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Colorado Public Finance Legislation Update 2008
May 8, 2008
The Colorado General Assembly adjourned sine die on May 6, 2008. During the session, several new laws were enacted that will affect Colorado governments and their finances. Below, please find a summary of several of these laws and how the changes might affect the Colorado local government community. Sherman & Howard Public Finance lawyers provided input on the drafting or amendment of many of these bills as part of our legislative monitoring.
Bills marked with a number (1) below have been sent to the Governor, but have not yet been signed. It is possible that one or more of such bills will be vetoed and, therefore, will not become law. Unless passed with a safety clause, the new laws will take effect on August 5, 2008. Bills passed with a safety clause take effect on the date specified in the bill, or, if no date is specified, upon their approval by the Governor. Bills containing a safety clause have been marked with a number (2) below.
House Bill 08-1125 - Special District Audits
House Bill 1125 amends the Colorado Local Government Audit Law by adding an additional reporting requirement for special districts organized under Title 32 of the Colorado Revised Statutes ("C.R.S."). Effective August 5, 2008, each special district subject to the audit requirement must include in its audit information regarding: (i) any authorized but unissued debt; and (ii) any current or anticipated plan to issue such debt. Also, each special district must submit its audit or application for exemption from audit to the county or municipal governing body that originally approved the special district in accordance with Title 32, C.R.S.
Senate Bill 08-158 - Extraterritorial Urban Renewal Plans (2)
Senate Bill 158 authorizes urban renewal plans adopted by municipalities to include unincorporated territory that is outside the boundaries of the municipality but contiguous to a portion of the urban renewal area located within the municipality. Before this extraterritorial property may be added, the municipality must receive consent from: (i) the board of county commissioners for the county in which the area is located; (ii) each property owner within the area; and (iii) each holder of a recorded mortgage or deed of trust encumbering real property within the area. In addition, the board of county commissioners must make certain findings and take certain actions with respect to the area that are typically undertaken by a municipal governing body with respect to an urban renewal area.
House Bill 08-1335 - State Assistance with School Capital Finance (1) (2)
House Bill 1335 changes the way that the state utilizes income from state land-grant property and implements a new program to assist schools in need of capital improvements. Certain portions of this income will be deposited into the new Public School Capital Construction Assistance Fund and will be used to assist schools in acquiring capital improvements through matching grants or lease-purchase agreements. The authorized outstanding amount of lease-purchase agreements that the state may enter into for these purposes is $20 million for fiscal year 2008-09, $40 million for fiscal year 2009-10, $60 million for fiscal year 2010-11, and $80 million for fiscal year 2011-12 and each fiscal year thereafter. Each school receiving assistance is required to provide matching funds based upon its financial ability. The bill additionally establishes a reserve of at least $1 million to be used only for public school facility emergencies.
The bill establishes the Public School Capital Construction Assistance Board (the "Board"), which will conduct an annual application and evaluation process to determine which projects to assist each year. Priority will be given to capital projects that will address safety hazards and health concerns, relieve overcrowding, and incorporate technology into the educational environment. The bill additionally creates the Division of Public School Capital Construction Assistance to aid the Board in carrying out its functions. Finally, the bill abolishes the current School Construction and Renovation Fund, School Capital Construction Expenditures Reserve, School Capital Construction Expenditures Reserve Fund, and Lottery Proceeds Contingency Reserve Fund, and transfers the balance of each to the new Public School Capital Construction Assistance Fund. The creation of the new fund and the elimination of the previous funds will take effect as of July 1, 2008.
House Bill 08-1349 - County Treasurer Offsets for Refunded Tax Increment Revenue (1)
House Bill 1349 authorizes county treasurers to withhold tax increment revenues ("TIF Revenues") that would otherwise be transferred to an urban renewal authority or a downtown development authority to offset amounts that were transferred to the authority in previous years but were then subsequently subject to a taxpayer refund. This authorization only applies to TIF Revenues generated by the same urban renewal project or plan of development area that generated the previous TIF Revenues. The authority is responsible for paying such amounts to the county treasurer in the event that there are not sufficient TIF Revenues in later years to accomplish the offset described above, and the authority may create a reserve fund or enter into an intergovernmental agreement with the municipality to accomplish this task. The bill further amends the statutes generally governing tax collection by the county treasurers to authorize the treasurers to withhold amounts to offset previously distributed tax revenues that were subsequently refunded to a taxpayer. These provisions to do not apply to the City and County of Denver or the City and County of Broomfield.
