Castle Pines North, Colorado

by Larry Hotz, All Denver Real Estate

Denver has a new suburb! Ok, it’s not exactly new. It’s been there for over 20 years. But, now Castles Pines North is the latest suburb to incorporate as its own city.

There is no police force yet, no city hall or even city ordinances. But, this new city voted in a City Council and Mayor just last month. But now, the real work begins. And, how will this effect it’s residents and future Denver relocation buyers?

I wondered why would they do this? It seems like a monumental task for a small village of only 9500 residents. And, where will the funding for it come from?

The answer is that a group of residents proposed the ballot initiative that was approved int he November elections because they wanted to capture the sales tax revenue from the strip mall which has expanded in the neighborhood. Perhaps they were worried that nearby Castle Rock would annex it for that revenue. In fact, Castle Pines North already shares the mailing address and zip code for Castle Rock so it would make sense to annex the neighborhood.

There was even a report that residents also approached the Castle Pines Village homeowners in the neighboring subdivision to be included. Evidently, they declined. Maybe they considered the higher property taxes on their homes to be high enough without risking any more increases for a municipality.

Surprisingly, property taxes are not the most attractive taxes for municipalities here. It’s the sales taxes. That is was drove the incorporation of both Lone Tree and Centennial earlier. In fact, both avoided incorporating some areas that were eligible for incorporation just because they lacked any commercial property. Some homeowners there were miffed to be “red-lined” out of incorporation.

Additional funding will likely have to come from other sources besides the commercial sales and property taxes. One way that can happen is to reallocate part of the mill levy amount set aside for police protection from Douglas County. But, that will require establishing its own police force, a costly proposition for capital expenses and salaries. The rest will have to come from increasing property taxes for residents.

How high will they go? No one seems to know right now. To my best knowledge, there is no detailed financial plan explaining that. It could be a sensitivity if they go too high. Castle Pines North already has an additional tax load from the Special District bonds agreement worked out years ago. The Special District became insolvent during the real estate recession of the 1980’s. New homes were not built as fast as projected due to low demand. The result was an extra mill levy on property taxes making their taxes about 15% higher than elsewhere in the county. Castle Pines Village is not included in the same District so it’s taxes did not increase.

Long term, incorporation may be very attractive. It will certainly give local residents More direct control over their future. But, short-term there could be some additional financial and political burdens. That is exactly what happened when nearby Centennial incorporated several years ago.