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Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 26-0402.01 Alison Killen x4350 HOUSE BILL 26-1119
House Committees Senate Committees
Finance
A BILL FOR AN ACT
CONCERNING THE AUTHORITY OF LOCAL TAXING ENTITIES TO IMPOSE101
PROPERTY TAXES ON THE ASSESSED VALUE OF LAND AND THE102
ASSESSED VALUE OF IMPROVEMENTS THEREON AT DIFFERENT103
MILL LEVY RATES.104
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill w ill be av ailable at
http://leg.colorado.gov.)
Section 2 of the bill allows local governments and certain special
districts authorized to impose property taxes (local taxing entities) to tax
certain land and improvements thereon at different mill levy rates,
HOUSE SPONSORSHIP
Woodrow,
SENATE SPONSORSHIP
Hinrichsen,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law.
provided that the mill levy rate for the improvements is less than or equal
to the mill levy rate for the land. A local taxing entity may not impose
different mill levy rates for agricultural land, land used for renewable
energy production, land subject to a perpetual conservation easement,
leaseholds and lands producing oil or gas, producing mines or
nonproducing mining claims, or state-assessed land. Nothing in section
2 allows a local taxing entity to impose property taxes on the assessed
value of land and the assessed value of improvements thereon at different
mill levy rates in a manner that is not consistent with section 20 of article
X of the state constitution or any statutory limitation on the local taxing
entity's mill levy rates or total property tax revenue.
Section 3 requires boards of county commissioners and other local
taxing entities to include with their certifications of all property tax levies
the individual certification of any local taxing entity required by section
5 regarding the different mill levy rates used for land and improvements
thereon by the local taxing entity.
Section 4 updates the tax and levy rate information required to be
made publicly available to include the specific, different mill levy rates
used for land and improvements thereon, if applicable.
Section 5 modifies the duty of local taxing entities to certify their
property tax levy to the board of county commissioners to require any
local taxing entity that imposes property taxes on the assessed value of
land and the assessed value of improvements thereon at different rates, as
allowed by section 2, to specify those mill levy rates in the local taxing
entity's certification of its levy.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. Legislative declaration. (1) The general assembly2
finds and declares that:3
(a) Colorado faces a severe housing shortage, with the state4
estimated to have a housing deficit of more than one hundred six5
thousand units acco rding to the state dem ographer's o ffice at the6
department of local affairs;7
(b) More than one in three Colorado households are8
cost-burdened, spending more than thirty percent of their income on9
housing, and more than half of Colorado's renter households are10
cost-burdened, while nearly ninety percent of Colorado's extremely11
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low-income rental households are cost-burdened;1
(c) The median monthly home mortgage payment in Colorado2
increased by seventy-one percent between 2017 and 2023 according to the3
Colorado housing and finance authority;4
(d) Rising land costs are a significant driver of housing5
unaffordability in Colorado, with land values rising from thirty-one6
percent of Colorado home values in 2012 to fifty-eight percent in 2024,7
according to the American Enterprise Institute;8
(e) High land costs create significant barriers to housing9
development, as developers struggle to make projects financially viable10
when the improvements they make to the property incur a larger property11
tax liability;12
(f) Creating a partial building exemption will reduce this barrier13
to housing, making it easier to build and finance new housing14
development;15
(g) The value of land is determined primarily by its location and16
the amenities and services surrounding it-factors created by the17
