First Regular Session

Sixty-first General Assembly

LLS NO. 97­0048.01 JAP SENATE BILL 97­124

STATE OF COLORADO

BY SENATOR Hopper;

also REPRESENTATIVE Sullivant.

FINANCE

REENGROSSED

A BILL FOR AN ACT

CONCERNING VALUATION FOR PROPERTY TAX PURPOSES OF REAL PROPERTY THAT IS LOCATED WITHIN DISTRICTS IN WHICH LIMITED GAMING IS AUTHORIZED BUT IS NOT USED FOR LIMITED GAMING.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

For property tax years beginning on or after January 1, 1998, instructs the assessing officer for any county that includes a limited gaming district to assess real property located within the limited gaming district but not used for limited gaming based on the actual use of the real property as of the assessment date if:

• The real property is used for residential purposes;

• The owner of the real property files a use agreement with the county clerk and recorder agreeing not to use the real property for limited gaming; or

• The assessing officer determines that the actual use of the real property is reasonable to support the economic stability of the limited gaming district.

Specifies that, if the assessing officer determines that the property is not used for residential purposes, no use agreement has been filed, and the actual use is not reasonable, the assessing officer may value the real property based on the highest and best use of the real property.

Clarifies that, in determining actual value based on actual use, the assessing officer shall apply the following approaches:

• If the actual use is for residential purposes, the assessing officer shall use the market approach to appraisal;

• If the actual use is for nonresidential purposes, the assessing officer shall use the income, market, and cost approaches to appraisal; except that the assessing officer shall only use the market or cost approach if either one would result in a lower valuation than the income approach.

Specifies the contents of the owner use agreement, including a statement that, if the owner begins using the real property for limited gaming, the owner will be liable for the amount of property taxes he or she would have paid had the property been valued as being used for limited gaming. Authorizes the county assessor to establish the time for filing of use agreements.

In using the market approach to appraisal, requires the assessing officer to use only sales involving real property that is used for a purpose comparable to the actual use of the real property being valued.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  39­1­103, Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended BY THE ADDITION OF A NEW SUBSECTION to read:

39­1­103.  Actual value determined ­ when. (18) (a)  THE GENERAL ASSEMBLY HEREBY FINDS AND DECLARES THAT REAL PROPERTY LOCATED IN A DISTRICT IN WHICH LIMITED GAMING IS AUTHORIZED BUT WHICH PROPERTY IS NOT USED FOR LIMITED GAMING MAY BE UNFAIRLY VALUED BY COMPARISON OF SAID REAL PROPERTY WITH REAL PROPERTY THAT IS USED FOR LIMITED GAMING. THE GENERAL ASSEMBLY FURTHER FINDS THAT REAL PROPERTY LOCATED IN A GAMING DISTRICT MAY BE REASONABLY USED FOR PURPOSES OTHER THAN LIMITED GAMING, THAT SUCH ALTERNATIVE USES MAY BE BENEFICIAL IN STRENGTHENING THE ECONOMIES OF GAMING DISTRICTS, AND THAT SUCH ALTERNATIVE USES SHOULD BE ENCOURAGED. IN ADDITION, THE GENERAL ASSEMBLY FINDS THAT APPLYING THE COST AND MARKET APPROACHES TO APPRAISAL IN VALUING REAL PROPERTY LOCATED IN A LIMITED GAMING DISTRICT BUT NOT USED FOR LIMITED GAMING MAY RESULT IN AN UNFAIRLY HIGH VALUATION OF REAL PROPERTY THAT IS REASONABLY USED FOR A PURPOSE OTHER THAN LIMITED GAMING. THEREFORE, THE PROVISIONS OF THIS SUBSECTION (18) SHALL GOVERN THE VALUATION OF REAL PROPERTY LOCATED WITHIN A GAMING DISTRICT BUT NOT USED FOR LIMITED GAMING.

(b)  FOR PROPERTY TAX YEARS BEGINNING ON OR AFTER JANUARY 1,1998, IF THE ACTUAL USE AS OF THE ASSESSMENT DATE OF ANY REAL PROPERTY LOCATED IN A LIMITED GAMING DISTRICT BUT NOT USED FOR LIMITED GAMING IS USE AS RESIDENTIAL REAL PROPERTY, THE ASSESSING OFFICER SHALL DETERMINE THE ACTUAL VALUE OF SAID REAL PROPERTY BY APPLYING THE MARKET APPROACH TO APPRAISAL BASED ON THE ACTUAL USE OF SAID REAL PROPERTY AS OF THE ASSESSMENT DATE. THE OWNER OF SAID REAL PROPERTY IS NOT REQUIRED TO FILE AN OWNER USE AGREEMENT AS PROVIDED IN PARAGRAPH (c) OF THIS SUBSECTION (18).

