Mountain district ethics complaints lead to state property tax investigation
La Plata County, along with two other counties, is calling for an investigation by the Colorado Division of Property Taxation into a state tax officer advising resort hotel owners on how to reduce their property tax bill. (Durango Herald file)
The Department of Local Affairs will hire a law firm to investigate the Colorado Division of Property Taxation after Eagle, La Plata, and San Miguel counties lodged ethical complaints against the two top directors of the state agency.
The move prevented a call to state accountants to investigate allegations that an overly comfortable relationship between State Department chiefs and a hired gun gave swanky resort hotel owners an edge in their battle for tax bills.
“I think that’s better,” said Rep. Dylan Roberts, a member of the Legislative Audit Committee who asked for a performance audit of the department following complaints from the districts. “A general examination of the entire department might not give Eagle County and the other counties the answers they are looking for. A performance audit could be too broad and would not offer the opportunity to investigate specific cases. “
Eagle, La Plata, and San Miguel counties spent most of 2021 grappling with the property tax department after learning that the department’s deputy director met regularly with a property tax attorney who has multiple owners of luxury hotels in holiday resorts in legal disputes with the overvalued counties represents the appraisal of the properties.
The counties discovered hundreds of emails between state tax officer Curt Settle and Bruce Cartwright, the hotel owners attorney.
Commercial property owners contracted Cartwright, the managing director of tax advice at the consulting firm Duff & Phelps, to represent high-end hotels in legal disputes over appraisal values. For example, Eagle County’s chartered accountant valued the 150-room lodge in Vail at around $ 36.5 million in 2019, but owner Vail Resorts argued that it should be closer to $ 14 million, as many of the units are owned by individuals. Cartwright is helping properties like the Lodge battle for lower valuations. And he met often with Settle, now retired, to discuss the cases, court rulings, and departmental policy positions.
The three counties called the meetings and discussions between Settle and Cartwright “a gross violation of public trust”. Long-time department head JoAnn Groff said the relationship was “absolutely nothing inappropriate”.
The counties’ complaints to Groff were dismissed. The Colorado Independent Ethics Committee denied the counties’ request for an investigation. The state equalization committee also refused to take action, but asked Groff in March to outline specific rules of conduct for employees.
On July 31, the division released its guidance for employees.
The new guidelines require employees to follow the Department of Local Affairs’ Code of Conduct. They also encouraged the department’s staff to meet with “external stakeholders” in both formal and informal settings. Department staff were instructed to notify supervisors of all off-site meetings and to pay for their meals and beverages themselves for meetings outside of the office.
“The department is a contact point for all parties interested in property tax,” says the guidelines.
Eagle County Attorney Bryan Treu called the guidelines “lip service” and said the timing of the re-formalized guidelines was “clearly intentional to avoid scrutiny.”
Treu said the new guidelines did not prevent Groff’s employees from meeting regularly with a tax advisor who represents property owners involved in lawsuits with district auditors.
“This does nothing to avoid the undue influence of these tax officials in an area that is ripe for corruption,” Treu said in an email response to the department’s employee guidelines. “This does not help to ensure equal, transparent access to interest groups in rule-making and other matters.”
One final attempt to get lawmakers to endorse a request for a performance audit of the department was won over by Roberts, who promised to request an audit at the Legislative Audit Committee hearing this month. Roberts said Eagle, La Plata, and San Miguel counties would need to sign off on the external investigation plan, which will take 30 to 60 days, as opposed to a year-long performance review.
“A study like this would be much more focused on specific problems or perceived issues with DPT,” he said. “And it will be much faster.”
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