community-rather than by any ingenuity, investment, or initiative of the18
landowner, whereas the value of buildings reflects productive investments19
made by property owners;20
(h) When governments invest in public services and amenities like21
transit, parks, and schools, the resulting increase to nearby land values is22
captured by private landowners rather than reinvested for the public23
benefit, creating windfall wealth increases for landowners, whose24
contributions to such improvements are substantially outweighed by the25
increased cost of housing for workers and families;26
(i) While a shift towards a property tax system where all buildings27
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and improvements are exempt and only land is taxed is administratively1
and politically unrealistic in the short-term, one simple step in that2
direction is allowing local taxing entities to choose to "split" their mill3
levies so that a lower mill levy rate is imposed on buildings compared to4
unimproved land;5
(j) Split-rate property taxation, which taxes land at a higher rate6
while providing partial "exemptions", provides economic incentives for7
productive investment and real estate development while disincentivizing8
land speculation and combating blight, because owners of vacant and9
underutilized la nd face higher tax burdens relative to owners who put10
their property to productive use;11
(k) Split-rate property taxation incentivizes more efficient land12
use and development patterns by encouraging construction on vacant lots,13
infill development, and higher-density construction in areas with existing14
infrastructure, thereby reducing urban sprawl, lowering per-unit land15
costs, and minimizing environmental impacts associated with16
development on the urban fringe;17
(l) Research and experience from jurisdictions that have18
implemented split-rate property taxation demonstrate that this policy can19
meaningfully boost housing construction while simultaneously reducing20
tax burdens for the majority of property owners who have invested in21
improving their land;22
(m) The United States has more than a century of experience with23
split-rate property taxation, with split-rate taxation previously the law in24
Hawaii, as well as twenty-three jurisdictions in Pennsylvania having25
implemented such systems since 1913, and sixteen Pennsylvania cities26
currently using split-rate taxation, providing substantial empirical27
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evidence of its effects;1
(n) The city of Harrisburg, Pennsylvania, which adopted split-rate2
taxation in 1975 and gradually increased the tax differential between land3
and buildings, experienced a transformation from one of the most4
distressed cities in the United States to a thriving community, with an5
eighty-five percent reduction in vacant structures over twenty years, a6
seven-fold increase in taxable real estate value, and between eighty and7
ninety percent of property owners paying less under the split-rate taxation8
system than they would have paid under a single, uniform property tax9
rate;10
(o) The city of Pittsburgh, Pennsylvania, which adopted split-rate11
property taxation in 1913, experienced a seventy percent increase in12
building permits following an increase in their land-to-building tax13
differential in the 1980s, during a period in which comparable peer cities14
experienced a fourteen percent decline in building activity;15
(p) Split-rate municipalities in Pennsylvania have experienced16
significantly higher construction activity than comparable single, uniform17
property tax rate cities, according to a 2000 study published in the Journal18
of Urban Economics;19
(q) A 2010 study published in the Journal of Urban Economics20
found that split-rate property tax jurisdictions experienced five additional21
percentage points of housing growth compared to single, uniform22
property tax rate jurisdictions, with the increase occurring through infill23
developments rather than sprawl, leading the researchers to characterize24
split-rate property tax as "a potentially powerful anti-sprawl tool"; 25
