Final Report 2013 Taxpayer Complaint Larimer County October 18, 2013 Submitted by: Mike Kerrigan, Administrative Resources

2013 Taxpayer Complaint – Larimer County

Complaint Filed:

On September 11, 2013 via email by Eric Sutherland, a citizen and taxpayer of Larimer County and owner of taxable property within the city limits of Fort Collins, CO at the address 3520 Golden Currant, Fort Collins, CO 80521. A copy of the complaint is attached to this report as Addendum A.

Statutory Authority:

Specifics of Complaint:

§39-2-111, C.R.S. Complaints. The administrator shall examine all complaints filed with him wherein it is alleged that a class or subclass of taxable property in a county has not been appraised or valued as required by law or has been improperly or erroneously valued or that the property tax laws have in any manner been evaded or violated. Complaints shall be in writing and may be filed only by a taxing authority in a county or by any taxpayer. Complaints may be filed only with respect to property located in the county in which the taxing authority levies taxes or in which the taxpayer owns taxable property. If the administrator finds the complaint is justified, he may use his findings as the basis for petitioning the state board of equalization for an order of reappraisal pursuant to section 39-2-114. This complaint pertains to the portion of the above referenced statute “that the property tax laws have in any manner been evaded or violated.” The complaint does not directly allege that a class or subclass of taxable property has not been valued as required by law. Rather, essentially, the complaint alleges that a violation of property tax law resulted from the improper and overstated distribution of increment value to the Fort Collins Downtown Development Authority (DDA). This complaint is composed in three parts: 1) The complainant outlines 6 facts that pertain to the creation and operation of the City of Fort Collins’ Downtown Development Authority (DDA) per the statutory provisions found in part 8, article 25, title 31, C.R.S. These facts will be examined in the analysis of this investigation. 2) The allegation, derived from these facts, is that property tax law has been violated. Specifically: 

That the Larimer County assessor prepared three consecutive annual tax warrants (2010, 2011, 2012) applying an overstated increment value.

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

This overstated increment value diverted 100 percent of the property tax revenue derived from the increment value located within the DDA from the respective funds of the City of Fort Collins (City) and the General Improvement District#1 (GID) to the DDA.

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This diversion deprives taxpayers whose property taxes contribute to the funds of the City and the GID of governmental services.

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The 100% diversion was not properly certified, thus only 50% of the increment value should have been applied annually to derive the revenue diversion to the DDA.

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Revaluation of the increment value is the only remedy that will make the taxpayers of the City of Fort Collins whole.

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The complaint contemplates potentially ambiguous statutory language pertaining to the tax allocation scheme: is the revenue derived from increment value divided in terms of tax dollars or assessed value? The complainant offers a clarifying answer to this question, citing the Assessor’s Reference Library and common practice, that the division of taxes be constructed using increment value.

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The complaint seeks examination of the facts presented by the Property Tax Administrator and a petition to the Board of Equalization for remedy of the violation.

3) The complaint appends Errata #1 through #4, which express the complainant’s opinions of prohibited, illegal, and detrimental practices pertaining to the diversions of property taxes within the statutory scheme of tax increment financing. Scope of Work:

The statutes that govern this investigation are those in Title 31, Article 25, Part 8 and Title 39, Article 2, of the Colorado Revised Statutes. Specifically, §31-25-807, C.R.S. pertains to the powers/duties of a DDA and §39-2-109, C.R.S. pertains to the duties, powers, and authority of the property tax administrator. Additionally, §39-2-111, C.R.S., cited in its entirety above, pertains to complaints filed with the property tax administrator; and §39-2-114, C.R.S. provides for the procedures whenever a reappraisal has been issued for a class or subclass of taxable property by the State Board of Equalization upon the recommendation of the Property Tax Administrator.

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The scope of work completed for this complaint involved five objectives. 

First, the governing statutory provisions were analyzed to discern that their common meaning and application were properly interpreted by the complainant within the context of his complaint.

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Second, the procedures or lack thereof, as promulgated in the Assessor’s Reference Library (ARL) were analyzed for consistency in effectively implementing the statutory provisions cited above.

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Third, particular attention was focused on §§31-2507(3)(a)(IV) and (3)(f), C.R.S. These subsections were added to the statute in 2008 by SB 08-170, authorizing DDAs to extend their collection of property taxes derived from tax increment financing for an additional 20 years, and directing the property tax administrator to develop procedures, as applicable, for the manner and methods by which the requirements of subparagraph (IV) are to be implemented. Staff from the Division of Property Taxation reviewed the history of SB 08-170, including committee hearing transcripts, amendments, fiscal note reports, and final votes from Senate and House committees.

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Fourth, the Larimer county assessor’s office was contacted and requested to provide copies of their 2010 – 2013 work files pertaining to the division of increment value for the benefit of the DDA. These work files were reviewed.

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Fifth, the executive director of the Fort Collins DDA was contacted and invited to issue his response to the complaint to the property tax administrator. His response was reviewed as part of the scope of work.

The question of value in this complaint, specifically the increment value that is alleged to be overstated, involves an administrative assessment reporting function. Therefore, investigating this complaint did not require appraisal analysis or procedures pertaining to a class or subclass of taxable property. Investigative Techniques:

The main investigative technique involved scrutinizing the history of SB 08-170 in order to discern the legislative intent and the common meaning of the statutory language added by SB 08-170. This included collaborative analysis and discussions by several Division of Property Taxation staff members in order to vet out alternative interpretations or applications of the statutory

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provisions. As stated in the scope of work above, this investigation also made a careful review of the Assessor’s Reference Library (ARL), Volume 2, Chapter12, which pertains to tax increment procedures that county assessor’s apply to determine and report increment values to taxing entities and DDAs; examined the Larimer county assessor’s work files; and reviewed the DDA’s executive directors’ response to the complaint. Reporting:

Responses are to each fact presented in the complaint, one fact at a time. The scope of this report is restricted to the statutes relevant to the complaint, specifically §§31-25-801 and 807, C.R.S. The intended user of this report is the property tax administrator and the complainant, who are both knowledgeable in the terms, concepts, and the scheme of tax increment financing. The intended use is to report if property tax laws have been violated. Any other user that may use this report is assumed to have a competent understanding of tax increment financing. As necessary, this report refers to and provides copies of supporting documents as addenda.

Investigation Details – Report The facts presented by the complaint, followed by a response to the property tax administrator. Presented Fact 1: “There exists in the City of Fort Collins (the City) a Downtown Development Authority (the DDA) created and sometimes (but not always) operated in accordance with CRS 31-25-801 et al.” Response: I concur that there exists in the City of Fort Collins (the City) a Downtown Development Authority (the DDA) created and operated in accordance with §31-25part 8, C. R.S. However, stating that the DDA “sometimes (but not always)” operates in accordance with §31-25-part 8, C.R.S. is a statement by the complainant and not a demonstrated fact. Presented Fact 2:“The DDA derives a percentage of its revenues from property tax increment, as allowed by 31-25-807(3)(a)(II), for the sole purpose of making debt payments.” Response: This is a fact, and I provide the following interpretation of §31-25-07(3)(a)(II),C.R.S. in less complicated language. When the value of taxable property within the boundary of a DDA exceeds the base value for assessment, as determined by the

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assessor in the year that the DDA was adopted, the excess value is termed the increment value. This increment value is separated (the statute uses the term divided) from the base value to produce the “portion of said property taxes” that is allocated to a special fund for the repayment of debt incurred by the DDA to develop a project within the DDA plan area. When this debt is paid, the increment value is unified to the tax base of the public bodies that had relinquished this value. By this financing scheme, the taxable value, and therefore tax revenue, produced by the DDA’s development project is used to finance the project. Once the financing is complete, the tax value of the project contributes to the tax base of the public bodies. Presented Fact 3: “In 2008, legislation in the Colorado General Assembly did amend CRS 31-25-801 et al. This legislation did create a means whereby the ability of a DDA to collect property tax increment could be extended by 20 years. Prior to this legislation the tax increment collection period of a DDA was limited to 30 years. The amendments to CRS 31-25-801 et al included the addition of 31-25-07(3)(a)(IV)(B):” (B) In connection with an extension implemented pursuant to sub-subparagraph (A) of this subparagraph (IV), on an annual basis fifty percent of the property taxes levied, or such greater amount as may be set forth in an agreement negotiated by the municipality and the respective public bodies, and allocated in accordance with the requirements of subparagraph (II) of this paragraph (a) shall be paid into the special fund of the municipality and the balance of such taxes shall be paid into the funds of the other public bodies by or for which such taxes are collected. Not later than August 1 of each calendar year, the governing body shall certify to the county assessor an itemized list of the property tax distribution percentages attributable to the special fund of the municipality pursuant to this sub-subparagraph (B) from the mill levies to be certified by each public body. When certifying values to taxing entities pursuant to sections 391-111 (5), 39-5-121 (2), and 39-5-128, C.R.S., the assessor shall certify only the percentage of increment value attributable to the special fund pursuant to this sub-subparagraph (B) as certified by the governing body.

