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March 7, 2024 HB 24-1295
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated February 26, 2024)
Drafting Number:
Prime Sponsors:
LLS 24-0658
Rep. Titone; Herod
Sen. Fenberg
Date:
Bill Status:
Fiscal Analyst:
March 7, 2024
House Finance
Brendan Fung | 303-866-4781
Emily Dohrman | 303-866-3687
Bill Topic: CREATIVE INDUSTRIES COMMUNITY REVITALIZATION INCENTIVES
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill updates the Community Revitalization Grant Program and creates a new
income tax credit for creative industry capital improvement projects in tax years 2026
through 2032. The bill decreases state revenue on net and increases state
expenditures starting in FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $102,498 to the Office of
Economic Development and International Trade.
Fiscal Note
Status:
This revised fiscal note reflects the introduced bill, as amended in the House Business
Affairs and Labor Committee.
Table 1
State Fiscal Impacts Under HB 24-1295
Budget Year
FY 2024-25
Out Year
FY 2025-26
Out Year
FY 2026-27
Revenue General Fund - ($8,000,000) ($16,000,000)
Cash Funds $10,750 $133,500 $133,500
Total Revenue $10,750 ($7,866,500) ($15,866,500)
Expenditures General Fund $102,498 - $50,109
Cash Funds $10,750 $104,472 $104,472
Centrally Appropriated $17,741 $22,177 $22,177
Total Expenditures $130,989 $126,649 $176,758
Total FTE 0.8 FTE 1.0 FTE 1.0 FTE
Transfers - -
Other Budget Impacts TABOR Refund $10,750 ($7,866,500) Not estimated
General Fund Reserve $15,375 - $7,516 Page 2
March 7, 2024 HB 24-1295
Summary of Legislation
The bill modifies the Community Revitalization Grant Program in the Office of Economic
Development (OEDIT) and creates a new community revitalization income tax credit for capital
improvement projects that support creative industries and workers.
Grant program. The bill expands eligible grant recipients in the Community Revitalization Grant
Program to include projects that are qualified for funding under the Space to Create Colorado
Program, which assists rural communities with the development of affordable live-work and
commercial spaces. Additionally, the bill extends deadlines for the Division of Colorado Creative
Industries in OEDIT to adopt program-related policies and publish reports, and updates the
program repeal date from January 1, 2025, to the date when all funds transferred to the
Community Revitalization Cash Fund have been used.
Community Revitalization Tax Credit. The bill creates a state income tax credit for tax years
2026 through 2032 for expenses for capital improvement projects that support creative
industries and mixed-use and creative-use spaces for the general public. The credit is equal to
25 percent of the project’s eligible expenses, with a maximum credit of $3 million per project.
Additionally, the total amount of tax credit reservations cannot exceed $16 million per year,
except that if less than $16 million is reserved in one year, the unreserved amount can be rolled
forward into later years.
Applicants must apply for a tax credit reservation from OEDIT, and, once the project is
completed, submit evidence of compliance and certification of expenditures to receive a tax
credit certificate. Additionally, the bill authorizes OEDIT to levy an application and issuance fee
to cover program implementation and administration.
Cash fund. The bill creates the Community Revitalization Tax Credit Program Cash Fund to
administer the tax credit. The fund consists of fee revenue, gifts, grants, donations, and any
other funds appropriated by the General Assembly. Money in the cash fund is continuously
appropriated to OEDIT.
Background
The Community Revitalization Program provides funding through grants for projects in historic,
main street, and creative districts to further community economic development. The program is
currently funded by federal dollars and has awarded approximately $98 million to 59 capital
projects over two years.
State Revenue
The bill increases cash fund revenue beginning in FY 2024-25 and decreases General Fund
revenue beginning in FY 2025-26. All impacted revenue is subject to the state TABOR limit.
Revenue changes are shown in Table 2 and discussed below.
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March 7, 2024 HB 24-1295
Table 2
Revenue Changes Under HB 24-1295
Fund FY 2024-25 FY 2025-26 FY 2026-27
Community Revitalization Tax Credit General Fund - ($8,000,000) ($16,000,000)
Issuance Fee Cash Fund - $112,000 $112,000
Application Fee Cash Fund $10,750 $21,500 $21,500
Total Revenue $10,750 ($7,866,500) ($15,866,500)
Community Revitalization Tax Credit. Based on the number of applications received for the
current Community Revitalization Program, this fiscal note assumes that the amount reserved
and issued each year will reach the $16 million cap. Tax credit certificates may be issued
beginning in tax year 2026. The credit is expected to reduce General Fund revenue from the
income tax by $8 million in FY 2025-26, representing an accrued half-year impact for tax year
2026, and $16 million in FY 2026-27, the first full year.
Issuance fees. OEDIT may impose an issuance fee of up to three percent of the amount of the
tax credit certificate at the time that the tax credit certificate is issued to the applicant. The fiscal
note assumes that OEDIT will impose a fee of 1.4 percent in FY 2025-26 and 0.7 percent in
FY 2026-27 and later years, to approximate their costs.
Application fees. OEDIT may impose an application fee of up to $200 for applications
requesting a tax credit of $250,000 or less, and a fee of up to $500 for applications requesting a
tax credit of more than $250,000. The fiscal note assumes OEDIT will charge the maximum fee,
and that the office will receive up to 10 applications requesting credits of less than $250,000 and
up to 39 application requesting credits for more than $250,000. Actual revenue will vary
depending on the number of applicants.
