SB 23-175

Senate Bill 23-175, which has been signed into law and will take effect on August 7, 2023, allows Colorado's downtown development authorities to use a tax increment financing (TIF) system for up to 50 years. This means that any increase in property or sales taxes within designated areas can be used to fund local projects for up to 30 years, with the possibility of extending it by another 20 years if approved by the city government. The law also specifies how these funds should be distributed between the municipality and other taxing entities involved. This bill aims to boost economic development in downtown areas by providing more financial flexibility for such initiatives.

Official Summary

A downtown development authority (authority) may use a tax increment financing (TIF) arrangement to generate capital by dedicating growth in property tax or sales tax revenue for a period of 30 years with the option for one 20-year extension. For property tax revenue only, the act creates the option for additional 20-year extension periods during which an authority may use a TIF arrangement if the governing body of the municipality that created the authority extends the period by ordinance. The first additional 20-year extension period may begin upon the expiration of the original 20-year extension. For the additional 20-year extension periods authorized by the act, 50% of the incremental revenue generated from the TIF arrangement is allocated to a special fund of the municipality that created the authority (special fund) to be used to finance projects within the boundaries of the authority and the other 50% of the incremental revenue is allocated to the other governmental entities that levy property taxes within the boundaries of the authority, unless the municipality and all of the other governmental entities reach an alternative agreement requiring a greater percentage of the incremental revenue to be credited to the special fund. For a 20-year extension period authorized by the act, the base year revenue is recalculated every year. The act allows a municipality and an authority to enter into an intergovernmental agreement through which the municipality may delegate to the board of the authority the power to incur debt and to pledge money in a special fund of the municipality for the payment of the debt. During a 20-year extension period authorized in the act, the authority is under the supervision and control of a board consisting of not less than 9 and not more than 13 members, which is between 4 and 8 additional board members compared to when there is not a 20-year extension period authorized in the act. Of the additional board members, one must be a member of the board of county commissioners of the county in which the authority is located, and one must be a member of the school district board of education of the school district in which the authority is located. The other additional board members are appointed by the governing body of the municipality that created the authority. APPROVED by Governor June 2, 2023 EFFECTIVE August 7, 2023 NOTE: This act was passed without a safety clause and takes effect 90 days after sine die. (Note: This summary applies to this bill as enacted.)

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