Living Colorado Springs » Taxes and Government

Colorado Springs Police Do A Good Job

Rick Van Wieren — Thu, 25 Aug 2011 21:52:02 +0000

I know that some of you with lead feet out there might disagree with this, but overall, the Colorado Springs Police Department does an excellent job. Today there was an accident right in front of our office just as I was about to leave. I called 911 to let them know, and before I could even get in my car to leave, a police officer was on the spot questioning those involved and a witness to the whole thing. Some people measure the safety of a city by crime rates, but almost as important is police and fire response times. I’d have to give them an A+ for being so quick on the call today. Colorado Springs is a very safe city overall, and to a major extent, we have the CSPD to thank for it.

Happy New Year For Colorado Springs?

Rick Van Wieren — Mon, 03 Jan 2011 19:56:42 +0000

I’d love to post Happy New Year For Colorado Springs as a statement, not a question, but the fact is, there are a LOT of questions out there as to how ‘happy’ 2011 will be around here. Here are a few:

City budget problems are likely to persist, as tax limitation laws passed years ago make it difficult to adjust for the decline in property values that has occurred in the last few years.
A new ‘strong mayor’ form of government could turn out to be a great thing, but it is not guaranteed by any stretch. The candidates so far are a ‘development friendly’ sort of group, which again could be a good thing, or not, depending on how sensitive they are about planning WELL for growth.
Unemployment is a big problem at the moment, and nobody seems to have any instant answers as to how local unemployment (9.5%) will be reduced.
Foreclosures, developments in trouble, etc will continue to be a dark cloud over both the commercial and residential real estate markets. The Banning Lewis Ranch and Colorado Crossing both come to mind as problem children.
Do I dare say the “D” word? Not depression, but DROUGHT! We have had a record dry fall and early winter, and while there is a trace of snow on the ground for the moment, it will likely be gone in another day or 2, and there isn’t much on the horizon. A drought could put even more pressure on the cash strapped parks department for maintaining green grass, and some sense of normalcy. There won’t be a shortage of water mind you, since the snow pack is excellent, but irrigation costs money, and we rely on natural rain and snow to keep the watering bills affordable.
Will the troops ever get to STAY home? While it sounds selfish, the fact is that long, repeated deployments from Ft Carson make a significant dent in the economy around here, and while the end game is here for Iraq, Afghanistan has a lot less certainty.

Questions aside, Colorado Springs has a GREAT future ahead. We’ll just have to see how much of it is realized in 2011!

Colorado Revises Real Estate Contracts for January 1 – Again

Rick Van Wieren — Tue, 07 Dec 2010 22:25:06 +0000

This morning I sat through another class on what is changing with our real estate contract here in Colorado. I say another, because it seems like they can never leave well enough alone with these things. In Colorado, licensed real estate agents are allowed to do contracts without lawyers, provided they use state approved forms. This means the forms are kind of important. The analogy would be if the state repaved most of the roads every year, and twice some years. It makes for a very bumpy ride while the work is going on – which seems like it is constant.

The sample contract was up to 15 pages from 12, not a good sign. Some changes were as minor moving sections around for readability (whose, I wonder?). They introduced some new terms and legal definitions that seemed helpful, like the Due Diligence documents. They put more teeth into some items, like a clear statement that if the buyer (and their lender) do not bring good funds to closing, it is a default. Hopefully no more “we are still waiting for the wire” at closings. The buyer’s loan contingency has been changed to become so absolute, that we’ll likely be seeing sellers requiring the Loan Conditions Deadline moved up to within 7 days of acceptance instead of at the end of the contract like it used to typically happen. Pre-approvals might even be taken seriously by lenders if that happens , since the earnest money is clearly NON REFUNDABLE after the Loan Conditions deadline going forward (except for other contingencies whose dates may not have arrived yet).