(r) Split-rate property taxation can have a significantly positive26
impact on aggregate market property values, with a 2022 study published27
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in the Public Finance Review finding that it can increase aggregate1
residential property value by twelve percent and commercial property2
value by twenty percent;3
(s) Economist Joseph Stiglitz has demonstrated that higher land4
taxes are correlated with higher economic growth rates because such5
taxes discourage land speculation that diverts investment from productive6
economic activities;7
(t) Split-rate property taxation is supported by a broad range of8
economists across the political spect rum because of its effi ciency,9
neutrality, and lack of economic distortions, beginning with Adam Smith10
and including Nobel laureates Milton Friedman, Paul Krugman, and11
Joseph Stiglitz;12
(u) Colorado county assessors already assess land values and13
improvement values separately on property tax records;14
(v) Colorado already operates a form of split-rate property15
taxation, as the assessment rates for school district property taxes differ16
from the assessment rates for other local government taxes; and17
(w) Allowing local governments and certain special districts to18
choose to adopt split-rate property taxation or building exemptions19
supports and reinforces recent state and local actions to address the20
housing supply and affordability crisis, including efforts to encourage21
transit-oriented development, accessory dwelling units, infill22
development, and smart growth strategies, all of which seek to promote23
more efficient use of land within existing communities and urban centers.24
(2) Therefore, by enacting this House Bill , the general25
assembly intends to provide municipalities, counties, and certain special26
districts with the freedom to choose to split their mill levies and create27
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"building exemptions" so that a lower rate is levied on buildings and1
improvements compared to the land without improvements, consistent2
with section 20 of article X of the state constitution, to encourage housing3
production, discourage land speculation, promote efficient land use, and4
reduce tax burdens on property owners who productively improve and5
develop their land.6
SECTION 2. In Colorado Revised Statutes, add 29-1-306 as7
follows:8
29-1-306. Split mill levy - different mill levy rates for land and9
improvements to land - limitations - requirements - definitions.10
(1) AS USED IN THIS SECTION , UNLESS THE CONTEXT OTHERWISE11
REQUIRES:12
(a) "A GRICULTURAL PROPERTY " MEANS THE SUBCLASS OF13
NONRESIDENTIAL PROPERTY DESCRIBED IN SECTION 39-1-104 (1.6)(c).14
(b) "C ONSERVATION EASEMENT PROPERTY " MEANS PROPERTY15
SUBJECT TO A PERPETUAL CONSERVATION EASEMENT.16
(c) "IMPROVEMENTS" HAS THE MEANING SET FORTH IN SECTION17
39-1-102 (6.3).18
(d) "L OCAL TAXING ENTITY " MEANS ANY COUNTY , CITY AND19
COUNTY, CITY, TOWN, METROPOLITAN DISTRICT, BUSINESS IMPROVEMENT20
DISTRICT, LOCAL IMPROVEMENT DISTRICT , PUBLIC IMPROVEMENT21
DISTRICT, SPECIAL IMPROVEMENT DISTRICT, DOWNTOWN DEVELOPMENT22
AUTHORITY, URBAN RENEWAL AUTHORITY, OR COUNTY REVITALIZATION23
AREA AUTHORIZED TO LEVY PROPERTY TAXES.24
(e) "M INING PROPERTY " MEANS PRODUCING MINES AND25
NONPRODUCING MINING CLAIMS VALUED FOR ASSESSMENT IN26
ACCORDANCE WITH ARTICLE 6 OF TITLE 39.27
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(f) "O IL AND GAS PROPERTY " MEANS LEASEHOLDS AND LANDS1
PRODUCING OIL OR GAS VALUED FOR ASSESSMENT IN ACCORDANCE WITH2
ARTICLE 7 OF TITLE 39.3
(g) "P ERPETUAL CONSERVATION EASEMENT " HAS THE MEANING4
SET FORTH IN SECTION 39-1-102 (8.7).5
(h) "R ENEWABLE ENERGY PRODUCTION PROPERTY " MEANS THE6
SUBCLASS OF NONRESIDENTIAL PROPERTY DESCRIBED IN SECTION 39-1-1047
(1.6)(b).8
(i) "STATE-ASSESSED PROPERTY" MEANS THE PROPERTY REQUIRED9
TO BE VALUED BY THE PROPERTY TAX ADMINISTRATOR PURSUANT TO10
SECTION 39-2-109 (1)(a).11
(2) (a) NOTWITHSTANDING ANY LAW TO THE CONTRARY, EXCEPT12
AS PROVIDED IN SUBSECTION (2)(b) OF THIS SECTION, FOR PROPERTY TAX13
YEARS COMMENCING ON OR AFTER JANUARY 1, 2027, THE GOVERNING14