“To wit, any public entity with a mil levy subject to the division of property taxation noted in fact 2) above may, by action of its governing body, enter into an agreement with the City to have more 50% of the tax increment generated paid to the DDA. This may be accomplished by certifying this intention no later than August 1st of every year.” Response: I concur with this fact. But this amended language needs to be dissected within the context of the evolution of SB 08-170, which added §31-25-807(3)(a)(IV)(B), C.R.S. “Certify” is used in this amended language as an action that belongs to three different bodies completing three related but separate tasks: the governing body certifies to the assessor; mill levies certified by each public body; the assessor certifies values to taxing entities. Yet, §31-25-802, C.R.S is silent on the definition of certify. The crux of this complaint is that the increment values were not properly certified. Therefore, it is critical to explain why and how this language was added, and in this context, what the term “certify” intends. The original draft of the bill, introduced on February 19, 2008 does not include the language starting with “Not later than August 1…the governing body shall certify.” The fiscal note accompanying the introduced bill included a $44,289 appropriation to the Department of Local Affairs (DOLA) to implement this legislation. See Addendum B. One of the problems in implementing the draft legislation required

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significant revisions to the 5.5% property tax revenue limit calculation form, along with the instructions accompanying this form, as published and promulgated by the Division of Local Government (DLG), which is a division of DOLA. See Addendum C. Evidently Senator Bacon, the sponsor of this bill, perceived this fiscal note as a barrier to passage and sought a resolution. Greg Schroeder, then the tax increment financing specialist with the Division of Property Taxation, developed language to resolve this problem, and sent his proposed language to the bill’s drafter, Bob Lackner of Legislative Legal Services. See memo, Addendum D. The amended language in the final bill is essentially Greg Schroeder’s creation, and is nearly identical to the language in the final adopted bill, except that Greg’s wording interchanges the terms certify and reported, in the first and last lines of this language, when referring to the action of the governing body. Greg understood that if the assessor was provided annually, prior to August 25th, the percentage (50%, or more if agreed to) of the increment that each taxing entity intended to share with the DDA, these figures could be used to mathematically deduce the increment value surrendered by each taxing entity. In some sense the complainant understands this as well, when he explains that “where the division of property tax between base and increment is calculated, the valuation of the property is the critical parameter.” The assessor needs to report this increment value as a single value on the certification of values form, exactly as the assessor did during the first 30 years of the DAA’s life, when the DDA’s increment share was 100% of the increment value. Greg sought input from advocates of this legislation, specifically from staff of the Fort Collins DDA, to confirm that this solution was workable from the DDA’s perspective. Greg also sought input from staff at the Larimer County Assessor’s office to confirm the same. Once this amended language removed the fiscal note appropriated to DOLA, even though the final fiscal note continued to identify state aid to school districts that would be unnecessary in the absence of a TIF extension, SB 08-170 moved easily through the legislative process to final adoption. In this context, the bill’s sponsors, advocates and drafters were not concerned with a specific, controlling, legally compelling or prohibitive definition of the term certify. Rather they were concerned with a practical process that implemented a simple method to extend tax increment financing to DDAs. The simple intent of this convoluted language goes like this: 

“Not later than August 1…” – this gives the assessor time to produce the August 25th certification of values to each taxing entity as required by sections 39-1-111 (5), 39-5-121 (2), and 39-5-128, C.R.S.

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“the governing body shall certify to the county assessor” – the governing body is the DDA. "Governing body" means the city council, town council, board of trustees, or other governing board of any municipality of this state. §31-25-802(5.5), C.R.S.

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

“an itemized list of the property tax distribution percentages attributable to the special fund of the municipality” – this is so the assessor can deduce the increment value attributable to this fund.

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“pursuant to this sub-subparagraph (B) from the mill levies to be certified by each public body.” – this is the same as it ever was. Public bodies are the taxing entities whose mill levies determine the revenue generated by the increment value. "Public body" means the state of Colorado or any municipality, quasi-municipal corporation, board, commission, authority, or other political subdivision or public corporate body of the state. §31-25-802(7), C.R.S.

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“the assessor shall certify only the percentage of increment value attributable to the special fund pursuant to this sub-subparagraph (B) as certified by the governing body.” – this saved the bill. When only the percentage of increment value is certified by the assessor, the assessor only has to certify one increment value to each taxing entity.

While §31-25-801 et seq., C.R.S. is silent on the definition of “certify”, it is worth noting that “certify” is defined in title 29 C.R.S., which pertains to the powers of local government. "Certified" means a written statement by a member of the governing body or a person appointed by the governing body that the document being filed is a true and accurate copy of the action taken by the governing body. §29-1-102(5), C.R.S. Perhaps it would have been helpful if this definition had been added to the bill’s amended language. Nevertheless, it is clear that the spirit of the 2008 legislation was to implement a simple process by which the assessor could certify only one increment value to each taxing entity. The parties involved in this process understood that if more than 50% of the increment value was to be relinquished by the public bodies, such share back amount would be determined by agreements secured by the DDA, who would then communicate this to the assessor annually. And that a public body could change, by agreement, the amount they opted to share with the DDA annually. In fact, Larimer County has a sophisticated agreement with the DDA by which the amount greater than 50% that Larimer County shares is determined by the type of new property, termed a special development project (SPD), that produces increment value. In this agreement the Larimer County Board of Commissioners evaluates the amount of value greater than 50% that they will forgo, on a property by property basis. This agreement obeys the spirit of the 2008 legislation by employing a methodology that delivers figures to the assessor that can be simply reflected as one aggregate increment value. Finally, in response to fact 3, the procedures in the ARL regarding this process are minimal. In ARL Volume 2, page 12.20 (Rev. 09-13) the instruction simply states: “When certifying values to taxing entities the assessor shall apply the appropriate distribution percentage to the increment value and certify only that percentage of increment value to the entity.” This minimal instruction indicates that the parties involved in this process are not compelled to, or prohibited from,