While there are lots of other small changes in the contract, the bottom line is that the new forms will take some time to get used to, will likely require new language to be added to clarify what has been muddied up, and will change some of the date strategies we have used in the past. Other than that, business as usual!

If you would like to see what ALL of our real estate contracts look like, visit the Colorado Department of Regulatory Agencies web site to see the current forms. The new ones don’t kick in until January 1 2011.

Colorado Springs Election Results Won’t Change Our Lives Much

Rick Van Wieren — Thu, 04 Nov 2010 15:15:48 +0000

The votes have been counted, and the sky is not falling after all. The way this year’s election campaigns have tried to position things, you’d think the world as we know it was about to end in Colorado Springs!

The truth is, it will probably feel a lot more like “business as usual”. While the governor’s race was somewhat of a foregone conclusion (the Republican candidate Dan Maes had a major resume’ malfunction just after the primaries), the senate race was more of a nail biter. In the end, nothing really changed. El Paso County remains pretty strongly Republican, but the state will have a Democratic governor (John Hickenlooper, a well respected businessman) for the next 4 years, and another Democratic Senator, Michael Bennett.

Locally, the ballot initiatives will result in Colorado Springs going to a “strong mayor” form of government, and this may or may not really change much. Many were not very happy with the last city manager that the city council had hired, and most cities the size of Colorado Springs have a strong mayor. There were quite a few tax related issues that were defeated, both for raising taxes as well as lowering them. The implication is that most people felt like this was not a good time to mess with taxes in Colorado Springs. Apparently most people felt that taxes are high enough, but not so high as to warrant forcing a major downsizing of local government.

In the next major election, the economy will hopefully be a little healthier, and it will be interesting to see who steps up to run for office. This year was kind of a yawner in that regard.

Happy Independence Day!

Rick Van Wieren — Mon, 05 Jul 2010 14:51:14 +0000

Yes, I know the 4th of July was yesterday. But if I was a day late wishing you a Happy Birthday, you’d still take it it, wouldn’t you?
The 4th has always been special to me here in Colorado Springs. When we first moved here 19 years ago, we were so impressed with how the city went ‘all out’ to make it a real event. The symphony concert at Memorial Park was so good, the fireworks amazing, and the howitzers they brought in from Ft Carson for the 1812 Overture just were over the top.
I say were, because once again this year, budget problems caused the city to cancel one of our best traditions. Don’t get me wrong, there were fireworks at 6 different venues. And 4th of July fireworks at the US Air Force Academy is pretty cool too. But I’m looking forward to the time when we can plan on the City of Colorado Springs to continue with one of the best 4th of July celebrations I’ve ever seen.
As it turned out, there was enough rain, hail thunder and lightening going on at dusk last night, that we stayed home anyway. Appropriately, we watched the Ken Burns documentary on the life of Thomas Jefferson, so our patriotic spirit was still fed
I hope your 4th was a good holiday. It kind of marks the 1/2 way point of the summer (even though it is really only about 1/3). Here in Colorado Springs the weather has been superb (other than one of our first rains in a while hitting at fireworks time ) We are looking at 70′s and 80′s and lots of morning sunshine this week, how can you beat that?

How Much Was That $8,000 Tax Credit Really Worth?

