Senate Committee on Finance (04/21/2009)

Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON FINANCE

Date:	04/21/2009	ATTENDANCE

Time:	02:03 PM to 02:55 PM	Brophy	*
		Heath	X
Place:	SCR 354	Isgar	*
		King K.	*
This Meeting was called to order by		Scheffel	X
	Senator Sandoval	Hudak	X
		Sandoval	X
This Report was prepared by
	Elizabeth Hanson
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB09-233		Amended, Referred to Appropriations

02:04 PM -- Senate Bill 09-233

Senator Schwartz, prime sponsor, presented Senate Bill 09-233. The bill is recommended by the Joint Select Committee on Job Creation and Economic Growth. It allows a mixed-use residential property in which less than 25 percent of its square footage is used for nonresidential purposes to be assessed at the residential assessment rate. It would be effective beginning with property tax year 2010. Properties in which the portion used for nonresidential purposes exceeds 2,000 square feet are not eligible.

Senator Schwartz distributed a copy of Amendment L.002 (Attachment A). She also distributed a statement of support for the bill (Attachment B) and a letter of support for Senate Bill 09-233 from Cloud Cover Hats, a small business in Paonia, Colorado (Attachment C). Senator Schwartz shared her thoughts about the property taxes paid by small businesses in Colorado. She stated that in difficult economic times, Colorado residents want to stay in the state, and that creating new jobs is important. Senator Schwartz explained that the bill provides that when a small business is run out of a residential home, the business owner is not taxed at a residential rate. She also provided the committee with background information about the fiscal note, and stated that the bill does not violate any provisions of current tax laws.

Senator Schwartz responded to questions from the committee about the current tax rate that is applied to mixed-use properties. She also responded to questions about the 25 percent square footage provision in the bill and Amendment L.002.

02:16 PM

Discussion continued about Amendment L.002. The committee discussed whether to clarify "nonresidential use" and other provisions in the bill. Senator Schwartz stated that she would like to be consistent with the language in the current tax code. The committee continued discussing potential clarifications to the language of Amendment L.002.

The following persons testified:

02:20 PM -- Mr. Chris Mendez, representing Colorado Counties Inc., testified. He stated that his primary concern about the bill is the potential impact on county tax revenue. Mr. Mendez said that county governments provide needed services to individuals outlined in state and federal law. He responded to questions from the committee about whether the counties supported the bill.

02:22 PM -- Mr. Keith Erffmeyer, representing the Denver County Assessor's Office, testified. He provided background information about tax assessment rules in Denver County. He stated that the bill could create confusion for county assessors regarding the square footage provisions and might be inconsistent with other established practices. He expressed concerns about the bill's impact on bed and breakfast establishments. He also read a provision from a Denver ordinance on permitted home occupations and square footage requirements.

02:27 PM -- Ms. Pam Godfrey, representing the Division of Property Taxation, explained the provisions of Colorado statute regarding nonresidential use. She said that any part of a residential property that is used for nonresidential purposes would be treated under tax law based on its use.

02:32 PM

Senator Schwartz stated that the bill would assist small counties in Colorado. She responded to additional questions from the committee about tax deduction rules related to residential property taxation and the 25 percent provision in the bill.

02:37 PM

Mr. Erffmeyer returned to the table and answered questions about the impact of the bill on bed and breakfast establishments. Senator Schwartz continued responding to questions about the tax assessment on a small businesses, and the example of an auto shop was discussed. The committee also discussed whether the terms "nonresidential" and "entrepreneurial uses" needed to be clarified in the bill.

02:40 PM -- Ms. Esther van Mourik, representing the Office of Legislative Legal Services, explained the changes in bill drafts, discussed issues related to the amending of the bill title, and stated that she would like to consult with the Colorado Property Tax Administrator's Office if the"gross finished building area" language is modified in the bill.

Senator Schwartz responded to the committee about technical changes in the bill, and she stated that she could move forward and continue working to address the issues the committee raised. The committee discussed the definition of "gross finished building area." The committee also discussed the square footage requirements in the bill, zoning issues, and the appropriate uses of the property under the tax laws.

02:48 PM -- Ms. JoAnn Groff, the Colorado Property Tax Administrator, testified and answered the committee's questions about how property taxes are assessed. She stated that the property tax assessor examines the use of the property when the tax is assessed and does not look at zoning issues, explaining that any zoning concerns are separate issues. She stated that zoning violations are addressed by cities and counties, which determine zoning rules and regulations, and not tax assessors.


BILL:	SB09-233
TIME:	02:51:59 PM
MOVED:	Heath
MOTION:	Adopt Amendment L002. The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-233
TIME:	02:52:41 PM
MOVED:	Heath
MOTION:	Moved a conceptual amendment to Amendment L.002 regarding page 2, line 12. The committee discussed this section and whether to clarify the definition of "gross finished building area." After discussion, the amendment was withdrawn.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: WITHDRAWN


BILL:	SB09-233
TIME:	02:55:03 PM
MOVED:	Heath
MOTION:	Refer Senate Bill 09-233, as amended, to the Committee on Appropriations. The motion passed 7-0.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	Yes
	Isgar	Yes
	King K.	Yes
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Final YES: 7 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:55 PM

The committee recessed.