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establishing agreements that best suit their objectives when sharing more than 50% of the increment value. Presented Fact 4: “The DDA began a 20 year extension subject to the terms of the 2008 legislation in 2010.” Response: Actually, the first year of the extension was 2011. The Ordinance No. 101, 2008, the action by which the City of Fort Collins extended the DDA, was adopted on September 2, 2008, recorded in reception # 20100003927, 01/21/2010 in the records of the Larimer County Clerk and Recorder. See Addendum F1. Presented Fact 5: “In 2010, 2011, 2012, 100% of the property taxes of the City and the G.I.D #1, both public bodies with property tax levies against property in the DDA, were paid to the DDA. (2010 taxes payable in 2011, etc.)” Response: This is not quite a fact. The first year of the DDA was 1981; the base year was 1980. The 30th year was 2010. In 2010, 100% of the increment value was necessarily allocated to the DDA per the provisions of the pre-amended statute. The 31st year was 2011. The 2011, 2012, 2013 work files of the Larimer County assessor consistently demonstrate that 100% of the City’s portion of increment value was surrendered to the DDA. Attached Addendum E is a summary report from these work files that demonstrates the increment values and percentages associated with all of the taxing entities that overlap and thus contribute to the special fund of the DDA. In this worksheet both the City’s and the GID’s increment share in 2011 (tax roll 2012), 2012 (tax roll 2013) and 2013 (tax roll 2014) is 100% of the increment value. Presented Fact 6: “No certifications have ever been duly approved or forwarded to the Larimer County Assessor.” Response: This is not a fact. Here, the crux of the complaint alleges that duly approved certifications were deficient because they did not conform to Article V Section 19.2 of the City of Fort Collins’ charter. The Property Tax Administrator has no authority to determine whether or not the City of Fort Collins’ charter has been violated as a result of the City giving 100% of its increment value to the DDA. This is a matter for the City of Fort Collins’ voters to address. As for the provisions of §31-25-807(3)(a)(IV)(B), C.R.S., it is clear that the 2008 legislation did not intend to prescribe a specific certification procedure. Rather, it intended to create a sufficient, effective process by which an extended DDA could receive 50% or more increment without having to also revamp the certification of values form that assessors have used for the past 30 years. In this context, the DDA did acquire, compile and deliver to the Larimer County assessor’s office annually in 2011, 2012, and 2013 the agreements necessary for the assessor to execute the “certification” process explained in Response 3 of this complaint.

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See Addenda items F. In turn, the Larimer County assessor’s office executed this process using the same supporting documents and figures provided to them by the DDA. This resulted in 100% of the increment value belonging to the City and the GID being allocated to the DDA. So the 100% allocation of these two taxing entities is correct; it is clear this is what the City and the GID intended; therefore it is not illegal per §31-25-807(3)(a)(IV)(B), C.R.S. Response to Errata #1 Nothing in §31-25-807(3)(a)(IV)(B), C.R.S. either compels or prohibits taxing entities from forgoing the same or different increment percentage each year, other than “on an annual basis fifty percent of the property taxes levied, or such greater amount as may be set forth in an agreement negotiated by the municipality and the respective public bodies… shall be paid into the special fund of the municipality.” In this case the City and the GID could, if they wished, change their annual percentage share to the DDA to something less than 100% but not less than 50%, by a different agreement. If they did this, then the DDA (or it could also be the City) would be required to certify this change to the assessor. If by some event the DDA, or the City, does not certify to the assessor by August 1, what the percentage share backs are, the Assessor would default to 50%. This default option may not behoove the DDA, so it is incumbent on the DDA to gather and deliver the documents necessary for the assessor to certify an amount greater than 50%. Is this collusion? No, it is practical. Response to Errata #2 Ultimately, the operation of tax increment financing in Colorado is a prerogative of the general assembly. It is true that the diversion of property tax revenue to extended DDAs reduces the total assessed value of all the taxing entities that overlap the DDA boundary. Extending tax increment financing for DDAs diverts revenue that would otherwise be available to fund services budgeted in the respective general funds of the taxing entities. Depending on the quantity of the increment value that is diverted, in relation to the base value of each entity, and also depending on each entities’ TABOR restrictions, the entity might be forgoing tax revenue or they might have to reduce their mill levy so as not to exceed their TABOR and/or 5.5% statutory revenue limit. In adopting SB 08-170 the legislature clearly knew that more state aid to schools would be likely. Colorado Counties Inc. also seemed satisfied to share 50% of their increment value, as evidenced by their testimony in support of this bill. Larimer County is willing to forgo more than 50% of its increment value on a property by property basis. The Division of Property Taxation is keenly aware of the many arguments about who are the winners and losers of tax increment financing. But nothing presented in this complaint demonstrates that these choices and their consequences are illegal. Response to Errata #3 The Division of Property Taxation (and other staff members from the Department of Local Affairs) has given considerable time and attention to many of the points and concerns the complainant has made regarding the complex topic of tax increment financing. In this specific complaint, no remedy is warranted because no tax laws have

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been violated. The crux allegation - that certifications were/are deficient - is disputed by the intention of SB 08-170 and the statute created by this legislation.

Summary and Conclusions

I have objectively examined the facts presented by this complaint. I conclude that within the scope of this complaint there is no justification demonstrating that “property tax laws have in any manner been evaded or violated”, §39-2-111, C.R.S.

Recommendations

I recommend that the Property Tax Administrator send this response to the complainant and the Larimer County Assessor. No further action is recommended, warranted or necessary..

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ADDENDUM A

COMPLAINT Submitted via email to: Joann Groff, Property Tax Administrator for the State of Colorado 1313 Sherman Street, Room 419 Denver, CO 80203 303.866.2371

http://www.colorado.gov/cs/Satellite/DOLA-Main/CBON/1251590375296 By Eric Sutherland, a citizen and taxpayer of Larimer County and owner of taxable property within the City Limits of the City of Fort Collins. 3520 Golden Currrant Fort Collins, CO 80521 (970) 224 4509 FACTS Per CRS 39-2-111, facts are hereby made known in support of an allegation of a violation of property tax law. 1) There exists in the City of Fort Collins (the City) a Downtown Development Authority (the DDA) created and sometimes (but not always) operated in accordance with CRS 31-25-801 et al. 2) The DDA derives a percentage of its revenues from property tax increment, as allowed by 31-25-807(3)(a)(II), for the sole purpose of making debt payments. 3) In 2008, legislation in the Colorado General Assembly did amend CRS 31-25-801 et al. This legislation did create a means whereby the ability of a DDA to collect property tax increment could be extended by 20 years. Prior to this legislation the tax increment collection period of a DDA was limited to 30 years. The amendments to CRS 31-25-801 et al included the addition of 31-25-807(3)(a)(IV)(B): (B) In connection with an extension implemented pursuant to sub-subparagraph (A) of this subparagraph (IV), on an annual basis fifty percent of the property taxes levied, or such greater amount as may be set forth in an agreement negotiated by the municipality and the respective public bodies, and allocated in accordance with the requirements of subparagraph (II) of this paragraph (a) shall be paid into the special fund of the municipality and the balance of such taxes shall be paid into the funds of the other public bodies by or for which such taxes are collected. Not later than August 1 of each calendar year, the governing body shall certify to the county assessor an itemized list of the property tax distribution percentages attributable to the special fund of the municipality pursuant to this sub-subparagraph (B) from the mill levies to be certified by each public body. When certifying values to taxing entities pursuant to sections 39-1-111 (5), 39-5-121 (2), and 39-5-128, C.R.S., the assessor shall certify only the percentage of increment value attributable to the special fund pursuant to this sub-subparagraph (B) as certified by the governing body.

To wit, any public entity with a mil levy subject to the division of property taxation noted in fact 2) above may, by action of its governing body, enter into an agreement with the City to have more 50% of the tax increment generated paid to the DDA. This may be accomplished by certifying this intention no later than August 1st of every year. 4) The DDA began a 20 year extension subject to the terms of the 2008 legislation in 2010. 5) In 2010, 2011, 2012, 100% of the property taxes of the City and the G.I.D #1, both public bodies with property tax levies against property in the DDA, were paid to the DDA. (2010 taxes payable in 2011, etc.) 6) No certifications have ever been duly approved or forwarded to the Larimer County Assessor.

Allegation of violation of property tax law. It follows from the previous facts that the Larimer County Assessor did, on 3 different occasions, prepare a tax warrant which resulted in the diversion of 100% of the tax increment derived from the City and G.I.D. #1 property taxes. This diversion deprived the City and the GID #1 of revenues payable to their respective funds and thereby deprived other taxpayers whose property tax also contributes to these funds of government services. This result is a violation of property tax law. The value of property in the DDA on which tax increment payable to the DDA was incorrect. Absent any certification from the governing body, only 50% of the value should have been used. Instead 100% of the value was used. A revaluation of the property is the only remedy that will make the taxpayers of the City of Fort Collins whole. The only ambiguity that might exist in this finding pertains directly to the tax allocation scheme that is described in 31-25-807(3)(a)(II). This paragraph does specify that tax increment is that portion of the property taxes… One could assume that this be measured in dollars of tax paid. However, it has been the custom in Colorado, and it is so described in the Assesseors Reference Library, that the division of taxes be constructed using property valuations. That is to say, the convention supports calculating tax increment based upon a level of property value over and above a base number, rather than a dollar figure for tax paid. In this context, as well as in all other known examples where the division of property tax between base and increment is calculated, the valuation of the property is the critical parameter. Although 31-25-807(3)(a)(IV)(B) does specifically state fifty percent of the property taxes levied, all other similar references to property taxes have been interpreted to mean property value. It is important to understand that any rejection of this interpretation, and thus a determination that CRS 39-2-111 and 39-2-114 are not relevant to the remedy owed the taxpayers of Fort Collins, would be a rejection of methodology used everywhere in Colorado for the calculation of tax increment.