Rick Van Wieren — Mon, 24 May 2010 14:57:26 +0000

The most frequently asked question I hear these days is, ‘How’s the market now the tax credit program is over?’ This is a really good question. While I’ve been very busy, the fact is, showing traffic is down, and I’ve had fewer calls from first time home buyers. This will be a busy closing week, as many of the first time home buyers are going to be closing on the homes they contracted for in April. May will likely be one of the best closing months of the year.
Having said all that, lets look at what the long term benefits of the tax credit really add up to, compared to other factors at work in the market. The $8,000 credit, when used in conjunction with other programs, freed up cash for buyers who did not have adequate down payment resources otherwise. This of course adds buyers to the market. But it really only helped buyers in the lower portion of our market, since the credit only covered the down payment of an FHA loan on a $228,000 house.
Since most buyers, even 2nd and 3rd time buyers pay for most of their home with a loan, the bigger issue is payment size. $8,000 spread over 30 years at 5% interest is a payment of $42.95. To put that in perspective, interest rates have fluctuated in the 3 weeks since the tax credit ended from around 5.25%, to 4.75% (I actually received quotes of 4.5% on certain loans this weekend). On that $228,000 house, that is a swing in house payments of $69.66 per month. So how much was the tax credit really worth? If you didn’t have the cash, quite a bit. But for those with even $8,000 in cash of their own, they will save substantially more from lower interest rates than the credit was ever worth. How long will these nice rates last? Unlike tax credits, they don’t announce these in advance, so you just have to take advantage of them when they are there!

Tax Credit Almost Done – Now What?

Rick Van Wieren — Wed, 28 Apr 2010 01:38:33 +0000

Many in the real estate industry are holding their collective breath to see what comes next after this Friday’s expiration of the First Time Home Buyers Tax Credit. While some thought it would be extended, the reality is that the Federal government has got to back off from its assumed role as rescuer of the housing market, and let people get back to business.
So does this mean that sales will dry up? Probably not. While we may have borrowed a few transactions from the summer months into the spring, the housing market does not really ebb and flow that much around special incentives, and is driven more by jobs, and the need for housing. Young people are still graduating from college, getting married, having kids and buying their first homes (not necessarily in that order!), with or without tax credit help. People are still transfering to accept new jobs, or retiring, or divorcing, or whatever other ‘change of life’ event that happens that changes housing needs.
Interest rates are trickling up a little, but are basically still at incredibly low levels. Colorado Springs homes are a great value, and there are lots of nice homes for sale right now. The economy is not great, but getting better by the month, if not the week. And Colorado Springs is still a GREAT place to live. Will sales slow? Maybe a little. But my own perspective is that there will continue to be many reasons for people to buy a house in Colorado Springs. And I’ll be here to help them!

Getting the Lead Out

Rick Van Wieren — Wed, 21 Apr 2010 13:48:33 +0000

1978 was a very good year, at least from an environmental standpoint. That was the year they quit using lead based paint in homes, fondly referred to as LBP by some of us in the business of selling houses. 2010 will be another important year, and April 22 may be one of those dates that ‘lives in infamy’, because new rules are going into effect on April 22 that will forever change the economics of doing major home renovations on homes built prior to 1978.
EPA (US Envronmental Protection Agency, occasionally joked about as the Economically Prohibitive Agency) has a web site that explains more about what is going on, but the basics are as follows.

Contractors doing work on homes built prior to 1978 will have to become certified
Procedures required for doing work on homes built prior to 1978 will slow down the construction process, and make it more expensive on older homes
Homeowners doing work on their own homes they live in are exempt, but not landlords, ‘fix and flip’ renovators, or pretty much anyone else doing work on a home they do not live in
Fines are HUGE for non-compliance

Before anyone goes and jumps off a bridge (or decides to inhale lead based paint dust ) over this, it isn’t really ALL bad. Over time, some contractors will probably get more efficient with the processes, and some initial ‘scary’ quotes for work will likely diminish. While projects like window replacement will likely continue as they are needed (the older windows really aren’t very energy efficient), there will be at least some projects that people may elect not to do, such as removing walls. Projects that don’t disturb more than 6 square feet of wall space don’t require the new certification and procedures, so little stuff won’t be affected.
The other unintended side effect of these rules, is that homes built prior to 1978 that have NOT been updated much, are going to become a bit harder to sell. Fix and flip and landlord type investors are not going to be as likely to buy them, so the demand will be more from owner occupants. This group has had an insatiable appetite for newer homes all along, so demand for the older homes will likely fall, at least until people can get their heads around these regulations.

