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March 22, 2022 HB 22-1301
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-0529
Rep. Soper; Roberts
Date:
Bill Status:
Fiscal Analyst:
March 22, 2022
House Trans. & Local Govt.
Marc Carey | 303-866-4102
marc.carey@state.co.us
Bill Topic: CONTROLLED ENV IRONMENTAL AG FACILITY AS AG PROPERTY
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
This bill defines controlled environmental agricultural facilities, and changes the way
they are valued for property tax purposes. The bill likely reduces property tax revenue
for local governments on an ongoing basis, and increases workload for both the
Division of Property Taxation and county assessors.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Summary of Legislation
Beginning with property tax year 2023, this bill defines a controlled environmental agricultural (CEA)
facility as a facility of at least 1,000 square feet combining engineering, horticultural science, and
computerized management techniques to optimize hydroponic plant production for human or
livestock consumption. The bill further specifies that:
a CEA facility will be valued for assessment purposes based on the net operating income derived
from the production and sale of the crops grown in the facility;
the value derived from the net operating income must be reduced by 25 percent to determine the
actual value of the facility for property tax purposes;
the land underlying or integral to the operation of a CEA facility will be classified as agricultural
land;
facilities currently classified as “all other agricultural property” must have been in operation for
at least 2 years before being eligible to be a CEA facility and reclassified as agricultural land;
agricultural equipment used in a CEA facility is exempt from property tax;
personal property used in the operation of a CEA facility is exempt from property tax; and
CEA facilities may not be used to grow hemp or marijuana.
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March 22, 2022 HB 22-1301
If the primary use of the CEA facility is not growing crops for human or livestock consumption, the
property shall be valued as “all other agricultural property”.
Assumptions
Beginning in property tax year 2023, this bill will likely reduce the amount of property tax revenue to
local governments from CEA facilities. The actual value of CEA facilities will be determined from the
net operating income of the facility, and then reduced by 25 percent. Additionally, personal property
and agricultural equipment associated with such facilities will be exempt from property tax. Because
no specific classification codes currently exist for CEA facilities, it is unknown how many such
facilities currently exist or what their net operating income is. The current classifications of such
facilities may vary by county, and would likely be either “commercial” or “all other agricultural
property”. This fiscal note will be updated if new information becomes available.
State Expenditures
Division of Property Taxation (DPT). In FY 2022-23, the DPT will update training materials, conduct
additional training and respond to inquiries. This will be accomplished within existing resources.
School finance. To the extent that the bill results in the reduction in property taxes paid by CEA
facilities, the bill will reduce property tax revenue to school districts with these facilities. If the budget
stabilization factor is unchanged, state aid will offset the property tax revenue decrease. The
magnitude of this impact is currently unknown. This fiscal note will be updated if new information
becomes available.
Local Government
County assessors. County assessors will be required to monitor annually the existence, use, and size
of CEA facilities, and will need to collect information on net operating income in order to value each
individual CEA facility. Some county assessors may require additional staff to accomplish these tasks,
particularly in counties where CEA facilities already exist or are forthcoming.
Property tax revenue. As stated in the Assumptions section, this fiscal note expects a reduction in
local government property taxes. The reduction will depend on the number and size of qualified
CEAs, the amount of net operating income generated by each CEA, and the amount of agricultural
equipment and personal property associated with each CEA.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
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March 22, 2022 HB 22-1301
State and Local Government Contacts
Agriculture Counties
County Assessors Property Tax Division - Local Affairs
Municipalities Special Districts
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.