The following rules apply to all organizations/properties
exempted/applying for exemption as owned and used for strictly charitable
purposes. For rules which apply to specific categories of charitable use, e.g.
child care centers, fraternal/veterans organizations, etc., see that specific
section.
A.
GENERAL
DEFINITIONS
1. "Charity" means a gift
to be applied consistently with existing laws, for the benefit of an indefinite
number of persons, either by bringing their minds or hearts under the influence
of education or religion, by relieving their bodies from disease, suffering or
constraint, by assisting them to establish themselves in life, or by erecting
or maintaining public buildings or works, or otherwise lessening the burdens of
government.
B.
GENERAL PROVISIONS
1. Whether a
"gift" is involved will be determined by analyzing both the beneficent objects,
goals or purposes of the entity and the organization's actual conduct. Things
to be considered include, but are not limited to:
(a) What are the sources of income?
(b) What is the intent of the
donors?
(c) Are fees charged, and
if so, is the amount received above or below expenses?
(d) How is any excess money used?
(e) Are fees ever waived, in whole or in
part?
(f) Are fees charged based on
the ability to pay?
(g) Is the
organization self-supporting, or does it do any fund raising?
(h) Are contributions to others a main
function or just an incidental one?
(i) Do the members of the organization
contribute a significant amount of volunteer time?
(j) What is the organization's status with
the Internal Revenue Service?
(k)
Is government charged a lower rate?
(l) What is the amount of government
involvement?
(m) Are other private
organizations involved in the same activity?
(n) Does the organization exist solely to do
a traditionally governmental function?
(o) Are the salaries paid to employees
reasonable?
2. Whether
an "indefinite number of persons" is served by an organization shall be
determined by whether the beneficiaries of the organization's activities are
involuntarily parts of the benefitted class. When the right to benefit depends
on a voluntary association with a particular society then that organization
does not benefit an indefinite number of persons. This rule does not apply to
exemptions granted under 39-3-108 (1)(c), C.R.S.
3. "Public buildings or works" means those
properties occupied and used by government bodies or agencies thereof, or
generally provided by the government solely for the use and enjoyment of the
general public.
4. "Lessening the
burdens of government" will be determined by whether the charitable work, if
not being done by a private person, would have to be undertaken at public
expense.
5. For a property to
qualify for exemption as owned and used for strictly charitable purposes,
status as a member of the organization must not be a requirement to be a
beneficiary of the use of the property. Any organization which confines its
benefits to its own members is not a charity, but a private institution for the
mutual advantage of the members. This rule does not apply to exemption granted
under 39-3-108 (1)(c).
6. For the
purposes of 39-3-108 (3), C.R.S. a "property" will consist of any single parcel
of real property as indicated in the records of the county assessor or
considered as a single parcel under Rule I.B.18; or any amount of personal
property located in a single tax area.
7. Where material reciprocity between
recipients and their donor exists then charity does not.
8. When property exempt under 39-3-108 to
39-3-113.5 and 39-3-127.7, C.R.S. is used by a religious organization in
furtherance of that organization's religious mission, the owner of the property
is not limited to receiving one dollar per year plus an equitable portion of
the reasonable expenses from that religious organization.
When such property is used by other entities for schools or
for strictly charitable purposes, the owner is limited to receiving one dollar
per year plus an equitable portion of reasonable expenses.
9. For properties that are claimed to be
owned and used for strictly charitable purposes, the Administrator will
consider only the actual, physical use of a property when determining whether
the property qualifies for exemption.
C.
APPLICABLE FOR PROPERTIES APPLIED
FOR/EXEMPTED UNDER 39-3-108, C.R.S., ONLY
1. "Nonresidential" means not providing a
permanent place of abode. Any facility allowing for average stays of over
ninety days shall be considered as residential.
Rule IV. C.3. is repealed.
4. The right to exemption of a health care
facility is not affected by the fact that few pay, or all pay, so the amount
received does not exceed the expenses except for amounts reasonably anticipated
for future needs, as determined according to the usual method of accounting for
such organization, and the institution is not maintained for private gain or
corporate profit, and the sums paid or contributed are devoted to the purpose
for which the charity was founded.
For purposes of Rule IV.C.4., amounts reasonably anticipated
for future needs may include any monies set aside for capital improvements or
required by bond agreements to meet income to expense ratios specified in such
bond agreements.
5.
"Domestic water company" means any company which has as a major function the
providing of water for human consumption within the State of Colorado. This
does not include irrigation companies.
Property used as an integral part of a nonprofit domestic
water company is that which is essential for providing water to the company's
customers.
7. For the
purposes of 39-3-108 (1)(b), C.R.S., "licensed health care facility" will only
include property, or a portion thereof, that is licensed by the Health
Facilities Division of the Colorado Department of Public Health and Environment
pursuant to Articles 3 or 27 of Title 25 of the Colorado Revised Statutes,
and/or property, or a portion thereof, that is used for functions that are
essential to the operation of a licensed health care facility but that are not
required to be licensed. Examples of essential functions include, but are not
limited to, parking lots, accounting offices and cafeterias that are used
primarily for said licensed health care facility. This includes community
residential homes which are jointly licensed by the Department of Public Health
and Environment and the Department of Human Services pursuant to article
10.5 of title
27 of the Colorado Revised
Statutes.
