November 2023
Commercial Property Tax Impact on Commercial Property Owners and the Colorado Economy: 7,520 fewer jobs, a $177M reduction in GDP, and a $223 decrease in household income
About the Author
Steven L. Byers is a Senior Economist for the Common Sense Institute.
About Common Sense Institute
Common Sense Institute is a non-partisan research organization dedicated to the protection and promotion of Colorado’s economy. CSI is at the forefront of important discussions concerning the future of free enterprise and aims to have an impact on the issues that matter most to Coloradans. CSI’s mission is to examine the fiscal impacts of policies, initiatives, and proposed laws so that Coloradans are educated and informed on issues impacting their lives. CSI employs rigorous research techniques and dynamic modeling to evaluate the potential impact of these measures on the economy and individual opportunity.
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CSI is committed to independent, in-depth research that examines the impacts of policies, initiatives, and proposed laws so that Coloradans are educated and informed on issues impacting their lives. CSI’s commitment to institutional independence is rooted in the individual independence of our researchers, economists, and fellows. At the core of CSI’s mission is a belief in the power of the free enterprise system. Our work explores ideas that protect and promote jobs and the economy, and the CSI team and fellows take part in this pursuit with academic freedom. Our team’s work is informed by data-driven research and evidence. The views and opinions of fellows do not reflect the institutional views of CSI. CSI operates independently of any political party and does not take positions.
Colorado Commercial Property Values
The estimated average increase in total commercial property value in 2023 is 26% based on a survey of initial value from county assessors. County increases vary between a low of 0% and a high of 62%. Commercial property valuations by county are provided in the table at the end of this document. This increase would represent the largest annual increase in both value and property taxes for commercial properties in the state annual report records going back to 1993. As shown in the following graph, the total value of Colorado commercial property is estimated to be $187B in 2023 using county assessors’ estimated increases. If total commercial property values grew at the long-run biennial rate of 11.6%, the 2023 total value would be $157B.
In the graph above, the black line shows the total value of commercial property in Colorado if it had grown based on the commercial real estate price index for the U.S. The change in value from 2022 to 2023 differs dramatically from the total value based on both the county assessors estimates and the long-run biennial growth rate. It highlights that the change in commercial property values in Colorado is abnormal in all aspects.
The difference in total value in 2023 of commercial property between the county assessors and the long-run biennial total value of commercial property is $30 billion. While rents are largely dictated by the market, commercial landlords typically pass on changes in property taxes to tenants. However, with historically high vacancy rates, it is harder to recover costs increases through increased rents. They will either bear a larger portion of the increased property values, or the remaining tenants will. Regardless of who pays the increased property taxes, they eventually result in higher prices for goods and services as businesses attempt to maintain profit margins, impacting consumers and economic growth.
Small businesses can expect to be severely affected by these increased commercial property taxes, with a recent NFIB survey showing that 63% of small business owners consider property taxes to be very/moderately burdensome.[i]
Estimated Commercial Property Tax Increases
Using the current mill levy for each county and the estimated value of commercial property, the estimated tax revenue from commercial property was $4.7 billion based on county assessors’ total commercial property value, and $3.9 billion based on the estimated total property value using historical biennial growth rates. The difference between the two estimates is $776 million.
| Estimated Increase in Property Tax Revenue | |||
| Commercial Property | Actual 2023 Growth Rate of 26% | Long Term Compound Annual Growth Rate = 11.6% | Difference |
| 2022 Assessed Value
(Actual From State Report) |
$43,082,912,380 | N/A | N/A |
| 2022 Total Value Estimated | $148,561,766,828 | N/A | N/A |
| 2023 Total Value Estimated | $187,191,114,878 | $156,881,225,770 | $30,309,889,108 |
| 2023 Assessed Value Estimated | $52,226,321,051 | $43,769,861,990 | $8,456,459,061 |
| 2023 Tax Revenue Actual Mills – Estimated | $4,721,779,258 | $3,945,871,414 | $775,907,844 |
Economic Impact of Historically Abnormal Commercial Property Tax Increase on the Colorado Economy
Considering the $776 million difference in commercial property tax revenue to be ‘abnormal’ in comparison to historical changes in commercial property tax revenue in Colorado and the U.S., it can be expected to have an impact on the Colorado economy when vacancy rates are historically high and rents that are typically tied to the consumer price index vary drastically from increases in commercial property valuations.
Using REMI, a dynamic general equilibrium model of the Colorado economy, CSI estimates the impact of the $776M abnormal commercial property tax increase on employment, GDP, and personal income per household. The results are shown in the following table. Higher commercial property taxes result in 7,520 jobs lost, a $177 million reduction in GDP, and a $223 decrease in personal income.
