years on St. Vrain Road just outside of Lyons still stands, but it’s abandoned, gutted and mildewed. Bathtubs, sinks and toilets, now covered in snow, sit in the front yard where lush grass and mulched flowerbeds once were. The St. Vrain River flows peacefully behind the house, never hinting at the destruction it wrought over just a few days in September.

Like thousands of Coloradans living along the Front Range, Mayes and her husband, Bart, lost nearly everything they had — their home, most of their furniture, priceless mementos like photos and record collections — in September’s historic flooding.

They’ve purchased a new home in Berthoud that Mayes says they’re happy with. But the Mayeses, and hundreds of other Boulder County residents, are still responsible for property taxes on their destroyed home.

“So now we have two $5,000 property tax bills at a time when we’ve lost most of our possessions,” says Mayes. “We needed some relief.”

Mayes was sitting in her mother’s living room in late January when she heard via the evening news that relief might be on the way.

“There was a very small blip that said the Colorado Legislature was going back into session: ‘And bills they will take up this year include …’ and one of them was a property tax credit for people affected by the flood, and my ears just [perked up],” says Mayes.

The Mayeses owe a combined total of $9,647 in property taxes for their damaged property in Boulder County — which consisted of their main residence and a “lodge” that wasn’t zoned for residential use — and their new home in Larimer County. Their property in Lyons qualified for the Federal Emergency Management Agency’s (FEMA) Hazard Mitigation Grant Program, otherwise known as the “buyout program.” FEMA provides money to the state, which in turn allocates money to counties to fund “hazard mitigation measures” after a major disaster. Buyout funds can be used in a number of ways, such as elevating a home to reduce risk of flooding, or to purchase property that is in danger of repeated damage.

But the buyout program is time consuming, often taking one to three years for completion. And residents like the Mayeses can’t know what can be done with their property until FEMA and Boulder County finish redrawing hazard maps that designate areas as either in the flood plain or the floodway.

“If we’re in the floodway, we can’t rebuild at all because we’re uninsurable by FEMA,” says Mayes. “If we’re in the flood plain, we can rebuild, but now that we’ve been determined to be over 50 percent destroyed on both properties, we’d have to fulfill flood proofing requirements that could force us to purchase up to $30,000 of increased compliance coverage.”

With more than 1,500 flood destroyed homes across 17 counties in Colorado, Rep. Jonathan Singer (D-Longmont) says the state Legislature has made recovery a major priority.

“I won’t say it’s [the] most important thing this year, but my number one priority is to figure how to recover from the worst disaster in not only the district’s history, but in Colorado’s,” Singer says.

The property tax problem came up during a community meeting with a number of Lyons evacuees shortly after the flooding, Singer recalls.

“One Lyons resident put up his hand and asked if he was going to owe taxes on property that’s not even there anymore,” he says.

Singer says he and Sen. Rollie Heath (D-Boulder) “literally ran out of the room” and called the Boulder County treasurer and assessor at their homes to get the ball rolling on new legislation.

The result is House Bill 14-1001, which establishes a state income tax credit for real or business personal property that’s been destroyed by natural causes.

Jerry Roberts, Boulder County assessor, says the county consulted with other assessors and referred to FEMA standards to create local guidelines for appraisers to determine which homes qualify as “destroyed” and which as “damaged.”

Property is considered destroyed if a building has moved off its foundation, is missing walls or a roof, or if there was water, mud or debris that filled the building above the doorknob in the first-floor living area. Damaged homes, such as those with flooded basements, don’t qualify for the tax credit.

Singer says the first iteration of the bill requires qualifying property owners to pay their county property tax before the state will issue an equivalent income tax refund. The owner would be taxed for the full value of the property up through the date the structure was destroyed, which Roberts says the Assessor’s Office assumes to be Sept. 12.

The Legislature is already working on an amendment to the bill that will allow the state to backfill county treasurers’ offices for discounted property taxes, so qualifying residents will never see a property tax bill, and counties can still have the money they typically rely on to rebuild damaged roads, bridges and public service facilities.

“If the state gives it back to us, then it doesn’t come back on the county’s shoulders,” Roberts says.

In Boulder County, Roberts says, 353 real properties (immovable property, such as land and homes) and eight personal properties (movable property, such as appliances in commercial buildings) were destroyed, adding up to a total of $592,591 in taxes owed to the county.

Singer says the state Legislature is still determining the life span of HB 14-1001.

“We’re still looking at whether we want this to be something that continues in perpetuity or for these tax years initially,” Singer says. “Things we’re looking at in terms of state budget priorities, but also in terms of natural disaster prorates — is this the best use of [state] money … in the next natural disaster, or are there other things we can do?” No matter where their former home falls on Boulder’s redrawn hazard maps, Mayes says she and her husband won’t be moving back to Lyons.

“It seems to me that this could happen again, and somebody else — it wouldn’t be us — would be in the same shape,” she says.

If FEMA doesn’t buy their property, the Mayeses will be forced to rebuild on the land to recover their investment. However, if FEMA does buy the land, she’d like to see the Town of Lyons turn the whole 6.7 acres of it into a park. She says, “I can think of nothing more lovely than coming back here in 10 years and seeing the maple tree I planted and saying, ‘I planted this. I can’t live here anymore, but I left a legacy.’”