This COMPLAINT seeks examination of the facts by the Property Tax Administrator and a petition to the Board of Equalization for remedy of the violation.

Errata #1 It has been suggested that the original Ordinance that extended the life of the DDA would be a sufficient stand-in for an annual certification of the governing body per 31-25807(3)(a)(IV)(B). This was the position of the Executive Director of the DDA when he was queried about the deficiency of certifications. This suggestion needs to be weighed against the Fort Collins City Charter, which is the controlling law for actions of the Fort Collins City Council, the governing body of a Home Rule municipality and the same governing body named in 31-25-807(3)(a)(IV)(B) as that entity responsible for certifying any departures from 50% valuation to the County Assessor.

Article V Section 19.2. General obligation securities Except as otherwise provided in this Part II of Article V of this Charter, no securities payable in whole or in part from the proceeds of ad valorem taxes of the city shall be issued until the question of their

issuance has, at a special or regular election, been submitted to a vote of the electors of the city and approved by a majority of those voting on the question.

Other provisions of the Fort Collins City Charter would similarly prohibit any long term obligation of ad valorem taxes. Consequently, any assertion that the intent of the City to have more than 50% of the value of property was finalized by the decision of City Council on an Ordinance in 2008 is tantamount to saying that the Fort Collins City Charter was violated. Violation of the City Charter is a misdemeanor. Any official convicted of violating the charter is subject to removal from office for a minimum of 2 years.

Errata #2 Tax Increment Financing, or the application of CRS 31-25-807(3)(a)(II) and 31-25807(9)(a)(II), results in the illegal diversion of tens of millions of dollars in Colorado every year. The winners, almost without exception are DDAs and Urban Renewal Authorities. The loosers are schools, county governments, special districts and Colorado State Government itself. The Division of Property Taxation and the Department of Local Affairs are funded by the Colorado General Fund. The revenues available to the General Fund are reduced by illegal diversions of Tax Increment Financing. Although this single instance of an illegal diversion of property tax dollars does not affect the ‘state backfill’ of Poudre School District under the school finance act, others do. Errata #3 The Division of Property Taxation has been extremely slow to respond to evidence of illegal diversions of property tax. This complaint does represent an effort to see if the public can expect some remedy from the DPT. The facts of this complaint are not in dispute. The only variable that is in play here is the DPT’s own ability/authority to effect a solution. Errata #4 Eric Sutherland is a taxpayer in Larimer County. His property taxes support local government.

ADDENDUM B

SB08-170 Colorado Legislative Council Staff Fiscal Note

STATE and LOCAL FISCAL IMPACT Drafting Number: LLS 08-0395 Prime Sponsor(s): Sen. Bacon Rep. Buescher TITLE:

Date: February 27, 2008 Bill Status: Senate Local Government Fiscal Analyst: Josh Abram (303-866-3488)

CONCERNING AN EXTENSION OF THE PERIOD DURING WHICH TAX REVENUES MAY BE ALLOCATED TO A SPECIAL FUND BY A DOWNTOWN DEVELOPMENT AUTHORITY IN CONNECTION WITH TAX INCREMENT FINANCING. Fiscal Impact Summary

FY 2008-2009

FY 2009-2010

State Revenue State Expenditures* General Fund

$44,289

$4,112

FTE Position Change

0.4 FTE

0.1 FTE

Effective Date: The bill is effective 90 days following final adjournment of the General Assembly unless a referendum petition is filed (August 6, 2008, if final adjournment is May 7, 2008). Appropriation Summary for FY 2008-2009: See State Appropriations section. Local Government Impact: See Local Government Impact section. * State Expenditures are initial costs to the Department of Local Affairs in the next 2 fiscal years. Beginning in 2011, several Downtown Development Authorities will expire and the state may incur expenditures for school finance at that time. See State Expenditure section for details.

Summary of Legislation This bill authorizes the governing body of a municipality to extend the period that tax increment financing (TIF) revenue is collected by a downtown development authority (DDA). A municipality that so chooses, may pass an ordinance to extend the period only within the last 10 years of the initial 30 year period that established the DDA. A DDA may be authorized to continue collecting TIF revenue for a single extension period of 20 years, resulting in a total life of 50 years, with the following conditions: • •

on the first day of the extension, the base valuation for TIF financing is advanced forward by 10 years; and prior to the end of the first 10 years of the 20 year extension, the base valuation for TIF financing is advanced 1 year for each additional year through the completion of the extension period.

Page 2

SB08-170

February 27, 2008

If a DDA is given authority to continue to collect TIF revenue, 50 percent of taxes collected shall be deposited into the fund created for the DDA and 50 percent shall be paid into the funds of the other taxing entities within the district. The taxing entities shall negotiate and agree to the allocation and distribution of their 50 percent portion. Background TIF is a mechanism for funding redevelopment projects in the state exclusively targeted at improving blighted areas. Current law authorizes a DDA to issue and repay redevelopment bonds by using the "increment" of increased taxes collected within a TIF district after improvements are made. TIF revenue may be generated from property or sales taxes. To determine the incremental amount of property tax revenue, the base valuation must first be determined. This value is the total assessed valuation within the TIF district prior to the approval of the redevelopment plan. As phases of the redevelopment are completed, the county reassesses the properties in the TIF district. Over time, improvements add to the property tax base. The revenue that is attributed to the growing tax base becomes the incremental revenue that is used by the authority for debt service on the bonds used to finance the redevelopment project. All property taxes attributable to the base valuation are paid to each taxing entity in the TIF district until the incremental revenue pays off the redevelopment bonds. Thus, local taxing jurisdictions are unable to receive any of the additional revenue resulting from improvements in the TIF district.

State Expenditures Department of Local Affairs - $44,289 and 0.4 FTE in FY 2008-09 and $4,112 and 0.1 FTE in FY 2009-10. The department will incur costs in the Division of Property Taxation and the Division of Local Government. These expenses will result from the need for a property tax specialist to update procedures in the Assessor's Reference Library and to modify the Tax Increment Finance Workshop offered by the department for employees of municipalities and county assessors. Further, the department will need to upgrade current database systems. The majority of these costs are onetime expenditures to prepare the department to accommodate requests for assistance from local governments. State Aid to School Districts - Conditional Fiscal Impact. This bill will result in increased state aid to school districts that otherwise would not be necessary in the absence of TIF. This aid will be necessary in any DDA that extends TIF. For municipalities that choose to extend a DDA, this bill will result in increased state aid to school districts that otherwise would not be necessary in the absence of TIF. The assessed value of the TIF project would have increased the local contribution to public school finance after the 30-year redevelopment period had expired. By extending TIF, the assessed value of property providing

SB08-170

Page 3 February 27, 2008

revenue to school districts within the boundaries of the DDA will not grow, which will increase state expenditures to backfill the property tax revenue foregone by school districts.