| Economic Impact of Abnormal Commercial Property Tax Increases on Colorado Economy | |
| Category | Abnormal Property Tax Increase = $775,907,844 |
| Change in Employment | -7,520 |
| Change in GDP | -$177M |
| Change in Personal Income | -$533M |
| Change in Personal Income per Household | -$223 |
| 2023 Commercial Property Valuations by County | ||||
| 2022 Estimated Total Value | % Increase | 2023 From County Assessors Data on Total Value Increases | 2023 Total Value Using 30-Year CAGR = 11.6% | |
| Adams | $13,357,339,345 | 43% | $19,095,652,327 | $14,105,350,348 |
| Alamosa | $200,777,545 | 4% | $208,748,413 | $212,021,087 |
| Arapahoe | $17,822,897,693 | 22% | $21,743,935,186 | $18,820,979,964 |
| Archuletta | $199,810,690 | 14% | $227,784,186 | $211,000,088 |
| Baca | $24,981,400 | 15% | $28,728,610 | $26,380,358 |
| Bent | $71,298,069 | 0% | $71,298,069 | $75,290,761 |
| Boulder | $9,837,955,914 | 41% | $13,871,517,838 | $10,388,881,445 |
| Broomfield | $2,595,495,517 | 12% | $2,906,954,979 | $2,740,843,266 |
| Chaffee | $501,627,793 | 21% | $606,969,630 | $529,718,950 |
| Cheyenne | $19,937,014 | 15% | $22,977,408 | $21,053,487 |
| Clear Creek | $146,172,034 | 13% | $164,589,711 | $154,357,668 |
| Conejos | $29,200,324 | 26% | $36,929,650 | $30,835,542 |
| Costilla | $25,687,986 | 4% | $26,715,506 | $27,126,513 |
| Crowley | $103,547,914 | 0% | $103,547,914 | $109,346,597 |
| Custer | $33,640,724 | 30% | $43,732,941 | $35,524,605 |
| Delta | $220,480,793 | 15% | $253,552,912 | $232,827,718 |
| Denver | $40,324,111,672 | 17% | $47,179,210,657 | $42,582,261,926 |
| Dolores | $13,862,703 | 57% | $21,778,307 | $14,639,015 |
| Douglas | $7,651,850,345 | 19% | $9,105,701,910 | $8,080,353,964 |
| Eagle | $2,893,894,103 | 40% | $4,051,451,745 | $3,055,952,173 |
| El Paso | $10,955,484,414 | 25% | $13,694,355,517 | $11,568,991,541 |
| Elbert | $101,734,241 | 35% | $137,341,226 | $107,431,359 |
| Fremont | $346,852,172 | 20% | $416,222,607 | $366,275,894 |
| Garfield | $1,276,983,483 | 30% | $1,660,078,528 | $1,348,494,558 |
| Gilpin | $1,018,867,345 | 22% | $1,247,093,630 | $1,075,923,916 |
| Grand | $418,583,931 | 45% | $606,946,700 | $442,024,631 |
| Gunnison | $506,714,448 | 7% | $542,184,460 | $535,090,457 |
| Hinsdale | $32,019,069 | 14% | $36,501,739 | $33,812,137 |
| Huerfano | $73,625,766 | 32% | $97,186,010 | $77,748,808 |
| Jackson | $35,064,583 | 1% | $35,415,229 | $37,028,199 |
| Jefferson | $11,535,755,976 | 20% | $13,842,907,171 | $12,181,758,311 |
| Kiowa | $16,718,586 | 1% | $16,904,163 | $17,654,827 |
| Kit Carson | $145,925,614 | 31% | $191,162,554 | $154,097,448 |
| La Plata | $1,454,635,759 | 20% | $1,745,562,910 | $1,536,095,361 |
| Lake | $52,911,507 | 55% | $81,748,278 | $55,874,551 |
| Larimer | $7,178,306,628 | 41% | $10,121,412,345 | $7,580,291,799 |
| Las Animas | $139,400,172 | 2% | $142,188,176 | $147,206,582 |
| Lincoln | $67,119,138 | 18% | $79,200,583 | $70,877,810 |
| Logan | $174,569,172 | 20% | $209,483,007 | $184,345,046 |
| Mesa | $2,049,898,586 | 42% | $2,910,855,992 | $2,164,692,907 |
| Mineral | $45,385,190 | 15% | $52,192,968 | $47,926,760 |
| Moffat | $138,909,721 | 9% | $151,689,415 | $146,688,665 |
| Montezuma | $237,256,724 | 25% | $296,570,905 | $250,543,101 |
| Montrose | $633,552,103 | 32% | $836,288,777 | $669,031,021 |
| Morgan | $353,880,241 | 31% | $463,583,116 | $373,697,535 |
| Otero | $102,699,228 | 9% | $111,428,662 | $108,450,384 |
| Ouray | $123,796,862 | 56% | $193,123,105 | $130,729,486 |
| Park | $127,916,693 | 23% | $157,337,533 | $135,080,028 |
| Phillips | $70,743,103 | 3% | $73,148,369 | $74,704,717 |
| Pitkin | $2,949,522,724 | 27% | $3,745,893,860 | $3,114,695,997 |
| Prowers | $95,537,207 | 26% | $120,567,955 | $100,887,290 |
| Pueblo | $1,192,068,417 | 28% | $1,519,887,232 | $1,258,824,249 |
| Rio Blanco | $72,327,793 | 12% | $81,007,128 | $76,378,150 |
| Rio Grande | $191,866,721 | 19% | $228,321,398 | $202,611,257 |
| Routt | $1,032,507,207 | 43% | $1,472,355,277 | $1,090,327,610 |
| Saguache | $49,145,590 | 35% | $66,346,546 | $51,897,743 |
| San Juan | $43,012,252 | 62% | $69,679,848 | $45,420,938 |
| San Miguel | $523,696,276 | 47% | $769,519,308 | $553,023,267 |
| Sedgwick | $18,972,755 | 5% | $19,921,393 | $20,035,229 |
| Summit | $1,778,190,148 | 29% | $2,285,685,617 | $1,877,768,797 |
| Teller | $310,849,931 | 32% | $410,321,909 | $328,257,527 |
| Washington | $18,860,703 | 53% | $28,856,876 | $19,916,903 |
| Weld | $4,668,466,379 | 35% | $6,302,429,612 | $4,929,900,497 |
| Yuma | $126,862,690 | 17% | $148,429,347 | $133,967,000 |
| Grand Total: | $148,561,766,828 | 26% | $187,191,114,878 | $156,881,225,770 |
[i] https://assets.nfib.com/nfibcom/NFIB-Tax-Survey-Full-Report.pdf