Date: 01/20/2009

Final
BILL SUMMARY for SB09-042

SENATE COMMITTEE ON FINANCE

Votes: View--> Action Taken:
Adopt Amendment L.001 (Attachment B). The motion
Adopt L.002 (Attachment A). After committee discu
Refer SB 09-042, as amended, to the Committee on A
Pass Without Objection
TIE
PASS



02:04 PM -- Senate Bill 09-042

Senator Tapia, prime sponsor, presented Senate Bill 09-042, Concerning the Exemption of Property Taxes. The bill broadens the definition of property overseen by the property tax administrator, expands the authority of the State Board of Equalization to grant an exemption retroactively, and requires the Division of Property Taxation to provide a list of pending applications for property tax exemptions annually to counties.

Senator Tapia provided background information and reasons for the bill. He explained that the steel company Colorado Fuel and Iron Company (known as CF& I) donated a portion of land for a museum about the history of mining to the Bessemer Historical Society, a nonprofit organization. The museum has become an important landmark in Pueblo and is enjoyed by the entire community. However, he stated that now the historical society has received an assessment from the property tax administrator because the society receives the federal New Markets Tax Credit. The tax assessment, he explained, accounts for more than a year of the Society's budget. He testified that SB 09-042 broadens the definition of property that qualifies for an exemption to include property owned by an organization that receives this federal tax credit.

Senator Tapia stated that he assumed the bill would be revenue neutral, but realizes the bill needs additional work to limit the cost of $11,000 to the State Education Fund specified in the fiscal note.


02:13 PM

Senator Tapia responded to questions from the committee about several issues, including the impacts on school finance, appropriations, and tax matters. He stated that there is a need to classify the definition of what constitutes a nonprofit under the Colorado property tax code.

The following witnesses testified:

02:15 PM -- Ms. Cornne Koehler, Bessemer Historical Society, testified in support of SB 09-042. She stated that the Bessmer Historical Society had to form a limited liability corporation (LLC) to take advantage of the New Market Tax Credit and the historical tax credits under federal law while still paying its property tax obligation. Ms. Koehler testified that the society would like to continue taking advantage of both federal credits and eliminate the property tax liability because paying this tax will put a huge strain on the museum's resources. Ms. Koehler responded to questions from the committee about the property tax liability and tax credit issues facing the nonprofit organization.

02:21 PM -- Ms. Mary Koernig, Colorado Preservation Inc, testified in support of bill. She stated that SB 09-042 would provide a benefit to other nonprofit organizations that own historic property. Nonprofit organizations are also looking for other avenues of financing and the additional tax burden places a strain on these organizations, she said. Ms. Koernig responded to questions from the committee about the benefits of the bill for these nonprofit entities.

02:26 PM -- Mr. Merv Bennett, representing the Colorado Society of YMCA's, testified in support of SB 042. Most of the nonprofit world, he explained, receives tax credits because these organizations relieve burdens on government. Nonprofits want to be seen as working with government as partners in assisting children and families in Colorado, he stated.

02:29 PM --
Ms. JoAnn Groff, Department of Local Affairs, testified about SB 09-042. Ms. Groff said DOLA has been tracking areas of property tax law that may need to be modified, and realizes that nonprofits provide a benefit to the community. She realizes the restrictions in federal law place organizations in a position to either pay property taxes or forgo federal funding or tax credits in other areas. This requires these organizations to change their ownership structure, she explained. Ms. Groff stated that if the property tax exemption was passed, any property taxes owed would be abated.

Ms. Groff also testified that the additional cost specified in the fiscal note is an issue because of the mill-levy freeze. Therefore, every time an exemption is granted it will impact the mill-levy freeze, she said. Ms. Groff responded to questions from the committee about the mill-levy, property taxes, and the assessment rates affecting nonprofit.

02:48 PM --
Mr. Stan Gueldenzope, DOLA, testified that the bill clarifies ownership structures for nonprofit organizations.


02:54 PM

Senator King distributed amendment L.002 to the committee (Attachment A). He said the amendment clarifies that charter schools also would qualify for the tax exemption. Ms. Groff clarified that currently school districts do not now need to own the property to receive the property tax exemption, but private schools need to own the property to qualify for the exemption.

09SenateFin0120AttachA.pdf

Committee discussion ensued about whether the clarification in the property tax code was really necessary for school finance. Many questions were raised by members of the committee about this issue and the definition of public school. The committee returned to the amendment when the bill drafter arrived.


03:12 PM

Senator Tapia distributed amendment L.001 (Attachment B). Senator Tapia testified that DOLA requested the amendment to clarify several tax application issues. Ms. Groff discussed L.001, which she said would allow pending applications to be considered. She also stated that DOLA suggests putting a deadline on the property tax application. In addition, the amendment, according to Ms. Groff, adds the term "local" to further clarify the exemption bill.

09SenateFin0120AttachB.pdf

03:18 PM

Mr. Gregg Fraser, Office of Legislative Legal Services, responded to questions about L.002. Committee discussion ensued about whether there is a need to define public school.


03:24 PM

Public testimony was closed.
BILL:SB09-042
TIME: 03:25:43 PM
MOVED:Isgar
MOTION:Refer SB 09-042, as amended, to the Committee on Appropriations. The motion passed 6-0, with one excused.
SECONDED:
VOTE
Brophy
Yes
Heath
Excused
Isgar
Yes
King K.
Yes
Scheffel
Yes
Hudak
Yes
Sandoval
Yes
Final YES: 6 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS


BILL:SB09-042
TIME: 03:26:33 PM
MOVED:King
MOTION:Adopt L.002 (Attachment A). After committee discussion, Senator King withdrew the amendment.
SECONDED:
VOTE
Brophy
Heath
Excused
Isgar
King K.
Scheffel
Hudak
Sandoval
Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: TIE


BILL:SB09-042
TIME: 03:26:00 PM
MOVED:Isgar
MOTION:Adopt Amendment L.001 (Attachment B). The motion passed 6-0, with one excused.
SECONDED:
VOTE
Brophy
Heath
Excused
Isgar
King K.
Scheffel
Hudak
Sandoval
Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection