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April 2, 2024 HB 24-1314
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated March 14, 2024)
Drafting Number:
Prime Sponsors:
LLS 24-1007
Rep. Lukens; Martinez
Sen. Gonzales
Date:
Bill Status:
Fiscal Analyst:
April 2, 2024
House Appropriations
Amanda Liddle | 303-866-5834
amanda.liddle@coleg.gov
Bill Topic: MODIFY TAX CREDIT PRESERVATION HISTORIC STRUCTURES
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill makes modifications to the existing preservation of historical structures tax
credit, including expanding the tax credit and extending it through 2036. The bill
reduces state revenue and increases state expenditures through FY 2036-37.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $128,663 to multiple agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill, as amended by the House Finance
committee.
Table 1
State Fiscal Impacts Under HB 24-1314
Budget Year
FY 2024-25
Out Year
FY 2025-26
Out Year
FY 2027-28
Revenue General Fund (Tax) ($25,000) ($60,000) ($5.1 million)
Cash Funds (Fees) - - $150,000
Total Revenue ($25,000) ($60,000) ($4.9 million)
Expenditures General Fund $128,663 $113,767 -
Cash Funds - - $153,965
Centrally Appropriated $16,305 $20,380 $20380
Total Expenditures $144,968 $134,147 $174,345
Total FTE 0.8 FTE 1.0 FTE 1.0 FTE
Other Budget Impacts TABOR Refunds ($25,000) ($60,000) not estimated
General Fund Reserve $19,299 $15,671 -
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April 2, 2024 HB 24-1314
Summary of Legislation
The bill makes modifications to the existing preservation of historic structures tax credit. For
both commercial and residential structures, the bill
lowers the minimum required age for a structure from 50 years old to 30 years old;
extends the period that a taxpayer may claim the credit through income tax year 2036,
rather than through 2032;
beginning January 1, 2026, limits the credit to apply to rehabilitation expenditures that
occurred 12, rather than 24, months prior to the submission of the application;
beginning January 1, 2025, prohibits applications in connection with an already
completed rehabilitation project; and
for applications submitted on or after January 1, 2025, removes the 5 percentage point
increase in percent of qualified expenditures that can be claimed for structures located in
declared disaster areas.
For residential structures only, the bill
beginning January 1, 2025, increases the maximum award per building, per owner from
$50,000 to $100,000; and
for tax years 2027 and subsequent years, allows the credit to be refundable rather than
able to be carried forward.
For commercial structures only, the bill
extends the period for which the Governor’s Office of Economic Development and
International Trade (OEDIT) may reserve tax credits for commercial structures to be
through 2032, rather than through 2029;
for calendar years 2025 through 2029, establishes a second income tax credit pool of
$5 million annually that may be reserved for commercial structures that are rehabilitated
to have housing units in at least half the square footage of the structure;
in regards to the second income tax credit pool, allows for an extra 5 percentage points
of qualified expenditures to be claimed for structures subject to a deed restriction
requiring the owner to lease rental housing to individuals below a certain income;
in regards to the second income tax credit pool, limits a tax credit reservation to
$1.5 million per rehabilitation plan; and
creates the Commercial Historic Preservation Tax Credit Program Cash Fund in the State
Treasury, for which fee revenue under this bill is to be deposited for use on
administrative costs of the tax credit program. The cash fund is continuously
appropriated to OEDIT and exempt from the cash fund reserve limit.
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April 2, 2024 HB 24-1314
Background
The preservation of historic structures tax credit is available to property owners who rehabilitate
or preserve a residential or commercial certified historic structure in Colorado. The credit
was enacted in 2014 under the Colorado Job Creation and Main Street Revitalization Act
(House Bill 14-1311), as an alternative credit to the preexisting historic property preservation
credit that was enacted in 1990 and expired January 1, 2020. Since the credit took effect, it has
been substantially changed once, under House Bill 18-1190. The credit is calculated as a
percentage of qualified rehabilitation expenditures, between 20 and 35 percent, depending on
the structure type and location.
History Colorado’s State Historic Preservation Office (SHPO) develops the standards for approval
for the substantial rehabilitation of qualified structures, in consultation with the Governor’s
Office of Economic Development and International Trade (OEDIT) for commercial structures.
Structures must be at least 50 years old and in the National Register of Historic Places, the State
Register of Historic Properties, or within a designated historic district of one of the state’s
67 certified local governments (CLGs).
Residential structures. Under current law, the preservation of a historical residential structure is
allowed a base credit of 20 percent of qualified expenditures, which is increased by 5 percentage
points for structures in a declared disaster area and 15 percentage points for structures in a rural
area. Up to $50,000 every 10 years per structure, per owner may be claimed as a tax credit, with
no statewide credit cap.
Applications for residential structures are reviewed and approved by one of the state’s Certified
Local Governments (CLG) or the SHPO. Upon completion and verification of expenditures, the
CLG or SHPO will issue a certificate to the approved applicant in order for the applicant to claim
the tax credit. Compared to commercial structures, residential structures face less requirements
in statute that must be met in order to receive the tax credit.
Commercial structures. Under current law, the preservation of historical commercial structures
receives a base credit of 25 percent for structures with less than $2 million in qualified
expenditures and 20 percent for structures with over $2 million in qualified expenditures. The
base percent is increased by 5 percentage points for commercial structures in a declared
disaster area and 10 percent for structures in a rural area. Each commercial structure is eligible
for up to $1 million in tax credits with a statewide reservation cap of $10 million per year.
Applications for commercial structures are reviewed and approved by OEDIT in consultation with
the SHPO. OEDIT reserves a tax credit for approved property owners and issues a certificate for
the tax credit once all requirements have been met, the restoration has been completed, and
expenditures have been verified by a third party. Under current law, OEDIT may reserve tax
credits for commercial structures through 2029 and may issue certificates for tax credits to be
claimed through 2032.
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April 2, 2024 HB 24-1314
State Revenue
The bill reduces state revenue by $25,000 in FY 2024-25, $60,000 in FY 2025-26, and an average
of about $4.9 million per year in FY 2026-27 through FY 2036-37. These reductions are primarily
from reduced General Fund tax revenue, which are partly offset by an increase in cash fund
revenue beginning in FY 2026-27 through FY 2036-37. These impacts are described below, with
tax changes shown in Table 2 and fee changes in Table 3.
Table 3
Tax Revenue Change under HB 24-1314
Fiscal Year
Residential
Properties
Commercial
Property
Total Tax
Impact
FY 2024-25 $25,000 - $25,000
FY 2025-26 $60,000 - $60,000
FY 2026-27 $63,000 $5,000,000 $5,063,000
FY 2027-28 $66,150 $5,000,000 $5,066,150
Residential structures. Based on a historical average tax credit amount of just over half of the
$50,000 cap per building per taxpayer, it is assumed that only 4 percent of taxpayers would incur
over $250,000 in expenditures such that more than $50,000 could be claimed with the cap
increase in the bill. For residential structures that do claim tax credit amounts larger than
$50,000, it is assumed that they would claim the maximum tax credit per this bill of $100,000.
The revenue reductions attributable to modifications to the tax credit for residential structures is
estimated at $25,000 in FY 2024-25, $60,000 in FY 2025-26, and reaching about $100,000 in
subsequent years through FY 2036-37.
The bill extends the time period for which owners of residential structures may claim the tax
credit through 2036, compared to through 2029 under current law, reducing General Fund
revenue by about $1.1 million per year in FY 2033-34 through FY 2035-36, with half-year
impacts in FY 2032-33 and FY 2036-37.
Commercial structures. The bill allows OEDIT to reserve an additional $5 million in tax credits
per year for commercial structures converting to at least 50 percent residential in tax years 2025
through 2029, totaling to $25 million in additional tax credits to be issued upon completion of
the rehabilitation plan. In reality, duration of rehabilitations varies greatly by project; however,
given that the average length of project is 1.6 years, the fiscal note assumes that tax credits will
begin to be claimed in the second half of 2026, realizing a full $5 million impact in FY 2026-27.
The bill extends the time period for which owners of commercial structures may claim the tax
credit through 2036, compared to through 2029 under current law, reducing General Fund
revenue by about $4.8 million per year in FY 2033-34 through FY 2035-36, with half-year
impacts in FY 2032-33 and FY 2036-37.
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April 2, 2024 HB 24-1314
Other modifications. It is assumed that all other modifications to the tax credit, other than the
ones listed above, are offsetting such that the changes will not significantly impact the total
number of applicants and historic structures approved for the tax credit. To the extent that these
modifications cause significantly greater or lesser credit amounts to be claimed, the bill’s impact
on revenue will differ from that presented in this fiscal note.
Fees. The bill allows OEDIT to collect fees for the issuance of tax credit certificates to owners of
qualified commercial structures, up to 3 percent of the tax credit amount. Fee revenue is
expected to average $150,000 per year in FY 2026-27 through FY 2036-37. The bill creates the
Commercial Historic Preservation Tax Credit Program Cash Fund in the state treasury, and the
fee revenue is to be used towards administrative costs incurred by the DOR, the SHPO, and
OEDIT for the tax credit. Fee revenue is shown in Table 3 below.
Table 3
Tax Credit Certificate Fee Revenue
Fiscal Year Type of Fee
Estimated
Certificates
Fee as % of
Certificates
Total Fee
Impact
FY 2024-25 - - - -
FY 2025-26 - - - -
FY 2026-27 Certificate Fee $5 million 3.0% $150,000
FY 2027-28 Certificate Fee $5 million 3.0% $150,000
State Expenditures
The bill increases state expenditures by about $145,000 in FY 2024-25, $134,000 in FY 2025-26
and subsequent years, except for FY 2027-28 which includes one-time costs, totaling about
$174,000 in expenditures for that year. The expenditures are detailed in Table 4 below and are
expected to be largely offset by fee revenue beginning in FY 2026-27.
Table 4
Expenditures Under HB 24-1314
FY 2024-25 FY 2025-26 FY 2027-28
OEDIT
Personal Services $41,277 $51,596 $51,596
Operating Expenses $512 $640 $640
Capital Outlay Costs $3,335 - -
Salesforce $29,120 - -
Centrally Appropriated Costs
1
$8,871 $11,088 $11,088
FTE – Personal Services 0.4 FTE 0.5 FTE 0.5 FTE
OEDIT Subtotal $83,115 $63,324 $63,324 Page 6
April 2, 2024 HB 24-1314
Table 4
Expenditures Under HB 24-1314 (Cont.)
FY 2024-25 FY 2025-26 FY 2027-28
History Colorado (SHPO)
Personal Services $41,277 $51,596 $51,596
Operating Expenses $512 $640 $640
Capital Outlay Costs $3,335 - -
Implementation and On-Site Visits $9,295 $9,295 $9,295
Centrally Appropriated Costs
1
$7,434 $9,292 $9,292
FTE – Personal Services 0.4 FTE 0.5 FTE 0.5 FTE
History Colorado (SHPO) Subtotal $61,853 $70,823 $70,823
Department of Revenue
GenTax Programming and Testing - - $37,608
Document Management (Paid to DPA) - - $2,590
FTE – Personal Services - - -
DOR Subtotal - - $40,198
Total Costs $144,968 $134,147 $174,345
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. Beginning in FY 2024-25, OEDIT requires personnel and
one-time contractor resources to implement changes to the existing tax credit and manage the
application for the expansion to the existing tax credit. It is expected that fees raised in the bill
will cover administrative expenditures for OEDIT beginning in FY 2026-27.
Program management. OEDIT requires one additional program manager beginning in
September 2024 to implement the changes to and expansion of the tax credit in the bill. The
program manager is responsible for developing the program guidelines, policies, and
procedures; coordinating the application process for commercial structures; tracking the
compliance and issuance of tax credits; and conducting outreach and education efforts
related to the changes to and expansion of the tax credit.
Salesforce programming. The buildout and maintenance of the tax credit application in
Salesforce is expected to require 130 hours of development in FY 2024-25, billed by the
contractor at a rate of $224 per hour.
History Colorado (SHPO). Beginning in FY 2024-25, the SHPO requires personnel and
implementation resources to implement and manage the application process for the tax credit.
It is expected that fee revenue under the bill will cover all administrative expenditures for the
SHPO beginning in FY 2026-27. Page 7
April 2, 2024 HB 24-1314
Program management. The SHPO requires one additional program manager beginning in
September 2024 to implement the changes to and expansion of the tax credit in the bill. The
program manager is reviewing rehabilitation plans; coordinating the application process for
residential structures; tracking the compliance and issuance of tax credits; and conducting
outreach and education efforts related to the changes to and expansion of the tax credit,
including training CLGs on the modifications and making on-site visits to ensure compliance.
Implementation and site visits. SHPO requires resources to ensure awareness of and
compliance with the modifications to the tax credit. Expenditures include costs to develop
and distribute educational materials, travel expenses to host training sessions regarding the
modifications, and travel expenses for site visits to ensure ongoing compliance.
Department of Revenue (DOR). Beginning in tax year 2027, which impacts work on tax return
forms in FY 2027-28, DOR will require one-time resources for paper form changes and GenTax
programming and development, specifically for the shift to a refundable tax credit for residential
structures.
GenTax programming and testing. For FY 2027-28, the bill will require changes to DOR’s
GenTax software system. This includes $16,223 in GenTax programming costs, $14,655 in
development and testing in support of the GenTax programming, and $6,720 in business
and user acceptance testing following the GenTax programming.
Document management. For FY 2027-28, DOR will incur $2,590 in document management
costs to update tax return forms. These expenditures will occur in the Department of
Personnel and Administration (DPA) using reappropriated DOR funds. The population
workload impact is expected to be minimal and absorbable.
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 2.
Other Budget Impacts
TABOR refunds. In FY 2024-25 and FY 2025-26, 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. This estimate assumes the December 2023 LCS revenue forecast. A forecast of
state revenue subject to TABOR is not available beyond FY 2025-26. Because TABOR refunds are
paid from the General Fund, decreased General Fund revenue will decrease the TABOR refund
obligation, but result in no net change to the amount of General Fund otherwise available to
spend or save for years that General Fund revenue is above the TABOR limit.
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. The bill is expected to
increase the amount of General Fund held in reserve by the amounts shown in Table 1.
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April 2, 2024 HB 24-1314
Local Government
The bill will drive a minimal workload impact for local governments certified to review
applications for residential historic properties. Certified local governments (CLGs) will need to
apply the new qualifications and increased credit amounts.
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 the following General Fund appropriations:
$74,244 to the Office of Economic Development and International Trade (OEDIT), and
0.4 FTE; and
$54,419 to History Colorado, and 0.4 FTE.
State and Local Government Contacts
History Colorado Information Technology Local Affairs
OEDIT 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.