Colorado Springs City Budget Woes

Rick Van Wieren — Fri, 12 Feb 2010 16:15:57 +0000

Colorado Springs has a budget problem. Yawn. So does about every city, state and county in the country. The Federal government is about the only entity out there than can just print or borrow money when they are short. For those living in Colorado Springs, there are also some other issues however.

1. Every government entity in Colorado is required to have a balanced budget. That means the city can’t hit their Visa card to pay for services.

2. Taxes cannot be raised without a general referendum here. In fact, if tax collections rise as a result of, say higher auto sales, they can’t even keep the money without a vote. This law, called TABOR, has made it very difficult for cities to figure out how to maintain services.

3. Coloradans in general, and residents of El Paso County in particular (of which Colorado Springs is the bulk of) are pretty tax resistant. The recession hasn’t ignored us here, and with many either unemployed or underemployed, more taxes are not exactly on the morning breakfast menu when they wake up. Low taxes are in part why our cost of living is 7.7% below the national average.

At a national level, the debates rage over “guns vs butter”. To be more specific, defense spending vs health care spending in the current environment. At the local level, if revenue can’t be raised, it comes down to some pretty basic services, like trash cans and irrigation in the parks, street lighting, police and fire department staffing and response times, fixing pot holes, bus services, etc. In Colorado Springs, the city council is having to make some tough choices. Some of them may, at some point, cause noticeable drops in city services that we all have come to expect. The watering season for our parks really doesn’t start until May, so the decision not to run the sprinklers may not even be noticed until then. Who knows, with the weather being so weird nationwide, we might even get lucky and have a wet summer that makes this completely a mute point. There are even discussions underway to possibly sell the city owned Memorial Health System. They are auctioning off police helicopters, and even sold some buses to help continue funding the commuter bus service to Denver (called FREX for Front Range Express). CNN is supposedly working on a piece using Colorado Springs as an example of the municipal budget dilemma being faced around the country.

This week I had a homeowner tell me that they are going to try and organize their neighborhood to raise money for the watering and otherwise maintaining the neighborhood park in Old Farm. Old Farm Park is part of the network of parks connected by the Homestead Ridge Trail. It has awesome views, some nice play areas for the kids, and services an area of about 1200 homes. I was totally impressed by the level of commitment being expressed to not let this recession rob the quality of living in Colorado Springs in the Old Farm area. Perhaps this is just one park, but perhaps this will be duplicated in other areas, and just perhaps this sort of thinking will take hold across the country. Until this recession is over, maybe individuals and neighborhoods will chip in to do what government can’t afford to at the moment?

Colorado Springs Builders Face Timing Dilemma

Rick Van Wieren — Wed, 20 Jan 2010 15:53:09 +0000

The $8,000 First Time Home Buyer Tax Credit ($6500 for others who qualify) has created a little bit of a dilemma for Colorado Springs home builders (or for that matter, all builders, nationwide). With the housing recession not fully over, many have been either unwilling or unable to build a lot of inventory homes. After all, when credit is tight, it is just not that easy to be borrowing millions to build houses that are taking too long to sell. On the other hand, the tax credit program has some deadlines that create a logistical problem.

Most Colorado Springs builders need 4 to 6 months to start a house from scratch and finish it. Since the tax credit expires 6/30/2010 (you have to close by then), there is really only about a 6 week window left (as of this writing 1-20-2010) to start a house from scratch and have it still qualify. Starting a bunch of inventory homes can get them a jump start on the process (the contract has to be written and accepted by 4/30/2010), but it is risky, because if they don’t sell, it ties up a lot of credit and capital. Picking the models and lots to target is tricky as well, although there is some mathematical guidance here. Since FHA (the most common civilian financing tool right now) requires a 3.5% down payment, the $8,000 credit translates into the down payment on a $228,500 home. My guess is that we’ll see the most ‘spec homes’ targeting that price range. Frankly, we can use more affordable new homes for sale in Colorado Springs!

For more information on new homes, please visit the New Construction section of our web site, or call me at 719-590-4768.