C.R.S. § 39-3-112 — Residential property - orphanage - low-income elderly or individuals with disabilities - homeless or abused - low-income households - charitable purposes - exemption - limitations - definitions

(1) As used in this section, unless the context otherwise requires: (a) Area median income means the median income of the county in which the property is located in relation to family size, as published annually by the United States department of housing and urban development. (a.3) Disabled means that an individual is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted for a continuous period of not less than twelve months. (a.5) Elderly or disabled low-income residential facility means a facility, a portion of which is operated as a residential facility for elderly individuals or individuals with disabilities who meet the requirements of sub-subparagraph (A) of subparagraph (II) of paragraph (a) of subsection (3) of this section, which portion houses only such persons, exclusive of necessary housing facilities for resident managerial personnel, and the rest of which is operated as a health-care facility which is licensed by the state of Colorado. (b) Family service facility means a facility that is operated as a residential facility for single-parent families; that houses only such families, exclusive of necessary housing facilities for resident managerial personnel; that provides, in addition to housing, counseling in such areas as career development, parenting skills, and financial budgeting; and that is a child care center licensed pursuant to section 26.5-5-309. (b.3) Low-income household means an individual or family whose total income is no greater than thirty percent of the area median income. (b.5) Low-income household residential facility means a facility: (I) That is operated as a residential facility for low-income households; (II) For which the published rent schedule includes rents that a low-income household can afford by expending no more than thirty percent of the low-income household's total income for rent and utilities; and (III) For which the owner of the facility has shown that the rent for the facility for which the exemption authorized in subsection (2) of this section applies is lower than the rent for a comparable facility for which said exemption does not apply by an amount equal to at least the value of said exemption. (c) Transitional housing facility means a facility that: (I) Is operated as a residential facility for single individuals or families, or both, who are homeless, who have resided within the past six months in a shelter for the homeless, or who have been abused, and whose incomes are as specified in sub-subparagraph (A) of subparagraph (II) of paragraph (a) of subsection (3) of this section; (II) Has as its purpose to facilitate the achievement of independent living by such individuals and families within a twenty-four-month period; and (III) Provides counseling in such areas as career development, parenting skills, and financial budgeting, whether at such facility or at another location. (2) Property, real and personal, which is owned and used solely and exclusively for strictly charitable purposes and not for private gain or corporate profit shall be exempt from the levy and collection of property tax if such property is residential and is occupied, owned, and operated in accordance with the requirements set forth in subsection (3) of this section. (3) In order for property to be exempt from the levy and collection of property tax pursuant to subsection (2) of this section, the administrator must find, pursuant to section 39-2-117, that: (a) The residential structure is: (I) Occupied as an orphanage; or (II) Occupied by: (A) Single individuals who are sixty-two years of age or older or who are disabled, or a family, the head of which, or whose spouse, is sixty-two years of age or older or is disabled, and whose incomes are within one hundred fifty percent of the limits prescribed for similar individuals or families who occupy low-rent public housing operated by a city or county housing authority which is nearest in distance to such structure; or (B) Single-parent families whose incomes are as specified in sub-subparagraph (A) of this subparagraph (II) and who occupy a family service facility which is owned and operated by an organization which is exempt from federal income tax pursuant to the provisions of section 501 (c)(3) of the Internal Revenue Code of 1986, as amended; or (C) Single individuals or families who occupy a transitional housing facility which is owned and operated by an organization which is exempt from federal income tax pursuant to the provisions of section 501 (c)(3) of the Internal Revenue Code of 1986, as amended; or (D) Low-income households who occupy a low-income household residential facility. (b) The residential structure is efficiently operated. Efficient operation is determined by the following factors: (I) That the costs of operation, including salaries, are reasonable based upon the services and facilities provided and as compared with the costs of operation of any comparable public institution; (II) That such operations do not materially enhance, directly or indirectly, the private gain of any individual except as reasonable compensation for services rendered or goods furnished; (III) That the property on which the exemption is claimed does not exceed the amount of property reasonably necessary for the accomplishment of the exempt purpose; and (IV) That the owners and operators of the residential structure have no occupancy requirement that discriminates upon the basis of race, creed, color, religion, sex, sexual orientation, gender identity, gender expression, marital status, national origin, or ancestry; however, if the owner or sponsoring organization is a religious denomination, said owners or operators may give preference to members of that denomination. (c) The property is owned: (I) By a nonprofit corporation of which: (A) No part of the net earnings of such corporation inures to the benefit of any private shareholder; and (B) Property owned by such corporation is irrevocably dedicated to charitable, religious, or hospital purposes and no portion of its assets will inure to the benefit of any private person upon the liquidation, dissolution, or abandonment of such corporation; or (II) (A) With respect to residential structures specified in subsections (3)(a)(II)(A), (3)(a)(II)(C), and (3)(a)(II)(D) of this section during any compliance period, as defined by section 42 (i)(1) of the Internal Revenue Code of 1986, as amended, including any extended use period provided under section 42 of the Internal Revenue Code of 1986, as amended, by any domestic or foreign limited partnership of which any nonprofit corporation that satisfies the provisions of subsection (3)(c)(I) of this section is a general partner and that was formed for the purpose of obtaining, and has been allocated, low-income housing credits pursuant to section 42 of the Internal Revenue Code of 1986, as amended. (B) For property tax years commencing prior to January 1, 2019, this subsection (3)(c)(II) shall not apply if, during such compliance period, such domestic or foreign limited partnership which owns the residential structure distributes income or has income available for distribution to its partners or if the residential structure is sold or otherwise disposed of during such compliance period. If the administrator determines that, as specified in this subsection (3)(c)(II)(B), income has been distributed or has been available for distribution or the residential property has been sold or otherwise disposed of, the administrator shall revoke the property tax exemption for the residential property and property taxes shall be levied and collected against the residential property which would have otherwise been levied and collected from the date on which the exemption was initially granted plus all delinquent interest as provided for by law. (B.5) For property tax years commencing on or after January 1, 2019, this subsection (3)(c)(II) shall not apply if, during such compliance period, such domestic or foreign limited partnership which owns the residential structure distributes income or has income available for distribution to its partners or if the residential structure is sold or otherwise disposed of during such compliance period. If the administrator determines that, as specified in this subsection (3)(c)(II)(B.5), income has been distributed or has been available for distribution or the residential property has been sold or otherwise disposed of, the administrator shall either revoke the property tax exemption for the residential property as of the date income becomes available for distribution or terminate the exemption as of the date the property is transferred. (C) The provisions of this subparagraph (II) shall apply to applications for exemption made pursuant to section 39-2-117 which are filed on and after January 1, 1991, or which are pending on said date; or (III) (A) With respect to residential structures specified in sub-subparagraphs (A), (C), and (D) of subparagraph (II) of paragraph (a) of this subsection (3), by any domestic or foreign limited partnership of which all of the general and limited partners are nonprofit corporations that satisfy the provisions of subparagraph (I) of this paragraph (c). (B) The provisions of this subparagraph (III) shall apply to applications for exemption made pursuant to section 39-2-117 which are filed on or after January 1, 1993, or which are pending on said date; or (IV) (A) With respect to elderly or disabled low-income residential facilities or low-income household residential facilities, during any compliance period, as defined by section 42 (i)(1) of the Internal Revenue Code of 1986, as amended, including any extended use period provided under section 42 of the Internal Revenue Code of 1986, as amended, by any domestic or foreign limited partnership so long as each of the general partners of such limited partnership is a for-profit corporation, seventy-five percent or more of the outstanding voting stock of which is owned by, and seventy-five percent or more of the members of the board of directors of which is elected by, one or more nonprofit corporations that satisfy the provisions of subsection (3)(c)(I) of this section and so long as such limited partnership