House Bill 08-1350 - Local Government Participation in Programs for Energy Efficiency and Renewable Energy (1) (2)
House Bill 1350 amends the County and Municipality Development Revenue Bond Act to allow counties and municipalities to issue private activity bonds to assist private entities in financing renovations to existing structures that will increase energy efficiency or add equipment to produce alternative energy. In addition, the bill expands the ability of counties and municipalities to finance improvements for energy efficiency and renewable energy as well as educational programs to encourage wise energy use within the county or municipality. New financing options include the use of county local improvement districts and municipal special improvement districts.
House Bill 08-1354 - Issuance of Private Activity and Exempt Facility Bonds by the Regional Transportation District (1)
House Bill 1354 authorizes the Regional Transportation District ("RTD") to issue private activity bonds and exempt facility bonds under the Internal Revenue Code. These bonds will be payable only by the private businesses benefiting from the bonds and will not be an obligation of RTD. The bill additionally authorizes the state and any county, municipality or other political subdivision to lend or grant money or any other type of property to a private business that receives such bonds either directly or indirectly through RTD. Finally, the bill clarifies that private businesses operating mass transit facilities under contract with RTD are not subject to the jurisdiction of the Public Utilities Commission.
House Bill 08-1388 - School Finance (1) (2)
House Bill 1388 is the detailed annual bill relating to school finance. The bill authorizes school districts to issue bonds to finance any capital asset that they are authorized by law to own, as opposed only those items on a specific list. It also removes many current limitations on amounts that may be collected pursuant to a mill levy override. In the future, a district's voters will be able to authorize an override of any size or calculation method so long as the total amount does not exceed 20% of the district's total program in any year.
Senate Bill 08-030 - Increased Time Period for Securities Delegation
Senate Bill 30 amends the Supplemental Public Securities Act to increase the time period for which a state agency or department or a local government may delegate to its officers the authority to make certain determinations with respect to public securities. Such delegations were previously valid for 60 days, but after August 5, 2008, they will be valid for one year or any shorter time designated by the governing body.
Senate Bill 08-128 - Eliminating the 6.9% Sales Tax Limitation (1)
Senate Bill 128 eliminates the current 6.9% cumulative limitation on sales taxes that may be imposed by the state, county, and municipality within in a given area.
Senate Bill 08-170 - Extension of Tax Increment Period for Downtown Development Authorities (1)
Senate Bill 170 allows a municipal governing body, during the last ten years of a tax increment period for a downtown development authority ("DDA"), to extend the period during which property and municipal sales taxes will be divided by up to 20 years. If the property tax increment period is extended pursuant to the bill, the new 20 year period will begin after the end of the original 30 year period. Upon an extension of property tax increments, the "base" amount will be modified from the assessed valuation at the time of the original adoption of the plan to the assessed valuation at a point ten years later. The adjusted base will stay in effect for the first ten years of the extension, and thereafter the base amount will advance by one year during each of the remaining ten years of the extension. During the extension, 50% of the increment amount will be paid to the municipality pursuant to the DDA Act, and the remaining 50% will be transferred to the public bodies that levy the applicable taxes. Municipal sales taxes will retain the same base amount and be collected and utilized in the same manner as they were during the original 30 year period.
Senate Bill 08-193 - Illegal Aliens and Contracts for Services (1) (2)
Senate Bill 193 further modifies the sections of Title 8, C.R.S., applicable to public contracts for services. First, the bill creates several exceptions for contracts that will not be required to comply with the illegal alien provisions including: (i) agreements relating to the offer, issuance, or sale of securities; (ii) agreements for investment advisory services or fund management services; (iii) certain grants, awards, and contracts awarded to an institution of higher education or one of its affiliates; (iv) intergovernmental agreements; and (v) agreements for information technology services or products and services. The bill updates the language of the law to reflect federal change from the "basic pilot program" to the "E-Verify" program. The bill also creates a separate program within the Colorado Department of Labor and Employment and allows compliance with the statute by participating in either the state or federal program. Finally, the bill narrows the scope of employees that must be verified through one of the programs from all employees hired within the United States to only those employees who will perform work under the public contract for services.