(c) (I)  FOR PROPERTY TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 1998, THE ACTUAL VALUE OF ANY REAL PROPERTY LOCATED IN A LIMITED GAMING DISTRICT BUT NOT USED FOR LIMITED GAMING OR AS RESIDENTIAL REAL PROPERTY SHALL BE BASED ON THE ACTUAL USE OF SAID REAL PROPERTY AS OF THE ASSESSMENT DATE IF THE OWNER OF SAID REAL PROPERTY HAS FILED A USE AGREEMENT IN THE OFFICE OF THE COUNTY ASSESSOR OF THE COUNTY IN WHICH SAID REAL PROPERTY IS LOCATED. THE USE AGREEMENT SHALL INCLUDE BUT IS NOT LIMITED TO THE FOLLOWING:

(A)  A STATEMENT OF ALL CURRENT AND CONTEMPLATED FUTURE USES OF SAID REAL PROPERTY;

(B)  A STIPULATION THAT SAID REAL PROPERTY SHALL NOT AT ANY TIME BE USED FOR LIMITED GAMING; AND

(C)  A STIPULATION THAT IF SAID REAL PROPERTY IS USED FOR LIMITED GAMING, THE OWNER OF THE REAL PROPERTY AT THE TIME THE USE CHANGES TO LIMITED GAMING SHALL BE LIABLE FOR PROPERTY TAXES IN AN AMOUNT EQUAL TO THE AMOUNT OF PROPERTY TAXES THAT WOULD HAVE BEEN ASSESSED AGAINST THE REAL PROPERTY HAD THE REAL PROPERTY BEEN VALUED AS BEING USED FOR LIMITED GAMING FROM THE DATE THE AGREEMENT WAS FILED UNTIL THE DATE ON WHICH THE REAL PROPERTY IS FIRST USED FOR LIMITED GAMING, MINUS THE ACTUAL AMOUNT OF PROPERTY TAXES PAID ON THE REAL PROPERTY FROM THE DATE THE AGREEMENT WAS FILED UNTIL THE DATE ON WHICH THE REAL PROPERTY IS FIRST USED FOR LIMITED GAMING.

(II)  THE ASSESSOR FOR EACH COUNTY IN WHICH LIMITED GAMING IS AUTHORIZED SHALL SPECIFY THE TIME FOR FILING THE USE AGREEMENT PURSUANT TO THIS PARAGRAPH (c).

(d)  FOR PROPERTY TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 1998, IF THE ACTUAL USE AS OF THE ASSESSMENT DATE OF REAL PROPERTY LOCATED IN A LIMITED GAMING DISTRICT BUT NOT USED FOR LIMITED GAMING IS FOR A PURPOSE OTHER THAN AS RESIDENTIAL REAL PROPERTY AND THE OWNER OF SAID REAL PROPERTY HAS FILED A USE AGREEMENT, THE ASSESSING OFFICER SHALL USE THE ACTUAL USE OF SAID REAL PROPERTY, RATHER THAN ANY POTENTIAL USE OF SAID REAL PROPERTY FOR LIMITED GAMING, IN GIVING APPROPRIATE CONSIDERATION TO THE INCOME, COST, AND MARKET APPROACHES TO APPRAISAL IN DETERMINING THE ACTUAL VALUE OF SAID REAL PROPERTY. IN APPLYING THE INCOME, COST, AND MARKET APPROACHES TO APPRAISAL, THE ASSESSING OFFICER MAY ONLY CONSIDER PROPERTY THAT IS USED FOR PURPOSES THAT ARE COMPARABLE TO THE ACTUAL USE AS OF THE ASSESSMENT DATE OF THE REAL PROPERTY BEING VALUED. FOR PURPOSES OF DETERMINING THE ACTUAL VALUE OF SAID REAL PROPERTY AS OF THE ASSESSMENT DATE USING THE INCOME APPROACH TO APPRAISAL, THE ASSESSING OFFICER SHALL CAPITALIZE THE ACTUAL INCOME GENERATED BY SAID REAL PROPERTY DURING THE CALENDAR YEAR PRECEDING THE ASSESSMENT DATE AT A RATE SET BY THE APPRAISER.

(e)  IN APPLYING THE MARKET APPROACH TO APPRAISAL OF ANY REAL PROPERTY THAT IS LOCATED WITHIN A LIMITED GAMING DISTRICT BUT NOT USED FOR LIMITED GAMING, THE ASSESSING OFFICER MAY ONLY CONSIDER SALES INVOLVING PROPERTY THAT IS USED AT THE TIME OF SALE FOR A PURPOSE COMPARABLE TO THE ACTUAL USE AS OF THE ASSESSMENT DATE OF THE REAL PROPERTY BEING VALUED.

(f) FOR PURPOSES OF THIS SUBSECTION (18) REAL PROPERTY IS CONSIDERED TO BE "USED FOR LIMITED GAMING" IF THE OWNER OR LESSEE OF THE REAL PROPERTY HOLDS A RETAIL GAMING LICENSE ISSUED PURSUANT TO PART 5 OF ARTICLE 47.1 OF TITLE 12, C.R.S., AND THE OWNER OR LESSEE ACTUALLY USES THE REAL PROPERTY IN OFFERING LIMITED GAMING FOR PLAY OR FOR ADMINISTRATIVE SUPPORT SERVICES RELATED TO PROVIDING LIMITED GAMING OR MAKES THE REAL PROPERTY AVAILABLE FOR OTHER USES BY PERSONS WHO ARE ENGAGED IN LIMITED GAMING FOR PLAY, INCLUDING BUT NOT LIMITED USING THE PROPERTY FOR PARKING, FOR A RESTAURANT, OR FOR A HOTEL OR MOTEL.

SECTION 2.  Safety clause.  The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.