Expenditures Not Included Pursuant to a Joint Budget Committee policy, funding for the items noted below will not be included in fiscal note expenditure estimates. However, indirect costs are calculated for the purpose of identifying the "per applicant" cost of a new or revised fee to reflect the total direct and indirect costs required to support a particular program. • • • •

group health, life and dental insurance • short-term disability inflation indices • leased space amortization equalization disbursements • indirect costs supplemental amortization equalization disbursements

Local Government Impact Assessor's Office. The bill requires that a county calculate a new base value for all property in a DDA area for the tax year that occurred 10 years after the tax year used to establish the initial base, and recalculate the base value annually after 10 years of the extension period. The county may further be required to calculate and distribute TIF revenue to the participating taxing entities. These are new procedures for the counties and will drive an additional workload if a municipality chooses to extend TIF for DDAs. Counties and Special Districts. Similar to school districts, counties and special districts forego the property tax revenue that would have accrued without the TIF. Even though the TIF amount is now reduced, these taxing entities will still forgo some amount of property tax revenue in areas where TIF is extended. Downtown Development Authorities. This bill will allow a DDA to retain some amount of TIF revenue, therefore creating increased revenue.

State Appropriations In FY 2008-09, the Department of Local Affairs requires a General Fund appropriation of $44,289 and 0.4 FTE.

Departments Contacted Law

Legislative Council

Property Tax

Local Affairs

ADDENDUM C County Tax Entity Code

DOLA LGID/SID

/

CERTIFICATION OF TAX LEVIES for NON-SCHOOL Governments TO: County Commissioners1 of

, Colorado.

On behalf of the (taxing entity)

the

,

A

B

(governing body)

of the (local government)

Hereby officially certifies the following mills to be levied against the taxing entity’s GROSS $ assessed valuation of: Note: If the assessor certified a NET assessed valuation (AV) different than the GROSS AV due to a Tax Increment Financing (TIF) AreaF the tax levies must be $ calculated using the NET AV. The taxing entity’s total property tax revenue will be derived from the mill levy multiplied against the NET assessed valuation of:

C

D

E

(GROSS assessed valuation, Line 2 of the Certification of Valuation Form DLG 57 )

G

(NET assessed valuation, Line 4 of the Certification of Valuation Form DLG 57)

for budget/fiscal year

Submitted: (not later than Dec. 15)

.

(mm/dd/yyyy)

(yyyy)

REVENUE2

LEVY2

PURPOSE (see end notes for definitions and examples) 1. General Operating ExpensesH

mills

$

mills

$<

mills

$

3. General Obligation Bonds and InterestJ

mills

$

4. Contractual ObligationsK

mills

$

5. Capital ExpendituresL

mills

$

6. Refunds/AbatementsM

mills

$

7. OtherN (specify):

mills

$

mills

$

2. Temporary General Property Tax Credit/ Temporary Mill Levy Rate ReductionI

<

>

SUBTOTAL FOR GENERAL OPERATING:

of General Operating TOTAL: [ Sum Subtotal and Lines 3 to 7 ]

mills

Contact person: (print)

Daytime phone: (

Signed:

Title:

>

$

)

Include one copy of this tax entity’s completed form when filing the local government’s budget by January 31st, per 29-1-113 C.R.S., with the Division of Local Government (DLG), Room 521, 1313 Sherman Street, Denver, CO 80203. Questions? Call DLG at (303) 866-2156. 1

If the taxing entity’s boundaries include more than one county, you must certify the levies to each county. Use a separate form for each county and certify the same levies uniformly to each county per Article X, Section 3 of the Colorado Constitution. 2 Levies must be rounded to three decimal places and revenue must be calculated from the total NET assessed valuation (Line 4 of Form DLG57 on the County Assessor’s final certification of valuation). Form DLG 70 (rev 7/08)

Page 1 of 4

CERTIFICATION OF TAX LEVIES, continued THIS SECTION APPLIES TO TITLE 32, ARTICLE 1 SPECIAL DISTRICTS THAT LEVY TAXES FOR PAYMENT OF GENERAL OBLIGATION DEBT (32-1-1603 C.R.S.). Taxing entities that are Special Districts or Subdistricts of Special Districts must certify separate mill levies and revenues to the Board of County Commissioners, one each for the funding requirements of each debt (32-1-1603, C.R.S.) Use additional pages as necessary. The Special District’s or Subdistrict’s total levies for general obligation bonds and total levies for contractual obligations should be recorded on Page 1, Lines 3 and 4 respectively. CERTIFY A SEPARATE MILL LEVY FOR EACH BOND OR CONTRACT:

BONDSJ: 1.

Purpose of Issue: Series: Date of Issue: Coupon Rate: Maturity Date: Levy: Revenue:

2.

Purpose of Issue: Series: Date of Issue: Coupon Rate: Maturity Date: Levy: Revenue:

CONTRACTSK: 3.

Purpose of Contract: Title: Date: Principal Amount: Maturity Date: Levy: Revenue:

4.

Purpose of Contract: Title: Date: Principal Amount: Maturity Date: Levy: Revenue: Use multiple copies of this page as necessary to separately report all bond and contractual obligations per 32-1-1603, C.R.S.

Form DLG 70 (rev 7/08)

Page 2 of 4

Notes: A

Taxing Entity—A jurisdiction authorized by law to impose ad valorem property taxes on taxable property located within its territorial limits (please see notes B, C, and H below). For purposes of the DLG 70 only, a taxing entity is also a geographic area formerly located within a taxing entity’s boundaries for which the county assessor certifies a valuation for assessment and which is responsible for payment of its share until retirement of financial obligations incurred by the taxing entity when the area was part of the taxing entity. For example: an area of excluded property formerly within a special district with outstanding general obligation debt at the time of the exclusion or the area located within the former boundaries of a dissolved district whose outstanding general obligation debt service is administered by another local governmentC. B

Governing Body—The board of county commissioners, the city council, the board of trustees, the board of directors, or the board of any other entity that is responsible for the certification of the taxing entity’s mill levy. For example: the board of county commissioners is the governing board ex officio of a county public improvement district (PID); the board of a water and sanitation district constitutes ex officio the board of directors of the water subdistrict. C

Local Government - For purposes of this line on Page 1of the DLG 70, the local government is the political subdivision under whose authority and within whose boundaries the taxing entity was created. The local government is authorized to levy property taxes on behalf of the taxing entity. For example, for the purposes of this form: 1. a municipality is both the local government and the taxing entity when levying its own levy for its entire jurisdiction; 2. a city is the local government when levying a tax on behalf of a business improvement district (BID) taxing entity which it created and whose city council is the BID board; 3. a fire district is the local government if it created a subdistrict, the taxing entity, on whose behalf the fire district levies property taxes. 4. a town is the local government when it provides the service for a dissolved water district and the town board serves as the board of a dissolved water district, the taxing entity, for the purpose of certifying a levy for the annual debt service on outstanding obligations.

D

GROSS Assessed Value - There will be a difference between gross assessed valuation and net assessed valuation reported by the county assessor only if there is a “tax increment financing” entity (see below), such as a downtown development authority or an urban renewal authority, within the boundaries of the taxing entity. The board of county commissioners certifies each taxing entity’s total mills upon the taxing entity’s Gross Assessed Value found on Line 2 of Form DLG 57. E

Certification of Valuation by County Assessor, Form DLG 57 - The county assessor(s) uses this form (or one similar) to provide valuation for assessment information to a taxing entity. The county assessor must provide this certification no later than August 25th each year and may amend it, one time, prior to December 10th. F

TIF Area—A downtown development authority (DDA) or urban renewal authority (URA), may form plan areas that use “tax increment financing” to derive revenue from increases in assessed valuation (gross minus net, Form DLG 57 Line 3) attributed to the activities/improvements within the plan area. The DDA or URA receives the differential revenue of each overlapping taxing entity’s mill levy applied against the taxing entity’s gross assessed value after subtracting the taxing entity’s revenues derived from its mill levy applied against the net assessed value. G

NET Assessed Value—The total taxable assessed valuation from which the taxing entity will derive revenues for its uses. It is found on Line 4 of Form DLG 57.

H

General Operating Expenses (DLG 70 Page 1 Line 1)—The levy and accompanying revenue reported on Line 1 is for general operations and includes, in aggregate, all levies for and revenues raised by a taxing entity for purposes not lawfully exempted and detailed in Lines 3 through 7 on Page 1 of the DLG 70. For example: a fire pension levy is included in general operating expenses, unless the pension is voter-approved, if voter-approved, use Line 7 (Other).

