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State of Colorado Property Tax Exemption for Leased Property

House Bill 1395 exempts the state's leased property from property tax. This guide provides information on qualifications, filing process, cost savings calculation, and communication with landlords and county assessors.

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State of Colorado Property Tax Exemption for Leased Property

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  1. State of ColoradoProperty Tax Exemption for Leased Property State Statue 39-3-124Formally HB08-1395 Real Estate Programs 1313 Sherman St., Suite 319 Denver, Colorado 80203 Phone (303) 866-6141 Fax (303) 894-7478 www.colorado.gov/dpa/dfp/sbrep

  2. What is House Bill 1395 • House Bill 1395 exempts the States leased property from the levy of Property Tax. • The law applies to all Department and Agencies. • House Bill 1395 will go into effect on January 1, 2009. • The bill requires that the Department/Agency to notify the local County Assessor of any property leased by the State.

  3. HB08-1395 Overview • What are the qualifications of a lease to be accepted under House Bill 1395? • What is the process in filing the necessary paperwork with the county assessor? • How is the cost savings of the property tax calculated? • Sending letters to Landlords informing them of new monthly rent. • Landlord Communication for future Leases • County Assessor Communication • Questions/Comments?

  4. Qualifications for a Lease under House Bill 1395 • The agreement must be for at least a one year term. • Lease expiration is on or after January 1, 2009. • Property must be leased from the private sector and not currently be tax exempt (Check with the county to make certain on status of all properties). • Property must be located within the State of Colorado. • Doesn't matter what type of reimbursements the lease is structured with (i.e. Net, Modified Gross, Gross). • Doesn’t matter what type of space is being leased (i.e. office, retail, warehouse, classroom, storage ect.)

  5. Step by step process how to file a lease document under HB 1395. 1) Determine which county the property is located within. 2) Lookup the Assessors contact information on-line at www.colorado.gov/dpa/dfp/sbrep/forms/countyassessors.pdf • Scan the lease, amendment or termination letter into a .pdf document. • Email all documents to the county assessor, follow with a phone call to ensure receipt. • Link the scanned files with Lease Harbor and make notes of when the lease or amendments were filed with the county assessor. 6) Calculate the change in base rent with the exclusion of property tax. (Information on how to calculate change in tax is further on in this presentation)

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  7. Calculating the State’s Portion of Property Tax • In order to calculate the cost savings on each lease, four variables must be found on each property. • Building Square Feet (County Assessor) • Mill Levy (County Assessor) • Assessed Value (County Assessor) • Leased Square Feet (Lease Document) • Fill out the excel worksheet for each lease inputting all four variables to get the exact tax savings for each lease.

  8. Step by step process how to Calculate the cost savings • Determine how many square feet the State occupies. This number needs to be taken directly from the lease document. • Go to the County Assessors Website contact information on-line at www.colorado.gov/dpa/dfp/sbrep/forms/countyassessors.pdf • The County Assessor will have the total number of square feet for the building. • Depending on the county either the County Assessor or County Treasurer will have the Mill Levy and the Assessed Value. • Input all four variables into the excel model to calculate the monthly savings in property tax.

  9. Example • Department of Higher Education 1560 Broadway Suite 1600 Denver, CO 80204 Leased Sq. Ft. (from Lease Document) Building Sq. Ft. (from County Website) Total Assessed Value (County Website) Mill Levy (from County Website) Input all four variables into Lease Savings Calculator Total Exemption per Month 21,304 SF 573,083 SF $13,603,870 66.897 $2,819.24

  10. Example • Department of Human Services 7990 West US Highway 50 Unit D Salida, CO 81201 Leased Sq. Ft. (from Lease Document) Building Sq. Ft. (from County Website) Total Assessed Value (County Website) Mill Levy (from County Website) Input all four variables into Lease Savings Calculator Total Exemption per Month 660 SF 4,159 SF $135,880 40.768 $73.26

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  12. Send Letter Detailing New Rental Amount to Landlord • Once the cost savings have been calculated, send letter with changed rent to the Landlord as stated in the lease under who Notice is to be given. If the rent check is sent to a different address also include a copy of the letter with the rent check. • Real Estate programs has template letter. • Include a copy of the Bill within each letter.

  13. Communication with Current and New Landlords • Inform all current landlords that this is revenue “neutral” to them. (regardless of what type of reimbursements the lease has Net or Gross) • New landlords need to be informed of this law to make sure the State is receiving the full benefit of the exemption.

  14. Communication with County Assessors • County Assessors need to be made aware of any change to our Leases. Included in this would be • Leases • Amendments • Extensions • Expansion • Contraction • Termination Letters

  15. Questions / CommentsContact Information Real Estate Programs Mike Karbach Brandon Ates (303) 866-4564 (303) 866-5458 mike.karbach@state.co.us brandon.ates@state.co.us Jones Lang LaSalle (State Leasing Broker) Joe Hollister Cynthia Daleigh (303) 390-5208 (303) 390-5232 joe.hollister@am.jll.com cynthia.daleigh@am.jll.com Department of Local Affiars JoAnn Groff Curt Settle (303) 866-2371 (303) 866-2371 joann.groff@state.co.us curt.settle@state.co.us

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