Agenda Date: 2/17/2015
Subject:
Title
Ordinance on second reading changing the definition of owner as it pertains to refunds for the elderly
Body
Presented By: |
Doug Farmen, Finance Director |
POLICY QUESTION:
Does city council support changing the property ownership requirement by adding a legal entity (trust) provision related to the city's Elderly Refund Program?
BACKGROUND:
Council Member Stahlman proposed an ordinance to change the ownership status of trust-owned properties' eligibility for the Elderly Refund Program.
The program was initiated in 1975 under chapter 11 of title 1 of the city code. The program details are attached and outline a refund of property taxes, sewer service charges and/or storm drainage utility fees based on an applicant's age of at least 65, one calendar year residing in the property dwelling and property taxes paid on that property in the refund year. The refund amount is based on the dwelling's assessed valuation; elderly lessees/renters are also eligible for refunds. Refunds range from $10 - $100.
The city code describes the refund (1-11-4) in two ways: owner (up to $100 refund) and renter (up to $30 refund). The owner's definition is "that person of record in whom is vested ownership, dominion and title of the said dwelling." In the past, the city has received numerous requests from citizens who have changed the legal property title to a trust entity for estate planning purposes and would like consideration as the 'owner' for refund purposes. In 2002, the city attorney's office determined that a trust doesn't qualify for the refund.
STAFF ANALYSIS:
Colorado exempts 50% of the first $200,000 of actual value of the assessment of residential real property of an owner-occupied property. For $100,000 exempted value, this equates to $703 annual savings for a Littleton citizen ($100 x 7.96% residential value x 88.364 mills for 2014). A provision allows for the owner of record to be a trust, corporate partnership, or any other entity solely for estate planning purposes and is the maker of the trust or other entity. The City of Littleton estimates that approximately 200 trusts exist for estate planning purposes; however, this information has not been collected over the years.
FISCAL IMPACTS:
It is difficult to estimate the fiscal impacts but if 200 trusts were now to receive the higher 'ownership' refund of $100 ($70 higher than the 'renter'), that equates to $14,000 annual increase in refunds. The General Fund impact is 90% or $12,600 of this estimated annual amount.
STAFF RECOMMENDATION:
Due to the high average annual state-approved exemption amount of 36%, staff does not support the ordinance. If council approves this ordinance, staff suggests adjusting the assessed value table, increasing the values by 442% (4.42 times the assessed valuations) to account for inflation since 1975.
PROPOSED MOTION:
Proposed Motion
I move to approve on second reading the ordinance changing the definition of owner as it pertains to refunds for the elderly.