Senate Bill 08-230 - Modifications to Retain Medicaid Eligibility for Colorado Facilities (1) (2)
Senate Bill 230 makes certain modifications to laws applicable to the University of Colorado Hospital Authority, the Denver Health and Hospital Authority, and other local medical authorities to assist in establishing such authorities as units of government eligible to receive Medicaid compensation. Most importantly, the bill grants the authorities the ability to impose sales taxes within certain areas as required by proposed federal Medicaid regulations. The bill sets forth the procedures for imposing such a tax, but also states that such imposition requires the affirmative act of the board and electoral approval, and so declares that the passage of the law itself does not affect the enterprise status of any of the affected authorities under TABOR. The bill also provides a mechanism for appropriations from the state to its teaching hospitals to facilitate compliance with other aspects of the proposed Medicaid regulations.
Senate Bill 08-206 - Lease Purchase Agreements for a New State Justice Center and State Museum (1) (2)
Senate Bill 206 authorizes the state to undertake lease purchase financings in a principal amount not to exceed $275 million for a new justice center and in a principal amount not to exceed $85 million for a new state museum. The justice center will provide consolidated facilities for the Colorado Supreme Court, the Colorado Court of Appeals, the administrative offices of the Colorado Judicial Department, the Colorado Department of Law, the Alternate Defense Counsel, the Office of the Child's Representative, and the Office of the State Public Defender. To provide additional funding for the justice center, the bill authorizes increased filing fees for Colorado courts. The state museum will provide a new location for the historical society, and will be partially funded by funds transferred from the judicial department for displacement and relocation expenses, as the new justice center will utilize space currently occupied by the historical society.
Senate Bill 08-233 - Lease Purchase Agreements for Higher Education (1) (2)
Senate Bill 233 directs the Colorado Commission on Higher Education, after consulting with the state higher education institutions, to submit a prioritized list of higher-education capital projects to the Office of State Planning and Budget and the Capital Development Committee. This list will be distilled into a list forwarded to the Joint Budget Committee, which will adopt a resolution stating which projects should be funded with lease-purchase agreements to be entered into by the State Treasurer. The rent amounts on these agreements will be funded by the Higher Education Federal Mineral Lease Revenues Fund. Each year, the State Treasurer will review amounts available in the fund to determine if they are sufficient to support additional lease-purchase agreements to fund additional capital projects. The bill also authorizes the treasurer to enter into interest rate exchange agreements to protect against future interest rate increases.
Senate Bill 08-245 - Higher Education Bond Intercept Program (1) (2)
Senate Bill 245 establishes a program similar to the current intercept program for school districts that directs the state to make payments on certain bonds issued by state institutions of higher education if those institutions are unable to do so. The State Treasurer may recover amounts used to pay bonds under this bill by withholding payments to the institution pursuant to the state's fee-for-service contract, but cannot withhold more than one-twelfth of any payment or withhold amounts for more than twelve consecutive months per occurrence. An institution may decline to participate in the program with respect to an issue of bonds by passing a resolution to that effect.
Senate Concurrent Resolution 08-003 - Modifying the Initiative Process
Senate Concurrent Resolution 3 will place a question on the ballot in the November election that, if passed, will reform the statewide initiative process. The resolution increases the signature requirement to place a proposed constitutional amendment on the ballot from 5% of the votes cast in the last election for Secretary of State to 6% of the votes cast in the last election for Governor. In addition, at least 8% of the signatures gathered for a constitutional amendment must come from each of the state's congressional districts. The resolution decreases the signature requirement for a proposed statutory amendment from 5% of the votes cast in the last election for Secretary of State to 4% of the votes cast in the last election for Governor. Statutory revisions initiated by the voters would not be subject to amendment by the General Assembly for a period of 5 years after passage without the approval of two-thirds of each house. The resolution also requires signatures proposing statutory revisions to be submitted within 9 months of a ballot title being set for the initiative. Finally, the resolution requires all initiated constitutional amendments to be submitted to the legislative council's office by the sixtieth day of the legislative session preceding the election so that the General Assembly may conduct hearings to review the proposed amendment.
If you have any questions about these or other new laws and how they might affect your organization, please do not hesitate to contact any of the Sherman & Howard Public Finance attorneys in Colorado using the contact information below.
Public Finance Department
303-299-8403
publicfinance@shermanhoward.com
Sherman & Howard has prepared this advisory to provide general information on recent legal development that may be of interest. This advisory does not provide legal advice for any specific situation. This does not create an attorney-client relationship between any reader and the Firm. If you want legal advice on a specific situation, you must speak with one of our lawyers and reach an express agreement for legal representation.