Second Regular Session
Seventy-third General Assembly
STATE OF COLORADO
REREVISED
This Version Includes All Amendments
Adopted in the Second House
LLS NO. 22-0529.02 Bob Lackner x4350
HOUSE BILL 22-1301
House Committees Senate Committees
Transportation & Local Government Finance
A BILL FOR AN ACT
C
ONCERNING THE TREATMENT OF CONTROLLED ENVIRONMENT101
AGRICULTURAL FACILITIES FOR PROPERTY TAX PURPOSES .102
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
A "controlled environment agricultural facility" (CEA facility) is
a structure of not less than 1,000 square feet and related equipment and
appurtenances that combines engineering, horticultural science, and
computer management techniques to optimize hydroponic plant growing,
plant quality, and food production efficiency from the land's water for
human or livestock consumption. The primary purpose of growing crops
SENATE
3rd Reading Unamended
May 2, 2022
SENATE
Amended 2nd Reading
April 29, 2022
HOUSE
3rd Reading Unamended
April 18, 2022
HOUSE
Amended 2nd Reading
April 14, 2022
HOUSE SPONSORSHIP
Soper and Roberts, Holtorf, McLachlan, Pelton, Rich, Titone, Will, Bernett, Bockenfeld,
Exum, Herod, Hooton, Jodeh, Lindsay, Lontine, McCluskie, Young
SENATE SPONSORSHIP
Donovan and Simpson, Buckner, Fenberg, Ginal, Gonzales, Jaquez Lewis, Kolker,
Moreno, Pettersen, Scott, Sonnenberg
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing statute.
Dashes through the words indicate deletions from existing statute. in a CEA facility is to obtain a monetary profit from the wholesale of
plant-based food for human or animal consumption.
Commencing January 1, 2023, for property tax purposes:
! The definition of "agricultural and livestock products"
includes crops grown within a CEA facility for human or
livestock consumption. "Agricultural and livestock
products" does not include marijuana and hemp, or any
other nonfood agricultural products.
! The definition of "agricultural equipment" includes any
personal property used in connection with the operation of
a CEA facility for planting, growing, and harvesting crops;
! The definition of "agricultural land" includes any land
underlying or integral to the operation of a CEA facility;
! "All other agricultural property" does not include a CEA
facility that has been in production for at least 2 years; and
! Agricultural equipment that is used in any CEA facility is
exempt from the levy and collection of property tax.
Under the bill, a CEA facility is valued for assessment purposes
based on the net operating income derived from the production and sale
of the crops grown within the facility and capitalized at the same rate as
irrigated agricultural land. The value so determined must be reduced by
25% to determine the actual value of the CEA facility for property tax
purposes.
If the primary use of the CEA facility is not the growing of crops
for human or livestock consumption, then the property is classified and
valued for assessment purposes as other agricultural property.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 39-1-102, amend2
(1.1), (1.3) introductory portion, and (1.3)(b); and add
(3.3) and (6.2) as3
follows:4
39-1-102. Definitions. As used in articles 1 to 13 of this title 39,5
unless the context otherwise requires:6
(1.1) (a) "Agricultural and livestock products" means plant or7
animal products in a raw or unprocessed state that are derived from the8
science and art of agriculture, regardless of the use of the product after its9
sale and regardless of the entity that purchases the product. "Agriculture",10
1301-2- for the purposes of this subsection (1.1), means farming, ranching, animal1
husbandry, and horticulture.2
(b) ON AND AFTER JANUARY 1, 2023, FOR THE PURPOSES OF THIS3
SUBSECTION (1.1), "AGRICULTURAL AND LIVESTOCK PRODUCTS " INCLUDES4
CROPS GROWN WITHIN A CONTROLLED ENVIRONMENT AGRICULTURAL5
FACILITY IN A RAW OR UNPROCESSED STATE FOR HUMAN OR LIVESTOCK6
CONSUMPTION. FOR THE PURPOSES OF THIS SUBSECTION (1.1)(b),7
"AGRICULTURAL AND LIVESTOCK PRODUCTS" DOES NOT INCLUDE8
MARIJUANA, AS DEFINED IN SECTION 18-18-102 (18)(a), OR ANY OTHER9
NONFOOD CROP AGRICULTURAL PRODUCTS .10
(1.3) "Agricultural equipment which THAT is used on the farm or11
ranch
OR IN A CEA FACILITY in the production of agricultural products":12
(b) Includes:13
(I) Any mechanical system used on the farm or ranch for the14
conveyance and storage of animal products in a raw or unprocessed state,15
