Concerning the authority of local taxing entities to impose property taxes on the assessed value of land and the assessed value of improvements thereon at different mill levy rates.
House Bill 26-1119 would authorize Colorado local taxing entities, including counties, municipalities, special districts, and certain redevelopment authorities, to adopt a split-rate property tax system beginning with property tax years on or after January 1, 2027. Under that system, a local taxing entity could levy different mill rates on the assessed value of land and the assessed value of improvements on that land, so long as the rate on improvements is no higher than the rate on land. The bill expressly bars this approach for several categories of property, including agricultural property, perpetual conservation easement property, mining property, oil and gas property, renewable energy production property, and state-assessed property.
The bill also makes conforming changes to property tax administration and disclosure requirements. County commissioners and other bodies certifying levies would have to include the separate certified rates for land and improvements when applicable, and public tax-and-levy information would have to disclose the different rates. Local taxing entities using split rates would also have to specify both mill levy rates in their certification of valuation for assessment. The bill includes a legislative declaration stating that the purpose is to encourage housing production, reduce land speculation, and promote more efficient land use by lowering the tax burden on improvements relative to land.
In practical terms, the bill would not require any local government to adopt split-rate taxation; it would simply give eligible local taxing entities the option to do so. It would also preserve existing constitutional and statutory limits on mill levies and total property tax revenue, meaning the new authority could not be used to exceed other tax caps or override existing law. The bill would therefore change local taxing authority and reporting rules, but only for jurisdictions that choose to implement the new structure.
The general sentiment reflected in the bill text is strongly supportive of split-rate taxation as a housing and land-use policy. The legislative declaration frames the proposal as a response to Colorado’s housing shortage and rising housing costs, and it cites research and examples from other jurisdictions to argue that taxing land more heavily than improvements can encourage development, infill, and reduced speculation. However, the bill was ultimately postponed indefinitely in the House Finance Committee, indicating that it did not advance and likely faced enough concern or lack of support to halt progress at that stage.
The main points of contention appear to be policy and administrative rather than constitutional in nature. Potential concerns include whether split-rate taxation would create uneven treatment among property classes, how it would affect local revenue stability, and whether local governments should have this discretion at all. The bill itself anticipates some of these issues by excluding certain property types and by requiring detailed certification and public disclosure of the separate rates, suggesting that transparency and implementation complexity were important considerations.
The bill would add a new statutory section authorizing local taxing entities to levy different mill rates on land and improvements, beginning in 2027, and would amend existing property tax certification and disclosure statutes to require separate reporting of those rates when used. It would affect counties, cities, towns, special districts, downtown development authorities, urban renewal authorities, and county revitalization areas that levy property taxes, while excluding several specified property classes from split-rate treatment. The measure would not alter assessment methods, but it would change how local property tax levies may be structured and publicly reported.
The bill’s stated purpose is strongly pro-development and pro-housing, with the legislative declaration presenting split-rate taxation as a tool to reduce housing costs, discourage speculation, and encourage productive land use. The available voting history shows that the bill was postponed indefinitely in House Finance, which suggests that despite the policy rationale, the proposal did not secure sufficient support to move forward. No committee transcript is available, so the record reflects support in the bill text but an ultimately unfavorable committee outcome.
The likely points of contention are whether split-rate property taxation would actually improve housing affordability, whether it would shift tax burdens in ways that are fair across property owners, and whether local governments should have the administrative capacity to implement separate rates for land and improvements. Opponents or skeptics may also have been concerned about carve-outs for agricultural, conservation, mining, oil and gas, renewable energy, and state-assessed property, as well as the complexity of certifying and publishing multiple mill rates. Supporters, by contrast, appear to view the bill as a flexible local option that could promote infill development and reduce barriers to new housing construction.