SENATE 3rd Reading Unamended April 8, 2016 SENATE Amended 2nd Reading April 7, 2016Second Regular Session Seventieth General Assembly STATE OF COLORADO REENGROSSED This Version Includes All Amendments Adopted in the House of Introduction LLS NO. 16-0339.01 Ed DeCecco x4216 SENATE BILL 16-067 SENATE SPONSORSHIP Scheffel and Heath, Hill, Holbert, Lundberg, Roberts, Woods HOUSE SPONSORSHIP Williams, Brown, Conti, Lawrence, Priola, Rankin, Saine, Thurlow, Van Winkle, Willett Senate Committees House Committees Finance Appropriations A BILL FOR AN ACT Concerning a property tax exemption for personal property used to provide broadband service. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Section 2 of the bill creates a property tax exemption for any locally assessed personal property that: A broadband provider acquires on or after January 1, 2016; and Is directly used by the broadband provider or any other person to provide broadband service. Electronics, equipment, transmission facilities, and fiber optic and copper cables are examples of property that may qualify for the exemption. Section 3 of the bill creates the same exemption for a public utility that is assessed statewide by excluding personal property from the factors that the property tax administrator uses to value the public utility. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly hereby finds and declares that broadband service should be made widely available to all citizens of the state and that this is in the public interest and a matter of statewide concern. The general assembly also recognizes that broadband deployment is capital intensive and a key economic driver and workforce development tool, which creates additional tax revenue through economic development at the local level. Now, therefore, the intended purpose of this property tax exemption is to encourage and maximize capital investment in broadband service infrastructure and to improve and expand broadband service in the state. (2) The general assembly hereby finds and declares that the reduction in the valuation for assessment of a public utility that the property tax administrator allocates to a county as required in this act is a reasonable way to apply the property tax exemption for locally assessed companies to a public utility that is assessed statewide. SECTION 2. In Colorado Revised Statutes, 22-54-106, amend (9) as follows: 22-54-106. Local and state shares of district total program. (9) If a district reduces or ends business personal property taxes through action taken pursuant to section 20 (8) (b) of article X of the state constitution or if business personal property is exempt from a district's property tax in accordance with section 39-3-118.9, C.R.S., the state's share of the district's total program for the budget year in which such action is taken and any budget year thereafter shall be the amount by which the district's total program exceeds the amount of specific ownership tax revenue paid to the district and the amount of property tax revenue which that the district would have been entitled to receive if such action had not been taken by the district or if sections 39-3-118.9 and 39-4-106 (9), C.R.S., did not apply. SECTION 3. In Colorado Revised Statutes, add 39-3-118.9 as follows: 39-3-118.9. Broadband service - installed - personal property - exemption - definitions. (1) As used in this section: (a) "Broadband service" means any communications service having the capacity to transmit data to enable a subscriber to the service to originate and receive high-quality voice, data, graphics, and video at speeds of at least ten megabits per second for download and one megabit per second for upload. (b) "County" means any county in this state and includes a city and county. (c) "Exemption" means the exemption created in this section. (d) "Municipality" means a home rule or statutory city or town, or a territorial charter city. (2) Except as set forth in subsection (4) of this section, for property tax years beginning on or after January 1, 2018, but before January 1, 2025, any personal property, such as electronics, equipment, transmission facilities, and fiber optic or copper cables, is exempt from the levy and collection of property tax by a county, municipality, or school district identified in subsection (3) of this section if: (a) The broadband provider that owns the personal property has an agreement with a county to provide broadband service within the county; (b) The broadband provider acquires the personal property on or after January 1, 2017; (c) The personal property is installed within the boundaries of the county, municipality, or school district; and (d) The personal property is directly used by the broadband provider or any other person to provide broadband service. (3) (a) Property is not exempt under this section from the tax levied by a county for a property tax year, unless: (I) The county has a population of less than sixty thousand people; (II) The county has an agreement with a broadband service provider to provide broadband service within the county; and (III) Prior to the property tax year, the board of county commissioners of the county adopts a resolution approving the exemption. (b) The board of county commissioners shall send a copy of a resolution approving the exemption under subparagraph (III) of paragraph (a) of this subsection (3) to each school district and municipality located within the county as soon as possible after its adoption. (c) If the board of county commissioners adopts a resolution approving the exemption, then the exemption also applies to the tax levied by a municipality and school district located within the county, unless, within ninety days after it receives notice from the county as specified in paragraph (b) of this subsection (3), the governing body of the municipality or school district adopts a resolution stating that the exemption does not apply to the municipality or school district. (d) An exemption to the property tax levied by a county, municipality, or school district for a property tax year under this subsection (3) applies for all property tax years that begin thereafter prior to January 1, 2025. (4) The exemption does not apply to personal property that is sold and repurchased or leased back by the same taxpayer. Personal property that is transferred as part of a merger or acquisition is ineligible for the exemption, unless it was originally acquired on or after January 1, 2017. SECTION 4. In Colorado Revised Statutes, 39-4-102, add (4) as follows: 39-4-102. Valuation of public utilities. (4) For the purpose of applying section 39-4-106 (9), the administrator shall determine the value of personal property that is included in a public utility's value as unit, but that would be exempt under section 39-3-118.9, if the public utility was locally assessed. SECTION 5. In Colorado Revised Statutes, 39-4-103, add (1) (c) as follows: 39-4-103. Schedules of property - confidential records - late filing penalties. (1) (c) For property tax years beginning on or after January 1, 2018, but prior to January 1, 2025, a public utility shall annually identify any personal property by county that would be exempt under section 39-3-118.9, if the public utility was locally assessed. SECTION 6. In Colorado Revised Statutes, 39-4-106, add (9) as follows: 39-4-106. Valuation of utilities - apportionment. (9) (a) If a public utility has property in a county that would be exempt under section 39-3-118.9, if the public utility was locally assessed, then the administrator shall provide the county with two valuations for assessment: (I) The valuation for assessment of the public utility that is determined under paragraph (b) of this subsection (9), which amount is used for the county and any municipality or school district located within the county that does not opt out of the exemption in accordance with section 39-3-118.9 (3) (c); and (II) The valuation for assessment of the public utility that is otherwise determined without application of this subsection (9), which amount is used for any municipality or school district that opts out of the exemption in accordance with section 39-3-118.9 (3) (c) and all special districts. (b) After determining the actual value of the public utility in this state, the administrator shall: (I) Apportion the actual value of the public utility to the county, utilizing commonly recognized methods of allocation as in his or her judgement are just and equitable; (II) Reduce the actual value of the public utility in the county based on the net-book value of the company's personal property in the county that would be exempt under section 39-3-118.9, if the company was locally assessed, multiplied by the market-to-book ratio of the company; and (c) Compute the valuation for assessment of the public utility in the county as provided in section 39-1-104. SECTION 7. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2016, if adjournment sine die is on May 11, 2016); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.