Englewood decides school district will not pay construction-related tax

District will not have to pay tax on current preschool, elementary schools projects

Posted 7/10/17

A debate that lasted for years came to an end when the Englewood City Council passed an ordinance to allow public schools to carry out voter-approved construction projects without paying a tax.

The council had been talking about the issue for …

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Englewood decides school district will not pay construction-related tax

District will not have to pay tax on current preschool, elementary schools projects

Posted

A debate that lasted for years came to an end when the Englewood City Council passed an ordinance to allow public schools to carry out voter-approved construction projects without paying a tax.

The council had been talking about the issue for more than a month, according to discussion in its meetings. It centered around whether Englewood's school district should have to pay what's called a building-use tax, which is technically levied on the contractors the schools hire.

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

At its meeting July 3, the council seemed to agree on the general idea that it doesn't want the district to have to pay the tax on voter-approved projects, like the current construction plans for Englewood's four elementary schools and one preschool.

The bill passed with only Councilmembers Laurett Barrentine and Rita Russell voting “no” because they took issue with the measure not exempting the schools in all cases — including non-voter approved construction projects, which a school could possibly do if it had saved enough money, for example. Barrentine and Russell took issue because they felt schools should be exempted on projects other than those funded by bond measures.

Councilmember Amy Martinez had reservations about that fact but said she would support the ordinance now and work further in the future to secure a broader tax exemption for the schools.

The measure also stipulates that the city is not responsible for other construction needs arising from a school district project, like crosswalks, lighting, gutters and utility lines — also called “right-of-way” construction.

Under previous tax law, the district would have had to pay about $1.5 million on the projects it currently has planned, Rubin said.

“I believe that city council made the right decision,” Rubin said in a statement. “This ensures that taxpayer dollars stay where the voters have approved them — in the construction budgets for our elementary schools and preschool. We appreciate council's timely actions on this matter, as these are projects that will benefit the entire Englewood community for decades to come."

In previous meetings, council discussions referenced an issue with a bond passed in 2011 that funded the 2013-15 construction and 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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