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Senate Finance advances bill to close metro-district property tax loophole
Summary
Committee advanced House Bill 25 12 89 to the Committee of the Whole and placed it on the consent calendar. The bill would limit a property tax exemption that has been used when a metropolitan district leases land and the landowner serves on the district board, adding disclosure requirements and oversight.
The Senate Finance Committee on Oct. 12 voted to move House Bill 25 12 89, aimed at closing a property-tax exemption loophole used by some metropolitan districts, to the Committee of the Whole and later cleared it for the Senate consent calendar.
Sponsor testimony said the bill would preserve property-tax exemptions for land leased by metropolitan districts when the land serves a public purpose, but would require disclosure of potential conflicts when landowners serving on a metro district board lease property that receives the exemption. "This is not the intent of the law," sponsor Senator Frizzell said, describing examples in which landowners who sit on a metro district board could receive tax-exempt treatment while a portion of leased property is used for private purposes.
Keith Erfmeier, assessor for the City and County of Denver, testifying for the Colorado Assessors Association, described specific concerns and asked for an "I" vote to close the loophole. Erfmeier said assessors have seen cases where landowners and family members sit on district boards and the statute, as currently written (cited in testimony as 39 3 1 24), allows leases that result in tax-exempt treatment even when substantial private use occurs. Erfmeier said one case in his county involves more than $40,000,000 of land at stake. "We humbly ask you for an I vote on this to close what appears to be a loophole and an unintended consequence in the original legislation," he said.
Other witnesses supporting the bill included Hawk Shipper, an economics student who testified about transparency and the risk of private profit from tax exemptions, and Michael Valdez of the Special District Association of Colorado, who said the association and metro-district education stakeholders worked together to draft the amended bill.
Committee members asked procedural questions about who determines whether a use is public; the sponsor and others confirmed that the county assessor makes an initial determination and the governing body (county commissioners or city council) has oversight. After a brief witness and amendment phase with no committee amendments presented, Senator Frizzell moved the bill to the Committee of the Whole with a favorable recommendation.
Roll call in committee showed support from multiple members and one excused member. Senator Fazel (majority leader) later moved to add the bill to the Senate consent calendar; there was no objection.
Under the bill as described to the committee, metropolitan districts could continue to lease land for public purposes and claim property-tax exemption, but must disclose conflicts where a landowner serving on the district board leases to the district; private use would be subject to review and could be taxed if it does not meet public-purpose criteria. The bill was sent to the Committee of the Whole and put onto the Senate consent calendar for further action.
Votes and committee record: the committee recorded an affirmative roll call to move the bill to the Committee of the Whole and then placed the bill on the consent calendar by unanimous consent/no objection.
