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April 21, 2022 HB 22-1301
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated March 22, 2022)
Drafting Number:
Prime Sponsors:
LLS 22-0529
Rep. Soper; Roberts
Sen. Donovan; Simpson
Date:
Bill Status:
Fiscal Analyst:
April 21, 2022
Senate Finance
Marc Carey | 303-866-4102
marc.carey@state.co.us
Bill Topic: CONTROLLED ENVIRONMENTAL 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 clarifies 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 reengrossed bill.
Summary of Legislation
Beginning with property tax year 2023, this bill defines a controlled environmental agricultural (CEA)
facility as a nonresidential structure and related equipment combining engineering, horticultural
science, and computerized management techniques to optimize hydroponics, plant quality and food
production efficiency from the land’s water for human or livestock consumption. The bill further
specifies that:
a CEA facility will be valued for assessment purposes as all other agricultural property using the
cost, market, and income approaches;
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
a CEA facility may not be used to grow marijuana or any other nonfood crop agricultural
products.
If the sole use of the CEA facility is not growing crops for human or livestock consumption, the
property shall be classified and valued based on actual use.
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April 21, 2022 HB 22-1301
As part of the personal declaration filed with the county assessor, the bill requires the owner of a CEA
facility to include an affidavit affirming that the facility optimizes hydroponics and its sole purpose is
to obtain monetary profit from the wholesale of plant-based food for human or livestock consumption.
Finally, the bill specifies that a CEA facility may not violate the terms of any applicable water court
decree or materially injure water rights or conditional water rights.
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 bill clarifies that CEA facilities will be valued as all other
agricultural property using the cost, market, and income approaches. 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”.
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 and use of
CEA facilities. 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 of qualified CEAs, 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. Page 3
April 21, 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.