Library taxes court case unresolved

August 5, 2009

By Cherry Sokoloski
The Wellington

Wellington (Colorado) has some decisions to make regarding its dispute with the Poudre River Public Library District over double taxation on future annexations to the town.

On July 9, the Colorado Court of Appeals ruled on the issue of removing new annexations from the library district surrounding the town. Wellington initiated the court action so that future annexations will not have to support two library systems.

The recent ruling was not definitive. Rather, the appeals court reversed the district court decision, made last October in Wellington’s favor, and sent the issue back to district court. The ruling said that the trial court failed to consider a relevant section of library law.

In 2006, before voters approved a tax-supported district, Wellington opted not to participate because the town already operated its own library. As a result, the Poudre River district boundaries were set to include property around Wellington, but not within the town limits.

As Wellington expands, new annexations will lie within the borders of the Fort Collins-based library district. That means these additions to Wellington must pay a 3-mill tax to the district, along with taxes to Wellington that help support the Wellington Public Library.

In its July ruling, the appellate court cited a 1990 amendment to library law. Under terms of the amendment, a municipality that has elected not to participate in a library district can remove newly annexed land from the district, but only when the district is protected from loss of revenue — or the library district agrees otherwise.

Wellington now has several choices in terms of how to proceed. Town attorney Brad March has already filed a petition for rehearing with the appellate court, but he said he is skeptical that the request will be granted.

If the petition is denied, the matter will be sent back to district court. At that point, District Judge Stephen Schapanski would have to determine how property would be removed from the district, and how to determine the amount of taxes owed to the district from the “disconnected” property.

It’s unclear, March noted, how that tax value would be determined — whether it would be based on the property value at the time of annexation, which in many cases would be agricultural, or its value after development.

If assessed at agricultural values, depending on parcel size, library district taxes could be as low as $20 a year, March noted. Taxed at commercial values, future developments in Wellington could be paying thousands of dollars to the Poudre River Public Library District.

Even with the extra tax revenue, March said he doubted the library district would build facilities in or near Wellington.

The town also has the option to appeal the Court of Appeal’s decision to the Colorado Supreme Court, or Wellington could simply drop the matter. In that case, new annexations to the town (after Jan. 1, 2007) would continue to pay the library district’s 3-mill tax as well as paying property taxes to Wellington.

The Wellington Town Board is concerned that double taxes would hinder new commercial development, in particular because businesses are assessed at a higher rate than homes.

The board will make its decision on whether to pursue the court case after the appellate court rules on the request for reconsideration.