BY FREDA MIKLIN – GOVERNMENTAL REPORTER
On May 18, the Cherry Hills Village City Council reviewed several different projections of future revenues and fund balances in its general, capital, and parks and recreation funds going out to the year 2042. The multiple forecasts included different assumptions about changes in various sources of tax revenue, all of which the council discussed and debated at length. In the end, the council decided it would not move forward with any policy changes without first asking the opinion of CHV residents.
The impetus for the long-term financial review was, “to get where our city will be much more financially viable (because) the baseline (financial forecast) doesn’t work out past 2027,” according to Councilmember Dan Sheldon. With no changes, the current forecast projects long-term challenges for the city’s general fund, however its parks and recreation fund is expected to keep increasing, resulting in a fund balance of just under $17 million in 2042 if nothing about the present tax and allocation system of the city changes.
One issue facing CHV is Colorado’s unified collection and reporting system for sales tax from remote sellers as a result of the Wayfair case. (The State of South Dakota sued to require solely online retailer Wayfair to collect and remit sales tax on sales to its residents. On June 21, 2018, the United States Supreme Court ruled in South Dakota’s favor. Colorado adopted the policy that remote sellers must have sales in our state of at least $100,000 annually to be required to collect sales tax.) The structure designed by the state, which includes having home rule cities adopt a model ordinance, has out-of-state sellers remit all state and local sales tax to the state’s revenue department, which then remits a share of the amount collected to cities based on the address of the purchaser. Kathie Guckenberger, CHV city attorney, reminded the city council that the policy does not negatively impact small sellers due to the sales threshold of $100,000. In response to a question from Councilmember Al Blum, Guckenberger confirmed that she would recommend a modification to the CHV municipal code before opting into the state system.
Among the ideas the council discussed, in addition to participating in the collection of sales tax from remote sellers, was to institute a construction materials use tax, as is in effect by many other cities, including Denver and the nearby communities of Littleton, Englewood, Centennial, Lone Tree, and Greenwood Village. The council also discussed lowering its municipal property tax levy from 14.722 mills to 13.722 mills by decreasing the portion allocated to the parks and recreation fund by one mill.
The council generally agreed that it was sensible to make the necessary adjustment to its code to clarify that it was able to participate in the state’s sales tax collection from remote sellers for sales in CHV. The primary reason for doing so, council members concurred, is the onerous, ongoing, labor-intensive effort required to opt out of it.
Mayor Pro Tem Katy Brown expressed the opinion that the city was actually “in a pretty good (financial) situation” and it is not “so dire that we have to act right now.” She added that, “We do have a piece of property that we own that’s probably right now worth about $3,000,000…and I think we need to consider that as a reserve number.” She added, “At any point, if we really felt the need, we could sell that property…so our cushion is even bigger than we think it is.” Councilmember Mike Gallagher took the discussion a step further, saying, “This is probably a very appropriate time to look hard at selling that property, given the marketplace.” The property to which Brown and Gallagher referred is 90 Meade Lane, a 2.28-acre parcel of land that was purchased by the city on January 14, 2004 for $1,905,000 because it was “adjacent to other public property…and provided significant and important opportunities to advance the public welfare and public interest.”
Councilmember Blum, who is a professional developer and builder, brought the conversation to the subject of the construction use tax. He said, “I’m the one here who has paid it (construction use tax) for the last 20 years. If we’re not collecting it, Englewood’s getting it. It doesn’t affect our people here. Somebody else is part of the construction contract, they’re paying it somewhere, whether it’s Englewood, Sheridan, or Denver—we don’t get it.”
After discussion, the council instructed its city manager to create a request-for-proposal for a public affairs consultant to poll CHV residents to determine “the will of the voters,” expecting that the next step will be the formation of a committee of citizen leaders to promote any recommended changes to the city’s current tax policies, particularly if they require a vote of the residents.
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