Committee advances bill to tighten review of property-tax exemptions for land leased to local public entities

House Bill 12 89, sponsored by Representatives at the hearing, drew testimony from county assessors and industry stakeholders before the House Finance Committee adopted an amendment and advanced the bill unanimously.

Sponsors said the bill clarifies state law governing exemptions for real property leased to public entities — primarily metro districts — and creates processes for additional local review when properties leased to a metro district appear to confer private gain. The bill was presented as narrowing a potential loophole where landowners who sit on metro district boards could lease property to the district and receive a property-tax exemption without external review.

"It is not uncommon to have scenarios where primary land owners within a metropolitan district also fill the majority and at times all of the positions on the board of directors for that district," Denver County Assessor Keith Erthmeier told the committee. He testified on behalf of the Colorado Assessors Association and said assessors have flagged cases where leases create outcomes that appear inconsistent with the statutory public-purpose exemption.

Weld County Assessor Brenda Donas described examples her office reviewed, including a privately owned golf course that had been leased to a metro district and then treated as exempt. Donas said the assessor stopped and questioned the exemption because it appeared a private owner could receive private gain, and the bill would allow assessors to value property in those lease-and-sublease situations.

Representatives said the bill does not change the core intent of the exemption for property leased and used for public purposes but instead provides an additional layer of oversight by allowing governing bodies — typically county commissioners — to review lease information shared by the assessor and determine whether an exemption is appropriate. Representatives said the bill includes a removal of an initial "look back" provision during negotiations so the measure applies prospectively.

The Colorado Municipal League told the committee it supported technical amendments. The Metro District Education Coalition said it remained in an amid-position but thanked sponsors and assessors for stakeholders' discussions and for limiting retroactive effects.

Committee members adopted amendment L1 to strike the retroactive "look-back" period and adjust several deadline dates. With the amendment adopted, Representative Zocai moved the bill to the committee of the whole and the motion passed unanimously.

Action taken included adoption of L1 and unanimous advancement to the committee of the whole.