Englewood

City wrestles with tax question as school construction begins

Current construction work likely to avoid levy after first-round vote

Posted 6/27/17

In what may signal the end to a debate that’s simmered for years, the Englewood City Council approved a bill on a preliminary vote that would effectively exempt Englewood’s public school district from paying tax on construction projects.

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Englewood

City wrestles with tax question as school construction begins

Current construction work likely to avoid levy after first-round vote

Posted

In what may signal the end to a debate that’s simmered for years, the Englewood City Council approved a bill on a preliminary vote that would effectively exempt Englewood’s public school district from paying tax on construction projects.

At the council meeting June 19, the council seemed to agree on the general idea that it doesn’t want the district to have to pay tax on voter-approved projects, like the current construction plans for Englewood’s four elementary schools and one preschool.

But they didn’t agree quietly.

“This is gonna be one of the craziest things I’ve seen. At this point in the game, this thing has gone back and forth, twisted and turned, and is just a big pile of excrement,” Councilmember Steven Yates said during the meeting. “It’s crazy. It’s crazy, and it’s embarrassing what’s going on up here.”

The six members of council who were present — Mayor Pro Tem Rick Gillit was absent — went back and forth for more than an hour on the correct way to save the schools from paying the tax. Under Englewood’s laws, the sale of materials used for construction are subject to what’s called the building use tax. Under that tax, for the projects the current school district has planned, the district would have to pay about $1.5 million, Superintendent Wendy Rubin said.

Rubin said aside from Westminster, Englewood is the only city she knows of in the state that charges school districts the tax. The city and Rubin said the district is otherwise tax-exempt.

The council has discussed the tax during four meetings since May 8, but some members clashed on whether to push for a broader change than other members favored. Before voting on the more widely favored change — called Council Bill 48 — Councilmembers Rita Russell and Laurett Barrentine pushed to direct the city to not enforce the tax without passing an actual bill.

City attorney Alison McKenney Brown informed the council that technically, the tax is not directed at the school district, but at the construction contractor it hires. Rubin told the council at a past meeting that ultimately, the district has to pay it. Russell’s and Barrentine’s move would not have changed the tax law itself, but they seemed to view it as taking a stronger stance for the schools.

Mayor Joe Jefferson had qualms with that proposed move, which would have exempted a school-hired contractor in all cases — Jefferson said he’d support Bill 48, which would exempt in cases of voter-approved projects, like the bond project Englewood voters passed in November for school construction. Bill 48 also stipulates that the city is not responsible for other construction needs arising from a school project, like crosswalks, lighting, gutters and utility lines. Councilmember Linda Olson and Jefferson both vocally supported that detail.

Ultimately, Russell’s motion did not pass on a 3-3 tie. When the council started discussing Bill 48, though, Olson was surprised by Jefferson’s apparent reversal to not vote for the bill.

“I’ll vote my conscience to not support an exemption,” Jefferson said at one point during the debate, in which Olson said she felt “held hostage” by Jefferson’s promise to not support the previous motion but to vote for Bill 48.

If she had known he would reverse, she said, she would have voted for Russell’s motion. Jefferson appeared to want to vote “yes” only if the entire council would, and Barrentine and Russell seemed prepared to vote “no.”

After tense exchanges by Olson and Jefferson, Yates proposed to shelve the bill altogether. Councilmember Amy Martinez quickly opposed that, saying “it’s been a month or more now,” and Yates turned to persuade the mayor to vote “yes.”

The mayor reversed again, but then Russell proposed an amendment to the bill that would exempt taxes in all cases related to a public school district project. That’s when Yates admonished the council as being “embarrassing” and suggested they “act like adults.”

Shortly after, most of the council seemed to agree, again, on an unamended Bill 48. It passed without Russell’s amendment, with Russell and Barrentine voting “no.” Barrentine said only exempting voter-approved projects would cause problems if the school district wanted to use money it saved.

The bill will be up for a second and final vote July 3.

“We really appreciate city council lifting up the issue and hearing us out,” Rubin said. At the June 12 council study session, Rubin spoke to the members, who at the time disagreed on whether the school district actually would end up paying the tax.

The discussions referenced an issue with a bond passed in 2011 that funded the 2013-15 construction/renovation work on Englewood’s two high schools and two middle schools. The district’s then-contractor went to the state of Colorado for a building permit rather than the city, which caused confusion over whether the tax needed to be paid.

The city allowed the district to pay half the tax it would have owed, but it has since agreed to reimburse the district for that amount, Rubin said.

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