Old St. Francis Hospital assessed value soars from $50,000 to $2 million following report 

Hitting reset

click to enlarge The closed St. Francis Hospital needs much intensive care. - PAM ZUBECK
  • Pam Zubeck
  • The closed St. Francis Hospital needs much intensive care.

The value of an old hospital just east of downtown Colorado Springs skyrocketed after El Paso County Assessor Steve Schleiker undertook a special review in response to revelations reported by the Independent a year ago about details of its 2014 sale.

When the building, located at 825 E. Pikes Peak Ave., changed hands, the seller reported a $50,000 sales price to county officials via the deed. That amount then became its taxable value for the buyer, an entity controlled by developer David Jenkins, who's in the process of assembling swaths of land in the downtown area.

But there was more to the deal, including a $1 million donation to a nonprofit associated with the hospital's owner, sources told the Indy.

After his valuation review last summer, Schleiker set the value at $1,969,177. That, in turn, caused the building's tax bill to soar from $913 last year to $35,961 this year, although the property owner could appeal the new value.

The hospital's value and tax bill, finalized last August, weren't released until May 1 when notices of value for all properties in El Paso County were disclosed.

St. Francis Hospital dates to 1887 and was expanded several times over the years. The 235,666-square-foot, multi-story building sits on 9.2 acres that also contains several parking lots. The hospital closed in 2010 after St. Francis Medical Center opened at 6001 E. Woodmen Road in 2008. The Penrose-St. Francis system also operates Penrose Hospital at 2222 N. Nevada Ave. Catholic Health Initiatives Colorado owns all of the Penrose system's buildings and is exempt from property taxes.

Before the most recent sale, the old hospital's value was stated as $1.8 million, based on the cost approach of assessment, which takes into account the replacement cost and depreciation.

In February 2014, Catholic Health Initiatives Colorado sold the building for $50,000 to 825 E. Pikes Peak LLC, an entity set up a few weeks before the sale by Jenkins, owner of Nor'wood Development Group, the region's biggest developer.

His son, Chris Jenkins, has said plans are to convert at least part of the building into 160 apartments, a much-needed addition to the downtown area. Chris Jenkins did not respond to a request for comment on the new value.

At the time, David Jenkins justified the $50,000 price to then-County Assessor Mark Lowderman (who's now county treasurer), with a report showing the building is rife with asbestos, and cleanup costs could top $2 million. A summary of that report obtained by the Indy showed asbestos is contained in pipes, in flooring, ceilings and a boiler. Abatement, along with demolition of interior finishes, would cost $1,962,601.

But sources familiar with the transaction told the Indy a year ago there was more to the deal than the reported sales price of $50,000.

They said the Jenkinses agreed to pay $50,000 to Catholic Health Initiatives Colorado, but also agreed to make a $1 million donation to Penrose-St. Francis Health Foundation as part of the transaction. The contribution provided Jenkins a tax benefit, while the lower purchase price kept property taxes low.

The Indy's report about that agreement ("The real deal," Cover, May 4, 2016) prompted Schleiker, who had since replaced Lowderman as county assessor, to revisit the value. He noted in emails to the Indy in August that the review was complicated by the property being exempt from the tax rolls between 1929 and 2014. Thus, he ordered a new inspection, measured the exact square footage and sketched the property.

"With this building being exempt for 85 plus years, we did not have property sketches on the main building and/or auxiliary buildings, which required my staff to measure, sketch and input them into our valuation system," he said. "I found it necessary with this parcel as with all other 268,000+ real property parcels to assess and ensure a fair, equitable, and defendable assessment."

Schleiker then took into account "the reported considerations paid and the number of known and documented issues regarding this property both physical and functional." He next compared it to other similar properties in the county, though he labeled it "a very unique property."

In addition, Schleiker notes, the state recommends consideration of demolition costs when analyzing a sale. "If a buyer paid less for the land knowing they will have to pay for demolishing buildings, then the value can reflect the discount until demolition is complete," he noted.

Although Schleiker arrived at the new value last year, he didn't release it publicly until last week. "I feel that it is only right that the current property owner has first right to review their 'new' 2017 value(s)," he said in August.

It was earlier thought that Schleiker could cause the new value to be applied retroactively to the prior year, but he says consultation with the Colorado Division of Property Taxation led him to believe that statutes, court rulings and a prior appealed value determination by the assessor's office prevented him from doing that.

Schleiker last week said via email the re-evaluation was based on market factors for the land and a cost approach for the improvements. The land value changed little, from $44,774 to $47,933. But the value of the improvements changed dramatically, from $5,226 to $1,916,018.

Still, the valuation might not yet be final. Jenkins can appeal, as can other property owners with new assessments, until June 1. The assessor's staff responds to all appeals with a notice of determination no later than June 30. If not satisfied, a property owner can appeal that ruling to the County Board of Equalization, composed of professional hearing referees. If still unsatisfied, a property owner can appeal to the state Board of Assessment Appeal, made up of professional appraisers from across the state; enter binding arbitration; or pursue a case in District Court.

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