was formed for the purpose of obtaining, and the structure that is owned by such limited partnership has been allocated, low-income housing credits pursuant to section 42 of the Internal Revenue Code of 1986, as amended. (B) The provisions of this subparagraph (IV) shall not apply if, during any compliance period: Any of the general partners of the domestic or foreign limited partnership which owns the residential structure specified in sub-subparagraph (A) of this subparagraph (IV) cease to meet the requirements specified in sub-subparagraph (A) of this subparagraph (IV); the domestic or foreign limited partnership which owns such residential structure distributes cash or other property to its partners; or such residential structure is sold or otherwise disposed of. (C) Upon a determination by the administrator that any of the events specified in sub-subparagraph (B) of this subparagraph (IV) have occurred, the administrator shall revoke the property tax exemption for the residential facility specified in sub-subparagraph (A) of this subparagraph (IV), and property taxes shall be levied and collected against such residential facility in the amount which would have otherwise been levied and collected from the date on which such exemption was initially granted, and all delinquent interest provided by law shall apply to such taxes. (D) The provisions of this subparagraph (IV) shall apply to applications for exemption made pursuant to section 39-2-117 which are filed on or after January 1, 1993, or which are pending on such date. (4) In the event the occupants of the residential structure include both persons who are qualified pursuant to paragraph (a) of subsection (3) of this section and persons who are not qualified, the portion of such residential structure that is utilized by qualified occupants shall be deemed to be property used solely and exclusively for strictly charitable purposes and not for private gain or corporate profit, and such portion, but only such portion, shall be exempt pursuant to the provisions of subsection (2) of this section. The determination as to what portion of such structure is so utilized shall be made by the administrator on the basis of the facts existing on the annual assessment date for such property, and the administrator shall have the authority to determine a ratio which reflects the value of the nonexempt portion of such structure in relation to the total value of the whole structure and the land upon which such structure is located and which is identical to the ratio of the number of residential units occupied by nonqualified occupants to the total number of occupied residential units in such structure. (4.5) No requirement shall be imposed that use of property which is otherwise exempt pursuant to the provisions of this section shall benefit the people of Colorado in order to qualify for said exemption. (5) Any exemption claimed pursuant to the provisions of this section shall comply with the provisions of section 39-2-117. (6) For purposes of processing applications received for the exemption authorized by subsection (2) of this section for low-income household residential facilities, the department of local affairs shall contract with an independent contractor for the performance of the application processing services in accordance with section 24-50-504, C.R.S. Said contract shall be limited to a term of one year and shall commence when the exemption for low-income household residential facilities first becomes available. Source: L. 89: Entire article R&RE, p. 1473, § 1, effective April 23. L. 90: (4.5) added, p. 1713, § 6, effective June 9. L. 91: (1)(c) added and (3)(a) and (3)(c) amended, p. 1957, §§ 4, 5, effective June 7. L. 92: (3)(c)(II)(B) amended, p. 2223, § 3, effective April 9. L. 93: (1)(a.5), (3)(c)(III), and (3)(c)(IV) added and (3)(c)(II)(C) amended, p. 432, §§ 1, 2, effective April 19. L. 95: (1)(c), (3)(c)(II)(A), and (3)(c)(III)(A) amended, p. 1391, § 1, effective June 5. L. 2001: (1)(a), (3)(c)(II)(A), (3)(c)(III)(A), and (3)(c)(IV)(A) amended and (1)(a.3), (1)(b.3), (1)(b.5), (3)(a)(II)(D), and (6) added, pp. 1520, 1521, §§ 1, 2, 3, effective August 8. L. 2008: (3)(b)(IV) amended, p. 1604, § 34, effective May 29. L. 2014: (1)(a.5) amended, (SB 14-118), ch. 250, p. 986, § 24, effective August 6. L. 2019: IP(3) and (3)(c)(II)(B) amended and (3)(c)(II)(B.5) added, (HB 19-1319), ch. 200, p. 2164, § 4, effective September 1. L. 2021: IP(3) and (3)(b)(IV) amended, (HB 21-1108), ch. 156, p. 897, § 45, effective September 7. L. 2022: (3)(c)(II)(A) and (3)(c)(IV)(A) amended, (HB 22-1392), ch. 412, p. 2911, § 1, effective June 7; (1)(b) amended, (HB 22-1295), ch. 123, p. 866, § 126, effective July 1. Editor's note: This section is similar to former § 39-3-101 (1)(g) as it existed prior to 1989. Cross references: (1) For the legislative declaration contained in the 2008 act amending subsection (3)(b)(IV), see section 1 of chapter 341, Session Laws of Colorado 2008. (2) For the legislative declaration in HB 19-1319, see section 1 of chapter 200, Session Laws of Colorado 2019. (3) For the legislative declaration in HB 21-1108, see section 1 of chapter 156, Session Laws of Colorado 2021.