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Two tax-break bills move forward, another killed in Colorado legislative committee

By: Megan Schrader
February 19, 2014 Updated: February 20, 2014 at 2:18 pm
Caption +
Colorado State Representative Crisanta Duran. (AP Photo/Brennan Linsley)

EDITOR'S NOTE: This article has been corrected. Initially, it named the wrong representative who vote against House Bill 1094. The vote was cast by Rep. Mike Foote, D-Lafayette.

DENVER - The House Finance Committee approved tax credits for developers of affordable housing and a tax holiday for back to school, but Democrats killed a bill that would have created a tax holiday for firearms.

Rep. Crisanta Duran's House Bill 1017 would create affordable housing tax credits available to developers and housing authorities worth $40 million over 10 years.

Because the fiscal note on the bill until recently didn't include the tax credit - which would decrease state revenue about $1.75 million in the first year and increase to a high of $8 million in 2018 - it was not included in The Gazette's analysis of tax credits proposed so far this legislative session.

Many tax credits have been proposed this year; in addition to other tax breaks and grants for private companies they would have more than a $76 million impact in 2015 and 2016 on state revenue or state allocations.

Rep. Dan Pabon, D-Denver, said his bill creating a sales tax holiday for three days in the first week of August for school supplies is estimated to cost the state about $3 million a year. Certain items such as pens, paper, lunch boxes or clothes would be exempt from state sales tax on those three days.

"This is a bill that's great for Colorado consumers, great for Colorado working families and recognizes that back-to-school season is an expensive one," Pabon said. "This is already in 19 other states, who have had tremendous success."

Pabon's bill limits the sales tax exemption to back-to-school supplies including clothing but not clothing accessories. The tax holiday would be authorized for one year and then revisited.

House Bill 1094 passed 11-1. Rep. Mike Foote, D-Lafayette, was the lone no vote, saying he needed more evidence that it is an effective and fiscally responsible policy regardless of how popular it might be.

Those two bills now go to the House Appropriations Committee for further scrutiny.

Under House Bill 1097, which failed in committee 5-7, the first weekend in August would have been a sales tax holiday for guns, ammunition and firearms accessories.

Representatives Clarice Navarro and George Rivera, both Republicans from Pueblo, sponsored the bill. Navarro said the bill would send a message to hunters and shooters that the state is open for business.

Rep. Daniel Kagan, a Democrat, said a tax break for the sale of sporting goodssuch as firearms for hunting was an inappropriate use of an incentive and something he wasn't willing to subsidize.

Affordable Housing Tax Credits

Developers would apply to the Colorado Housing and Finance Authority, which administers a federal tax credit program, for the new state tax credits.

"We really are, with these types of resources, serving the very lowest income households," said Cris White, executive director and CEO of the authority.

White said the 1986 federal tax credit program for affordable housing is "the most successful tool" for both generating new affordable housing developments and preserving existing ones.

"The timing of this legislation is great," White said. "The need for resources to finance affordable housing is great. We just received 29 letters of intent to apply for credits. Those applicants are requesting in the neighborhood of $29 million and we have $5 million in (federal) tax credits to allocate."

HB 1017 would increase the tax credits available and expand the program.

A similar tax credit offered in 2001 and 2002 helped finance seven affordable housing developments, with 840 units. White said this renewal of that expired program is the exact same size and would likely have similar results.

Here's how it works: developers submit details of their proposed development to Colorado Housing and Finance Authority and the authority picks the best projects.

Those developers then sell the tax credits to private entities that have considerable tax liabilities. White said the federal tax credits sell for about 90 cents to 95 cents per dollar and he expects state tax credits to sell at closer to 60 cents or 65 cents per dollar.

Then housing authority oversees development and holds the developers responsible for fulfilling the promises in their application. If those criteria aren't met, White said the authority can retroactively revoke the tax credits ensuring that both the developer and the private buyer of the tax credits is held accountable.

Duran said 30 other states have similar programs.

"When you look at the state of Colorado compared to other states when it comes to affordable housing we are really the bottom of the barrel when it comes to funding programs," Duran said. "There's a lot of good work that has been done in the past but there's a lot more that we could be doing."

The bill passed 7-5 with all the Democrats in the House Finance committee voting against it.

Rep. Lori Saine, R-Dacono, said the developers she has spoken to have said the market is moving in the direction of affordable housing - noting an increased demand of patio homes for retired individuals.

"This bill does pick winners and losers," Saine said.


Contact Megan Schrader


Twitter: @CapitolSchrader

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