Colorado Legislative Council Staff

STATE and LOCAL

CONDITIONAL FISCAL NOTE

State General Fund Expenditure Impact

Local Revenue Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-079

Sen. Hopper

Rep. Grampsas

Date:

Bill Status:

Fiscal Analyst:

January 28, 1998

Senate Finance

Harry Zeid (866-4753)

 

TITLE:            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.



Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund

Other Fund



 



 

State Expenditures

General Fund

Other Fund


 


*

FTE Position Change

None

None

Local Government Impact — The bill may result in a minimal property tax revenue reduction within the boundaries of limited gaming district in Gilpin County beginning in 2000.

             *If a reduction of assessed value occurs in Gilpin County, the property tax revenue reduction for the school district may be reimbursed for operating purposes through the School Finance Act.


            This bill would require that for property tax years beginning on or after January 1, 1999, if the actual use of any real property that is located within the boundaries of a limited gaming district is used as residential real property (and the property is not used for limited gaming), the real property shall be classified as residential real property. The assessor would be required to determine the actual value of the residential real property by applying the market approach to appraisal. If comparable valuation data is not available from within the limited gaming district to adequately determine the actual value of the real property, the assessing officer would be required to consider sales of reasonably comparable residential real property located inside and outside of any limited gaming district for purposes of utilizing the market approach to appraisal.


            If the actual use of any real property that is located within the boundaries of a limited gaming district is not used for limited gaming or as residential real property, the real property shall be classified as nongaming real property, and the assessing officer would determine the actual value of the property by giving appropriate consideration to the cost, market, and income approaches to appraisal. If comparable valuation data is not available from within the limited gaming district to adequately determine the actual value of the real property, the assessing officer would be required to consider sales of reasonably comparable real property that is not used as residential property located inside and outside of any limited gaming district for purposes of utilizing the market approach to appraisal. The assessing officer would also be required to consider reasonably comparable real property that is not used as residential property for purposes of utilization of the income approach to appraisal.


            The bill may lower the assessed value of a limited number of properties located within the boundaries of the limited gaming district in Gilpin County beginning in 1999, depending upon the method of assessment used by the assessor on selected properties. This would affect property tax collections beginning in 2000. Based on the conditional nature of any potential future impact, the bill is assessed as having a conditional fiscal impact. The bill would become effective upon signature of the Governor, and would apply to property tax years beginning on or after January 1, 1999.



State Expenditures


            State aid for schools is computed as the difference between Total Program and the amount collected from property taxes and specific ownership taxes. If property tax collections for schools in Gilpin County are reduced, there may be a need for additional state aid through the School Finance Act to “backfill” the difference. It has not been determined whether property tax collections will actually be lowered.



Local Government Impact


            When applying the market approach to value, the bill would allow assessors to use comparable sales data from inside the limited gaming district as well as from outside the limited gaming district. This would be used for determining values for residential and other non-gaming property, when appropriate. Limited gaming districts exist only in Teller and Gilpin County.


            In Teller County, there are sufficient sales within the limited gaming district to allow the assessor to determine the values for both residential and non-gaming property based on local sales. Therefore, the Teller County assessor indicates that the bill would not affect assessment practices on any property within the Teller County.


            Sales of comparable non-gaming properties within the limited gaming district in Gilpin County have historically been very limited. Similarly, the county does not have sufficient comparable sales outside of the gaming district that is within the county boundaries. Therefore, the assessor may have to consider comparable properties from outside of the county when seeking to determine the market approach to value.


            The method of valuation of several properties within the limited gaming district in Gilpin County may be affected by the bill. These properties include seven residential properties, five commercial properties, several vacant buildings, and a parking lot. A reduction of assessed value would occur if these properties are re-assessed based on the provisions of the bill in considering the market approach to appraisal. However, some commercial properties may continue to be valued on the income approach, which may result in a value higher than that achieved by the market approach. The question is whether the assessor deems these considerations in the method of appraisal to be appropriate in valuing the affected properties. If the affected properties are assessed at a lower value beginning in 1999, it would affect property tax collections beginning in 2000.



Spending Authority


            The fiscal note would imply that no additional appropriations or spending authority would be required in FY 1998-99 for implementation of the bill.



Departments Contacted


            Local Affairs