Urban Renewal Authorities have been used for many years to stimulate economic development of blighted properties. Urban Renewal Authorities can capture the incremental increase in property and sales taxes generated on a property within a designated urban renewal area ("URA") by virtue of private investment in such property. Those tax dollars are then used to fund public improvements, which helps eliminate blight. Historically, there was no statutory restriction on the property tax classification of property permitted to be included within a URA. This year, largely in response to a perceived public concern regarding so-called "green field" urban renewal, the Colorado legislature placed restrictions on URAs.
House Bill 10-1107, which becomes effective June 1, 2010, places limits on the inclusion of agricultural land within the boundaries of a URA. After June 1, 2010, agricultural land can be included within a URA only if one of the following is true: (1) such land is a designated brownfield site, (2) not less than one-half of the total URA consists of parcels of land containing urban level development, and not less than two-thirds of the total perimeter of the URA is contiguous with urban level development, (3) such land is completely surrounded by municipal boundaries and such land has been completely surrounded by urban level development for three years, (4) all taxing authorities levying a tax on such land agree in writing, or (5) such land was included within a URA prior to June 1, 2010.
For the next 10 years, agricultural land may only be included in a URA if, in addition to at least one of the five factors above, the following two factors are also met: (1) the person owning such land on June 1, 2010, also owned land within the URA that is contiguous to the agricultural land and (2) such land is developed solely for the purpose of manufacturing operations.
Additionally, agricultural land continues to be valued for assessment purposes based on the agricultural classification of such land, unless and until it is reclassified in the ordinary course of the assessment process, regardless whether it was included within a URA on or before June 1, 2010. In other words, the inclusion of agricultural land within a URA does not, by itself, alter the tax status of such property.
Practically, this legislation completely eliminates the possibility of including agricultural land within an urban renewal area for at least 10 years and likely well beyond.
Otten Johnson's Land Use practice group has substantial experience dealing with urban renewal areas. For more information on this Client Alert or on addressing urban renewal area issues, contact any of the attorneys in the Land Use practice group (for a listing, click here ).
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