State Expenditures
The bill increases state expenditures in OEDIT and the Department of Revenue by about
$131,000 in FY 2024-25, about $127,000 in FY 2025-26, and about $177,000 in FY 2026-27, paid
from the General Fund and the Community Revitalization Tax Credit Program Cash Fund.
Expenditures are shown in Table 3 and detailed below.
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March 7, 2024 HB 24-1295
Table 3
Expenditures Under HB 24-1295
FY 2024-25 FY 2025-26 FY 2026-27
OEDIT
Personal Services $82,554 $103,192 $103,192
Operating Expenses $1,024 $1,280 $1,280
Capital Outlay Costs $6,670 - -
Salesforce Development $23,000 - -
Centrally Appropriated Costs
1
$17,741 $22,177 $22,177
FTE – Personal Services 0.8 FTE 1.0 FTE 1.0 FTE
OEDIT Subtotal $130,989 $126,649 $126,649
Department of Revenue
GenTax Programming - - $18,540
Systems Support Office - - $14,455
Office of Research and Analysis - - $7,392
User Acceptance Testing - - $6,624
Document Management - - $3,098
Department of Revenue Subtotal $0 $0 $50,109
Total Costs $130,989 $126,649 $176,758
Total FTE 0.8 FTE 1.0 FTE 1.0 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Office of Economic Development and International Trade. In FY 2024-25, expenditures in
OEDIT will increase by about $131,000 paid, in part, from tax credit application fee revenue in
the Community Revitalization Tax Credit Program Cash Fund. The remaining $120,000 will be
paid from the General Fund. Beginning in FY 2025-26, expenditures will increase by about
$127,000, paid entirely from the Community Revitalization Tax Credit Program Cash Fund.
Staff. Starting in FY 2024-25, OEDIT requires 1.0 FTE Program Management II to evaluate
tax credit applications, administer the credit, manage program continuation, develop
program materials, and communicate the tax incentive program. Staff costs and FTE are
prorated in the first year based on the bill’s effective date.
Salesforce development. OEDIT uses the management software Salesforce to oversee
program applicants, analytics, and application development. In FY 2024-25, OEDIT requires
an estimated $23,000 to integrate the new tax credit program into Salesforce. Page 5
March 7, 2024 HB 24-1295
Legal services. OEDIT may require legal services, provided by the Department of Law, which
can be accomplished within existing legal services appropriations. Legal counsel is related to
rulemaking, implementation, and ongoing administration of the program.
Department of Revenue. Starting in FY 2026-27, expenditures will increase in DOR to update
existing tax forms, test programming changes, and evaluate the new tax credit.
Computer programming and testing. In FY 2026-27 only, workload in DOR will increase to
update the GenTax software system and additional testing. Changes are programmed by a
contractor at a cost of $231.75 per hour, for an estimated 80 hours. Additional computer and
user acceptance testing are required to ensure programming changes function properly.
Data reporting. Starting in FY 2026-27, workload in the Office of Research and Analysis will
increase to collect and report data on the new tax credit.
Document management and tax form changes. In FY 2026-27 only, workload in DOR will
increase to update tax forms for paper filings. Expenditures for form changes occur in the
Department of Personnel and Administration using reappropriated funds.
State Auditor. Starting in FY 2025-26, workload in the Office of the State Auditor will increase
to measure the effectiveness of the tax credit in achieving the program’s goals. This workload is
expected to be minimal and no change in appropriation is required.
Department of Local Affairs. Starting in FY 2024-24, workload in the Department of Local
Affairs will increase for the Division of Local Government to continue collaborating with OEDIT
on grant application review and program development for the Community Revitalization Grant
Program, and provide administrative support to the Space to Create Program. This workload is
expected to be minimal and no change in appropriation is required.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs
associated with this bill are addressed through the annual budget process and centrally
appropriated in the Long Bill or supplemental appropriations bills, rather than in this bill. These
costs, which include employee insurance and supplemental employee retirement payments, are
shown in Table 3.
Other Budget Impacts
TABOR refunds. On net, the bill is expected to decrease the amount of state revenue required
to be refunded to taxpayers by the amounts shown in the State Revenue section above.
However, the amount refunded to taxpayers may be higher than this estimate if OEDIT sets fees
higher than assumed in this fiscal note. This estimate assumes the December 2023 LCS revenue
forecast. A forecast of state revenue subject to TABOR is not available beyond FY 2025-26.
The bill decreases General Fund subject to TABOR, which will decrease the amount of General
Fund revenue required to be refunded to taxpayers with no net impact on the amount available
for the General Fund budget. Page 6
March 7, 2024 HB 24-1295
The bill increases cash fund revenue subject to TABOR, which will increase the amount of
General Fund revenue required to be refunded to taxpayers, correspondingly decreasing the
amount available for the General Fund budget.
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve. Based on this fiscal note,
the bill is expected to increase the amount of General Fund held in reserve by the amounts
shown in Table 1, decreasing the amount of General Fund available for other purposes.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
State Appropriations
For FY 2024-25, the bill requires a General Fund appropriation of $102,498 to the Office of
Economic Development and International Trade, and 0.8 FTE.
State and Local Government Contacts
Local Affairs Office of Economic Development Personnel
Revenue State Auditor
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 the General Assembly website.