BODY OF A LOCAL TAXING ENTITY MAY, BY ORDINANCE OR RESOLUTION,15
IMPOSE PROPERTY TAXES ON THE ASSESSED VALUE OF LAND AND THE16
ASSESSED VALUE OF IMPROVEMENTS THEREON AT DIFFERENT MILL LEVY17
RATES, PROVIDED THAT THE MILL LEVY RATE IMPOSED BY THE LOCAL18
TAXING ENTITY FOR THE IMPROVEMENTS IS LESS THAN OR EQUAL TO THE19
MILL LEVY RATE IMPOSED BY THE LOCAL TAXING ENTITY FOR THE LAND.20
(b) A LOCAL TAXING ENTITY SHALL NOT IMPOSE PROPERTY TAXES21
ON THE ASSESSED VALUE OF LAND AND THE ASSESSED VALUE OF22
IMPROVEMENTS THEREON AT DIFFERENT MILL LEVY RATES PURSUANT TO23
SUBSECTION (2)(a) OF THIS SECTION FOR AGRICULTURAL PROPERTY ,24
CONSERVATION EASEMENT PROPERTY , MINING PROPERTY , OIL AND GAS25
PROPERTY , RENEWABLE ENERGY PRODUCTION PROPERTY , OR26
STATE-ASSESSED PROPERTY.27
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(3) NOTHING IN THIS SECTION ALLOWS A LOCAL TAXING ENTITY TO1
IMPOSE PROPERTY TAXES ON THE ASSESSED VALUE OF LAND AND THE2
ASSESSED VALUE OF IMPROVEMENTS THEREON AT DIFFERENT MILL LEVY3
RATES IN A MANNER THAT IS NOT CONSISTENT WITH SECTION 20 OF4
ARTICLE X OF THE STATE CONSTITUTION OR ANY STATUTORY LIMITATION5
ON THE LOCAL TAXING ENTITY 'S MILL LEVY RATES OR TOTAL PROPERTY6
TAX REVENUE.7
SECTION 3. In Colorado Revised Statutes, 39-1-111, amend (2)8
as follows:9
39-1-111. Taxes levied by board of county commissioners.10
(2) (a) As soon as such levies have been made, the board of11
county commissioners, or other body authorized by law to levy taxes, or12
either group's authorized party shall forthwith certify all such levies to the13
assessor, upon forms prescribed by the administrator, and shall transmit14
a copy of such certification to the administrator, to the division of local15
government, and to the department of education.16
(b) A BOARD OF COUNTY COMMISSIONERS OR OTHER BODY17
REQUIRED TO CERTIFY ALL LEVIES TO THE ASSESSOR PURSUANT TO18
SUBSECTION (2)(a) OF THIS SECTION SHALL INCLUDE WITH ITS CERTICATION19
THE CERTIFIED LEVY OF ANY LOCAL TAXING ENTITY , AS DEFINED IN20
SECTION 29-1-306, THAT IMPOSES PROPERTY TAXES ON THE ASSESSED21
VALUE OF LAND AND THE ASSESSED VALUE OF IMPROVEMENTS THEREON22
AT DIFFERENT MILL LEVY RATES PURSUANT TO SECTION 29-1-306 (2)(a)23
AND IS REQUIRED BY SECTION 39-5-128 (4) TO INCLUDE IN ITS24
CERTIFICATION EACH MILL LEVY RATE FOR LAND AND IMPROVEMENTS25
THEREON IMPOSED BY SUCH LOCAL TAXING ENTITY.26
SECTION 4. In Colorado Revised Statutes, 39-1-125, amend27
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(1)(a)(I) as follows:1
39-1-125. Tax and levy rate information publicly available.2
(1) (a) When each town, city, school district, special district, or3
other taxing authority certifies its levy pursuant to section 39-5-128, it4
shall also provide the following information for each levy that it imposes:5
(I) The rate of the levy, INCLUDING THE DIFFERENT RATES FOR6
LAND AND IMPROVEMENTS THEREON, IF APPLICABLE;7
SECTION 5. In Colorado Revised Statutes, 39-5-128, add (4) as8
follows:9
39-5-128. Certification of valuation for assessment.10
(4) A LOCAL TAXING ENTITY, AS DEFINED IN SECTION 29-1-306 (1),11
THAT IMPOSES PROPERTY TAXES ON THE ASSESSED VALUE OF LAND AND12
THE ASSESSED VALUE OF IMPROVEMENTS THEREON AT DIFFERENT MILL13
LEVY RATES PURSUANT TO SECTION 29-1-306 (2)(a) SHALL INCLUDE IN ITS14
CERTIFICATION EACH MILL LEVY RATE FOR LAND AND THE IMPROVEMENTS15
THEREON IMPOSED BY THE LOCAL TAXING ENTITY.16
SECTION 6. Act subject to petition - effective date. This act17
takes effect at 12:01 a.m. on the day following the expiration of the18
ninety-day period after final adjournment of the general assembly (August19
12, 2026, if adjournment sine die is on May 13, 2026); except that, if a20
referendum petition is filed pursuant to section 1 (3) of article V of the21
state constitution against this act or an item, section, or part of this act22
within such period, then the act, item, section, or part will not take effect23
unless approved by the people at the general election to be held in24
November 2026 and, in such case, will take effect on the date of the25
official declaration of the vote thereon by the governor.26
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