Form DLG 70 (rev 7/08)

Page 3 of 4

I

Temporary Tax Credit for Operations (DLG 70 Page 1 Line 2)—The Temporary General Property Tax Credit/ Temporary Mill Levy Rate Reduction of 39-1-111.5, C.R.S. may be applied to the taxing entity’s levy for general operations to effect refunds. Temporary Tax Credits (TTCs) are not necessary for other types of levies (non-general operations) certified on this form because these levies are adjusted from year to year as specified by the provisions of any contract or schedule of payments established for the payment of any obligation incurred by the taxing entity per 29-1-301(1.7), C.R.S., or they are certified as authorized at election per 29-1-302(2)(b), C.R.S. J

General Obligation Bonds and Interest (DLG 70 Page 1 Line 3)—Enter on this line the total levy required to pay the annual debt service of all general obligation bonds. Per 29-1-301(1.7) C.R.S., the amount of revenue levied for this purpose cannot be greater than the amount of revenue required for such purpose as specified by the provisions of any contract or schedule of payments. Title 32, Article 1 Special districts and subdistricts must complete Page 2 of the DLG 70. K

Contractual Obligation (DLG 70 Page 1 Line 4)—If repayment of a contractual obligation with property tax has been approved at election and it is not a general obligation bond (shown on Line 3), the mill levy is entered on this line. Per 29-1-301(1.7) C.R.S., the amount of revenue levied for this purpose cannot be greater than the amount of revenue required for such purpose as specified by the provisions of any contract or schedule of payments. L

Capital Expenditures (DLG 70 Page 1 Line 5)—These revenues are not subject to the statutory property tax revenue limit if they are approved by counties and municipalities through public hearings pursuant to 29-1301(1.2) C.R.S. and for special districts through approval from the Division of Local Government pursuant to 291-302(1.5) C.R.S. or for any taxing entity if approved at election. Only levies approved by these methods should be entered on Line 5. M

Refunds/Abatements (DLG 70 Page 1 Line 6)—The county assessor reports on the Certification of Valuation (DLG 57 Line 11) the amount of revenue from property tax that the local government did not receive in the prior year because taxpayers were given refunds for taxes they had paid or they were given abatements for taxes originally charged to them due to errors made in their property valuation. The local government was due the tax revenue and would have collected it through an adjusted mill levy if the valuation errors had not occurred. Since the government was due the revenue, it may levy, in the subsequent year, a mill to collect the refund/abatement revenue. An abatement/refund mill levy may generate revenues up to, but not exceeding, the refund/abatement amount from Form DLG 57 Line 11. 1. Please Note: If the taxing entity is in more than one county, as with all levies, the abatement levy must be uniform throughout the entity’s boundaries and certified the same to each county. To calculate the abatement/refund levy for a taxing entity that is located in more than one county, first total the abatement/refund amounts reported by each county assessor, then divide by the taxing entity’s total net assessed value, then multiply by 1,000 and round down to the nearest three decimals to prevent levying for more revenue than was abated/refunded. This results in an abatement/refund mill levy that will be uniformly certified to all of the counties in which the taxing entity is located even though the abatement/refund did not occur in all the counties. N

Other (DLG 70 Page 1 Line 7)—Report other levies and revenue not subject to 29-1-301 C.R.S. that were not reported above. For example: a levy for the purposes of television relay or translator facilities as specified in sections 29-7-101, 29-7-102, and 29-7-105 and 32-1-1005 (1) (a), C.R.S.; a voter-approved fire pension levy; a levy for special purposes such as developmental disabilities, open space, etc.

Form DLG 70 (rev 7/08)

Page 4 of 4

ADDENDUM C

PROPERTY TAX REVENUE LIMIT CALCULATIONS WORKSHEET (“5.5%” limit in 29-1-301, C.R.S., and the TABOR limits, Art. X, Sec. 20(4)(a) and (7)(c), Colo. Const.) The following worksheet can be used to calculate the limits on local government property tax revenue. Data can be found on the Certification of Valuation (CV) sent by the county assessor on August 25, unless otherwise noted. The assessor can revise the valuation one time before Dec. 10; if so, you must perform the calculation again using the revised CV data. ( Note for multi-county entities: If a taxing entity is located in two or more counties, the mill levy for that entity must be the same throughout its boundaries, across all county boundaries (Uniform Taxation, Article X, Section 3, Colo. Const.). This worksheet can be used by multi-county entities when the values of the same type from all counties are added together.) Version November 2008

Data required for the “5.5%” calculation (assessed valuations certified by assessor): 1. 2. 3. 4. 5. 6. 7. 8. 9.

Previous year’s net total assessed valuation1 Previous year’s revenue2 Current year’s total net assessed valuation Current year’s increases in valuation due to annexations or inclusions, if any Current year increase in valuation due to new construction, if any Total current year increase in valuation due to other excluded property3 “Omitted Property Revenue” from current year CV4 “Omitted Property Revenue” from previous year CV5 Current year’s “unauthorized excess revenue,” if any6

$ $ $ $ $ $ $ $ $

-

$ $ $ $ $ $ $ $ $ $ $

-

Data required for the TABOR calculations (actual valuations certified by assessor): 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Previous year’s revenue7 Total actual value of all real property Construction of taxable real property Annexations/Inclusions Increase in mining production Previously exempt property Oil or gas production from new wells Taxable property omitted (from current year's CV) Destruction of Property improvements Disconnections/Exclusions Previously taxable property

21.

Inflation

0.000% (The U.S. Bureau of Labor Statistics (http://www.bls.gov/cpi/home.htm) will not release this number, the Consumer Price Index (CPI) for the Denver-Boulder Area, until February of next year. Forecasts of this inflation figure may be obtained by contacting the Dept. of Local Affairs (DOLA) at (303) 8662156. or at www.dola.colorado.gov )

1

There will be a difference between net assessed valuation and gross assessed valuation only if there is a “tax increment financing” entity, such as a Downtown Development Authority or Urban Renewal Authority, within the boundaries of the jurisdiction. 2 For the “5.5%” limit only (Part A of this Form), this is the lesser of: (a) the total amount of dollars levied for general operating purposes on the net assessed valuation before deducting any Temporary Tax Credit [if Form DLG 70 was used to certify levies in the previous year, this figure is on Line 1], or (b) last year’s “5.5%” revenue limit. 3 Increased production of a producing mine, previously exempt federal property, or new primary oil or gas production from any oil and gas leasehold or land. NOTE: These values may not be used in this calculation until certified to, or applied for, by filing specific forms with the Division of Local Government [forms can be found in the Financial Management Manual , published by/on the State Auditor’s Office web page or contact the Division of Local Government]. 4 Taxes paid by properties that had been previously omitted from the tax roll. This is identified on the CV as “taxes collected last year on omitted property as of Aug. 1.” 5 This figure is available on the CV that you received from the assessor last year. 6 This applies only if an “Order” to reduce the property tax revenue was issued to the government in the spring of the current year by the Division of Local Government, pursuant to 29-1-301(6), C.R.S. 7 For the TABOR property tax revenue limit only (Part C of this form), use the previous year's TABOR limit or the property tax revenue levied for general operating purposes. This is a local option. DLG staff is available to discuss the alternatives. Page 1 of 4

Form DLG-53a (Rev 11/26/08)

A. Steps to calculate the “5.5%” Limit (refer to numbered lines on the previous page): A1. Adjust the previous year's revenue to correct the revenue base, if necessary: $

-

+

$

Line 2

-

= A1. $

Line 8

-

Adjusted property tax revenue base

A2. Calculate the previous year’s tax rate, based upon the adjusted revenue base: $ ÷ $ = A2. Line A1

7

Adjusted Tax Rate (round to 6 decimal places)

Line 1

A3. Total the assessed valuation of all the current year “growth” properties: $

-

+

$

Line 4

+

$

0.000000

8

Line 5

-

= A3. $

9

Total "growth" properties

Line 6

A4. Calculate the revenue that “growth” properties would have generated: $

-

0.000000

X

Line A3

= A4. $

Line A2

-

Revenue from "growth" properties

A5. Expand the adjusted revenue base (Line A1) by the “revenue” from “growth” properties: $