regardless of whether or not such mechanical system is affixed to real16
property; and
17
(II) Silviculture personal property that is designed, adapted, and18
used for the planting, growing, maintenance, or harvesting of trees in a19
raw or unprocessed state;
AND20
(III) ANY PERSONAL PROPERTY WITHIN A FACILITY, WHETHER21
ATTACHED TO A BUILDING OR NOT, THAT IS CAPABLE OF BEING REMOVED22
FROM THE FACILITY, AND IS USED IN DIRECT CONNECTION WITH THE23
OPERATION OF A CONTROLLED ENVIRONMENT AGRICULTURAL FACILITY ,24
WHICH FACILITY IS USED SOLELY FOR PLANTING, GROWING, OR25
HARVESTING CROPS IN A RAW OR UNPROCESSED STATE . 26
(3.3) "C
ONTROLLED ENVIRONMENT AGRICULTURAL FACILITY " OR27
1301
-3- "CEA FACILITY" MEANS A NONRESIDENTIAL STRUCTURE AND RELATED1
EQUIPMENT AND APPURTENANCES THAT COMBINES ENGINEERING ,2
HORTICULTURAL SCIENCE , AND COMPUTERIZED MANAGEMENT3
TECHNIQUES TO OPTIMIZE HYDROPONICS, PLANT QUALITY, AND FOOD4
PRODUCTION EFFICIENCY FROM THE LAND 'S WATER FOR HUMAN OR5
LIVESTOCK CONSUMPTION . THE SOLE PURPOSE OF GROWING CROPS IN A6
CEA
FACILITY IS TO OBTAIN A MONETARY PROFIT FROM THE WHOLESALE7
OF PLANT-BASED FOOD FOR HUMAN OR LIVESTOCK CONSUMPTION .8 (6.2) "HYDROPONICS" MEANS A SYSTEM IN WHICH WATER SOLUBLE9
PRIMARY OR SECONDARY PLANT NUTRIENTS OR MICRONUTRIENTS, OR A10
COMBINATION OF SUCH NUTRIENTS, ARE PLACED IN INTIMATE CONTACT11
WITH A PLANT'S ROOT SYSTEM THAT IS BEING GROWN IN WATER OR AN12
INERT SUPPORTIVE MEDIUM THAT SUPPLIES PHYSICAL SUPPORT FOR THE13
ROOTS.14
SECTION 2. In Colorado Revised Statutes, amend 39-3-122 as15
follows:16
39-3-122. Agricultural equipment used in production of17
agricultural products - CEA facilities - exemption. (1) Agricultural18
equipment which THAT is used on any farm or ranch in the production of19
agricultural products shall be IS exempt from the levy and collection of20
property tax.21
(2) O
N AND AFTER JANUARY 1, 2023, BUT PRIOR TO JANUARY 2,
22
2028, AGRICULTURAL EQUIPMENT THAT IS USED IN ANY CEA FACILITY IS23
EXEMPT FROM THE LEVY AND COLLECTION OF PROPERTY TAX .24
SECTION 3. In Colorado Revised Statutes, add 39-5-134 as25
follows:26
39-5-134. Controlled environment agricultural facility -27
1301
-4- valuation - affidavit - definition - repeal. (1) AS USED IN THIS SECTION,1
"
CONTROLLED ENVIRONMENT AGRICULTURAL FACILITY " OR "CEA2
FACILITY" HAS THE SAME MEANING AS SPECIFIED IN SECTION 39-1-1023
(3.3).4 (2) A CEA FACILITY IS VALUED FOR ASSESSMENT PURPOSES AS ALL5
OTHER AGRICULTURAL PROPERTY USING THE COST, MARKET, AND INCOME6
APPROACHES TO VALUE.7
(3) I
F THE
SOLE USE OF THE CEA FACILITY IS NOT THE GROWING OF8
CROPS FOR HUMAN OR LIVESTOCK CONSUMPTION , THEN THE PROPERTY IS9
CLASSIFIED AND VALUED FOR ASSESSMENT PURPOSES BASED ON ACTUAL10
USE.11
(4) AS PART OF THE PERSONAL DECLARATION THE OWNER OF A12
CEA FACILITY SIGNS AND RETURNS TO THE COUNTY ASSESSOR PURSUANT13
TO SECTIONS 39-5-107 AND 39-5-108, THE OWNER SHALL INCLUDE AN14
AFFIDAVIT EXECUTED BY THE OWNER IN WHICH THE OWNER AFFIRMS THAT15
THE CEA FACILITY MEETS THE REQUIREMENTS OF SECTION 39-1-102 (3.3),16
INCLUDING THE REQUIREMENTS THAT THE FACILITY OPTIMIZES17
HYDROPONICS AND THAT THE SOLE PURPOSE OF THE CEA FACILITY IS TO18
OBTAIN A MONETARY PROFIT FROM THE WHOLESALE OF PLANT-BASED19
FOOD FOR HUMAN OR LIVESTOCK CONSUMPTION. IF THE CROP GROWN IN20
THE CEA FACILITY IS HEMP, THE OWNER MUST ALSO INCLUDE A COPY OF21
A LICENSE TO VERIFY TO THE ASSESSOR THAT THE CROP IS NOT22
MARIJUANA.23
(5) NOTWITHSTANDING ANY OTHER PROVISION OF LAW , A CEA24
FACILITY SHALL NOT VIOLATE THE TERMS AND CONDITIONS OF ANY25
APPLICABLE WATER COURT DECREE ISSUED PURSUANT TO ARTICLE 92 OF26
TITLE 37 AND SHALL NOT MATERIALLY INJURE WATER RIGHTS OR27
1301
-5- CONDITIONAL WATER RIGHTS GRANTED UNDER ARTICLE 92 OF TITLE 37.1
(6) T
HIS SECTION IS REPEALED, EFFECTIVE JULY 1, 2029.
2
SECTION 4. Act subject to petition - effective date. This act3
takes effect at 12:01 a.m. on the day following the expiration of the4
ninety-day period after final adjournment of the general assembly; except5
that, if a referendum petition is filed pursuant to section 1 (3) of article V6
of the state constitution against this act or an item, section, or part of this7
act within such period, then the act, item, section, or part will not take8
effect unless approved by the people at the general election to be held in9
November 2022 and, in such case, will take effect on the date of the10
official declaration of the vote thereon by the governor.11
1301
-6-