-

+

$

Line A1

-

= A5. $

Line A4

Expanded revenue base

A6. Increase the Expanded Revenue Base (Line A5) by allowable amounts: [ $

-

X

-

+

1.05510

]

Line A5

+

$

$

-

= A6. $

Voter-Approved Revenue Increase11

DLG-Approved Revenue Increase

Increased Revenue Base

A7. Current Year's “5.5%” Revenue Limit: $

-

-

$

Line A6

-

= A7. $

-

Current Year's "5.5%" Revenue Limit12

Line 7

A8. Reduce Current Year’s “5.5%” Revenue Limit by any amount levied over the limit in the previous year: $

Line A7

-

$

Line 9

= A8. $

-

Reduced Current Year's "5.5%" Limit. This is the maximum allowed to be levied this year13

A9. Calculate the mill levy which would generate the Reduced Revenue Limit (Line A8): $ ÷ $ - X 1,000 = A9. Line A8

Line 3

0.000

Mill Levy (round to 3 decimals)

7

If this number were multiplied by 1,000 and rounded to three decimal places, it would be the mill levy necessary in the previous year to realize the revenue in line A1. 8 The values of these properties are “excluded” from the “5.5%” limit, according to 29-1-301(1)(a) C.R.S. 9 This revenue is the amount that the jurisdiction theoretically would have received had those “excluded” or “growth” properties been on the tax roll in the previous year. 10 This is the “5.5%” increase allowed in 29-1-301(1), C.R.S. 11 This figure can be used if an election was held to increase property tax revenue above the “5.5%” limit. 12 Rounded to the nearest whole dollar, this is the “5.5%” statutory property tax revenue limit. 13 DLG will use this amount to determine if revenue has been levied in excess of the statutory limit.

Page 2 of 4

Form DLG-53a (Rev11/26/08)

Steps to calculate the TABOR Limit (refer to numbered lines on page one):14 B. TABOR “Local Growth” Percentage B1. Determine net growth valuation: $

-

-

$

Lines 12+13+14+15+16+17

-

=

$

Lines 18+19+20

Net Growth Value

B2. Determine the (theoretical) valuation of property which was on the tax roll last year: $

-

-

$

Line 11

-

=

-

=

$

-

Line B1

B3. Determine the rate of “local growth”: $

-

÷

$

Line B1

0.000000

Line B2

Local Growth Rate (round to 6 decimal places)

B4. Calculate the percentage of “local growth”: 0.000000

X 100

=

0.000%

Line B3

(round to 3 decimal places)

C. TABOR Property Tax Revenue Limit C1. Calculate the growth in property tax revenue allowed: $

Line 10

X

0.000%

15

=

$

Line B4 + line 21

Increase allowed

C2. Calculate the TABOR property tax revenue limit: $

Line 10

+

$

15

-

=

Line C1

$

-

TABOR Property Tax Revenue Limit

C3. Calculate the mill levy which would generate the TABOR Property Tax Revenue Limit (Line C2): [ $

Line C2

÷

$

- ] X 1,000 Line 3

=

0.000 Mill Levy (round to 3 decimal places)

D. Which One To Use? There is general agreement among practitioners that the most restrictive of the two revenue limits (“5.5%” or TABOR) must be respected, disallowing the levying of the greater amount of revenue which would be allowed under the other limit. Therefore, one must decide which of the two limits is more restrictive. Compare Line A7 (Current Year’s 5.5% Revenue Limit) to Line C2 (TABOR Property Tax Revenue Limit). The lesser of the two is the more restrictive revenue limit. NOTE: TABOR(4)(a) requires prior voter approval to levy a mill levy above that of the prior year. This is a third limit on property taxes that must be respected, independent of the two revenue limitations calculated above. If the lesser of the two mill levies in A9 and C3 is more than the levy of the prior year, it is possible that neither of the revenue amounts may be generated, and that revenues must be lowered to comply with this third limit.

14

This section is offered as a guideline only. The Division is required by law to enforce the “5.5%” limit, but does not have any authority to define or enforce any of the limitations in TABOR. 15 NOTE: For the TABOR property tax revenue limit only (Part C of this form), use the previous year's TABOR limit or the property tax revenue levied for general operating purposes. This is a local option. DLG staff is available to discuss the alternatives. Page 3 of 4

Form DLG-53a (Rev 11/26/08)

OTHER LEVIES: Capital Expenditure Levy Under the “5.5%” limit, additional revenue greater than that on Line A8 may be levied for capital expenditures, if the specific procedures in 29-1-301(1.2) [counties or municipalities] or 29-1-302(1.5), C.R.S. [special districts or towns under 2000 in population] are followed, or an election is held for this purpose. If such a levy is made, it and the revenue resulting from it must be certified to the county as a separate levy on the Line 5 of Form DLG 70. The amount of revenue derived from this capital levy will not accrue to the “base” upon which next year’s calculation will be made.

Refund/Abatement Levy The refund and abatement revenue, reported by the County Assessor to some local governments on the "Certification of Assessed Valuation" is not part of either property tax revenue limitation. This figure, if any, represents revenue that the jurisdiction should have received, but did not. The local government may certify mills sufficient to generate the refund and abatement revenue amount16 in excess of the ones calculated for the property tax revenue limitation. This is an optional levy and will not accrue to the base for subsequent years' limit calculations. It can be entered on Line 6 of Form DLG 70 for certifying all levies. Temporary Tax Credit/Mill Rate Reduction A temporary mill levy reduction can be made, in order to effect a refund of tax revenue (39-1-111.5 and 29-1-301(6), C.R.S.). If used, it should be certified as a separate levy on Line 2 of Form DLG 70, when certifying tax levies to the County Commissioners. Annual Incentive Payments The “5.5%” revenue limitation may be exceeded by counties and municipalities by the total amount of annual incentive payments made by the local government in accordance with agreements negotiated with certain private business taxpayers pursuant to 30-11-123(6) C.R.S. [counties] and 31-15-903(5) C.R.S. [municipalities]. This is an optional levy and will not accrue to the base for subsequent years' limit calculations. It should be certified to the county commissioners as an “Other levy” on Line 7 of Form DLG 70. Reappraisals Ordered by the State Board of Equalization The “5.5%” revenue limitation may be exceeded by counties to pay for the reappraisal of classes or subclasses ordered by or conducted by the State Board of Equalization ( 29-1-301(1)(a) C.R.S. This levy should be certified as an “Other levy” on Line 7 of Form DLG 70. Payment to the State for Excess State Equalization Payments. The “5.5%” revenue limit may be exceeded by counties to make payments to the state when excess state equalization payments are made to school districts due to the undervaluation of taxable property ( 29-1-301(1)(a) C.R.S. This levy should be certified as an “Other levy” on Line 7 of Form DLG 70. NOTE: for assistance in using this form, understanding its terms, or suggested improvements, please contact Cynthia Thayer at the Division of Local Government: (303) 866-2156; Email address: [email protected].

16

29-1-301(1), C.R.S. and a 1994 Supreme Court case both allow the levying of an amount of revenue above the revenue limits without an election to recoup revenue which was lost in the previous year due to abatements and refunds which might have been granted by various boards and courts. So, for example, if an entity levies $10,000 in one year, but only received $9,000 due to a $1,000 tax abatement granted by a District Court, it could levy an additional $1,000 above either the A5.5%@ or TABOR revenue limitation in the following year to offset the loss of revenue. Page 4 of 4

Form DLG-53a (Rev 11/26/08)

ADDENDUM D

TO: FROM:

Bob Property

SUBJECT: DATE:

Lackner Greg Schroeder Tax Specialist SB 08-170 – Conceptual amendment and other issues

February

29, 2008

Bob, our proposed language for the conceptual amendment approved yesterday is shown below. Concerns with other aspects of language in the bill are also listed. Conceptual Amendment to SB 08-170 NO LATER THAN AUGUST 1 OF EACH YEAR, THE GOVERNING BODY SHALL CERTIFY TO THE ASSESSOR AN ITEMIZED LIST OF THE PROPERTY TAX DISTRIBUTION PERCENTAGES ATTRIBUTABLE TO THE SPECIAL FUND OF THE MUNICIPALITY PURSUANT TO SUB-SUBPARAGRAPH (B) OF SUBPARAGRAPH (III), FROM THE MILL LEVIES TO BE CERTIFIED BY EACH PUBLIC BODY. WHEN CERTIFYING VALUES TO TAXING ENTITIES PURSUANT TO SECTIONS 39-5-128, 39-5-121(2), AND 39-1-111(5), THE ASSESSOR SHALL CERTIFY ONLY THE PERCENTAGE OF INCREMENT VALUE ATTRIBUTABLE TO THE SPECIAL FUND OF THE MUNICIPALITY PURSUANT TO THE PROVISIONS OF SUB-SUBPARAGRAPH (B) OF SUBPARAGRAPH (III), AS REPORTED BY THE GOVERNING BODY. Additional concerns that may require clarification 

Lines 10-12 of page 3 state that the “base year for allocation . . . is advanced forward by ten years . . . .” Is the assessor then required to carry that new base forward by 20 years to the current level of value? In other words, does § 31-25-807(3)(e), C.R.S., still apply, or is it superseded by the new language? In my opinion, § 31-25-807(3)(e), C.R.S., still applies, but my supervisor Pam Godfrey disagrees, or is at least she is concerned that if our office drafts new procedures for assessors under the assumption that § 31-25-807(3)(e), C.R.S., applies, your office might say our procedures are in conflict with statute or that we have exceeded our authority. The fact that Pam and I don’t agree on what the legislation says is a good indication that the legislation needs clarification on this point. If § 31-25-807(3)(e), C.R.S., still applies, our procedures would require the assessor to recalculate each base and increment for years 11-30 of the TIF, thereby rolling the new base forward to the current level of value. Mark Radtke said that this is the intent of the legislation. If § 31-25-807(3)(e), C.R.S., does not apply, the base value for year 31 would represent market values as they existed 20 years earlier, and any additional value would be attributable to the increment.

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The confusion stated above also applies to the language on page 3 lines 13-15, discussing the one-year advancement of the base for each of the last 10 years of the TIF. Does this provision supersede § 31-25-807(3)(e), C.R.S?

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Pursuant to § 31-25-807(3)(a)(I), C.R.S., the assessor calculates a base value as of the point in time values were last certified prior to the adoption of the plan that included the provision for TIF. In 1978, values were certified on September 15. Therefore, if a TIF plan was adopted on September 1, 1978, the initial base would have represented values as they existed on September 15, 1977, but if the plan was adopted on October 1, 1978, the initial base would have represented values as they existed on September 15, 1978. Our interpretation of lines 10-12 of page 3 is that the base is moved forward 10 years from the tax year used to establish the initial base, which is not necessarily the same year in which TIF began. In the first scenario above, the new base would represent the total taxable assessed value certified to the DDA as of September 15, 1987, or if values changed, as recertified to the DDA on a later certification. In the second scenario, it would represent the total taxable assessed value certified to the DDA as of September 15 1988 or as later recertified. Is that the correct interpretation, and is it sufficiently stated in the bill?

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As stated in the first bullet, if § 31-25-807(3)(e), C.R.S., still applies, the assessor must recalculate 20 years of base/increment splits. To do so, the assessor needs the total taxable value and the net growth value for each of years 11-30. The figures are stated on the assessor’s old annual TIF calculations if those are still available. (We know of one assessor’s office that has purged those records.) If they are not available, the net growth values can be determined if the base and increment values for each year are known. These figures should be available. They are published by our office, and the DDAs might retain these figures. However, if they are not available, the assessor is not capable of recalculating the 20 years of base increment split, and the provisions of this bill cannot be implemented. Should the bill state that if the figures are not available, the assessor is not required to comply with the provisions of the bill?

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The conceptual amendment above is written with the understanding that the 50 percent figure stated on page 3 line 25 is what “may be negotiated by the municipality and the respective public bodies.” In other words, the respective parties can negotiate a split other than 50 percent. In my opinion however, the language doesn’t tie the negotiation statement to the 50 percent figure. A different reading of this provision is that the “allocation and distribution” methodology of the 50 percent split can be negotiated. In other words, the money could be allocated and distributed by the county treasurer as property tax revenue (this is how TIF currently works), or it could be first distributed to the DDA who would then redistribute 50 percent to the entities as an expense of the DDA and not as property tax revenue. Such an interpretation might add further complexity to the language in the conceptual amendment, and it could potentially remove the revenue from the 5.5 percent property tax limit and the TABOR property tax limit.

Larimer County Assessor Summary of Fort Collins DDA Increment Distribution by Authority

ADDENDUM E

Prepared for Mike Kerrigan, Colorado Department of Property Taxation 9/16/2013

Taxroll 2011 Authority # 006 028 032 054 059 064 095 110 112 117

Authority Name Poudre R-1 School District Larimer County City of Fort Collins Health District of Northern Larimer County Fort Collins GID No 1 Larimer County Pest Control Boxelder Sanitation District East Larimer County Water District Poudre River Public Library District Northern Colorado Water Cons District

DDA Total Increment 47,794,750 47,794,750 47,794,750 47,794,750 47,794,750 47,794,750 47,794,750 47,794,750 47,794,750 47,794,750

Overlapping % 100.000000% 100.000000% 100.000000% 100.000000% 59.575866% 84.364073% 6.703954% 9.899868% 100.000000% 100.000000%

Distribution % 50.000000% 50.000000% 100.000000% 50.000000% 100.000000% 50.000000% 50.000000% 50.000000% 50.000000% 50.000000%

Certified Increment 23,897,375 23,897,375 47,794,750 23,897,375 28,474,136 20,160,799 1,602,069 2,365,809 23,897,375 23,897,375

Authority Name Poudre R-1 School District Larimer County City of Fort Collins Health District of Northern Larimer County Fort Collins GID No 1 Larimer County Pest Control Boxelder Sanitation District East Larimer County Water District Poudre River Public Library District Northern Colorado Water Cons District

DDA Total Increment 50,225,682 50,225,682 50,225,682 50,225,682 50,225,682 50,225,682 50,225,682 50,225,682 50,225,682 50,225,682

Overlapping % 100.000000% 100.000000% 100.000000% 100.000000% 59.726365% 83.682909% 6.771090% 10.025247% 100.000000% 100.000000%

Distribution % 50.000000% 50.000000% 100.000000% 50.000000% 100.000000% 50.000000% 50.000000% 50.000000% 50.000000% 50.000000%

Certified Increment 25,112,841 25,112,841 50,225,682 25,112,841 29,997,974 21,015,156 1,700,413 2,517,624 25,112,841 25,112,841

Authority Name Poudre R-1 School District Larimer County City of Fort Collins Health District of Northern Larimer County Fort Collins GID No 1 Larimer County Pest Control Boxelder Sanitation District East Larimer County Water District Poudre River Public Library District Northern Colorado Water Cons District

DDA Total Increment 53,807,084 53,807,084 53,807,084 53,807,084 53,807,084 53,807,084 53,807,084 53,807,084 53,807,084 53,807,084

Overlapping % 100.000000% 100.000000% 100.000000% 100.000000% 59.452422% 83.473978% 6.505264% 9.725337% 100.000000% 100.000000%

Distribution % 50.000000% 50.000000% 100.000000% 50.000000% 100.000000% 50.000000% 50.000000% 50.000000% 50.000000% 50.000000%

Certified Increment 26,903,542 26,903,542 53,807,084 26,903,542 31,989,615 22,457,457 1,750,146 2,616,460 26,903,542 26,903,542

Taxroll 2012 Authority # 006 028 032 054 059 064 095 110 112 117

August 2013 Authority # 006 028 032 054 059 064 095 110 112 117

ADDENDUM F 2011

ADDENDUM F 2012

ADDENDUM F 2013

ADDENDUM F1

ADDENDUM F2

ADDENDUM F3