8. 39-3-108 (3)(a),
C.R.S. can be considered only for a property or portion thereof that has been
licensed by the Health Facilities Division of the Colorado Department of Public
Health and Environment, pursuant to Articles 3 or 27 of Title 25 of the
Colorado Revised Statutes, and for a property or portion thereof that is used
for functions that are essential to the operation of said licensed health care
facility.
D.
APPLICABLE FOR PROPERTIES APPLIED FOR/EXEMPTED UNDER 39-3-109, C.R.S.,
ONLY
1. Residential property is used
as an integral part of otherwise exempt property when the residents of such
property are the direct beneficiaries of the services provided, or employees
whose presence at such residential property is necessary for the well being of
the resident beneficiaries, or employees whose presence is essential to the
operation of the property.
2.
"Annual determination" means, for purposes of sections IV.D. and IV.G., the
decision issued by the Property Tax Administrator indicating the percentage of
taxable value and the percentage of exempt value of a property exempt under
39-3-109 (2), 39-3-112, or 39-3-127.7, C.R.S. on the assessment date for that
year.
The percentage of nonexempt value shall be calculated by
dividing the number of units occupied by nonqualifying residents by the total
number of units occupied as of the annual assessment date.
3. Owners of residential property claiming it
is exempt as an integral part of a hospital, licensed health care facility, or
institution for physical or mental disabilities, shall submit to the
administrator, a certificate signed by a physician licensed to practice in the
state of Colorado that the medical condition of each resident of units claimed
to qualify for exemption requires the individual to reside in such residential
unit. The owner shall also disclose the capacity of such residential property.
If the owner can clearly establish that it only accepts
tenants who would be qualified pursuant to 39-3-109 (1)(b), C.R.S., an annual
attestation to that fact, on the form provided by the administrator, may take
the place of the filing of medical condition certificates.
4. The administrator shall provide the
necessary forms for reporting the occupancy of residential property claimed to
be exempt under 39-3-109 (1)(b), C.R.S.
Such forms must be completed and returned to the
administrator before a decision can be issued on any application considered
under this statute.
Such forms must also be completed and returned by July 1 of
each succeeding year to maintain exemption.
5. When a property is partially exempted
under section
39-3-109 (1)(b),
C.R.S., which requires annual occupancy information, and partially exempted
under another statute which does not require annual occupancy information, the
Administrator may require that an annual report be filed for each portion
exempted pursuant to each specific statute.
6. When annual occupancy information is
required to be filed under 39-3-109, C.R.S. and these rules, any exemption will
be revoked if the annual occupancy reports filed in compliance with Rule
IV.D.4. show no qualified occupants for two consecutive years.
The exemption will be revoked as of January 1 of the second
of those consecutive years.
E.
APPLICABLE FOR PROPERTIES APPLIED
FOR/EXEMPTED UNDER 39-3-110, C.R.S., ONLY
1. "Child care center" - As defined in Title
26, Article 6, Colorado Revised Statutes.
2. Exemption will be denied to any owner
applying for exemption of property used as a child care center within the
meaning of Title 26, Article 6, C.R.S., unless that owner can provide proof
that their property is licensed by the Department of Human Services under Title
26 of the Colorado Revised Statutes or that said property is exempt from such
licensing requirements. This does not apply to child care centers included as
part of a religious mission.
3.
"Gross revenue" means money from whatever source derived. This includes, but is
not limited to, tuition, fees, contributions, donations, grants, and net income
from fund raisers.
4. Tuition
includes all costs paid so that students may participate in the daily programs.
Included in this are registration fees, athletic fees, charges for
identification cards, required meal charges, and any other costs charged for
day to day attendance at such child care center. Additional fees charged for
special events (e.g. field trips) shall not be considered part of tuition if
they are assessed on an at cost basis.
5. "Charges on the basis of ability to pay"
means that the total cost for each child is determined by a scale based on the
recipient's financial status.
6.
"Irrevocably dedicated" means property which is used solely and exclusively for
the exempt purpose claimed and shall continue to be used for charitable
purposes and not inure to the benefit of any private person upon the
liquidation, dissolution or abandonment by the owner.
F.
APPLICABLE FOR PROPERTIES APPLIED
FOR/EXEMPTED UNDER 39-3-111, C.R.S., ONLY
1. "Fraternal organization" - As defined in
Title 12, Article 9, Colorado Revised Statutes, notwithstanding the requirement
that such organization be in existence for a period of five years.
2. "Veterans' organization" - As defined in
Title 12, Article 9, Colorado Revised Statutes, notwithstanding the requirement
that such organization be in existence for a period of five years.
3. "Irrevocably dedicated" - See Rule
IV.E.6.
4. Every owner of real or
personal property for which exemption from general taxation had previously been
granted pursuant to the provision of 39-3-111, C.R.S., and which is used for
any purpose other than the purposes specified in 39-3-106 to 39-3-113.5 and
39-3-127.7, C.R.S. for less than two hundred eight hours during the calendar
year or if the use of the property for such purposes results in annual gross
rental income to such owner of less than ten thousand dollars, may elect to
sign only the declaration statement provided on the annual report form and
return such statement as proof of exemption by the filing deadlines specified
on the form. No annual fee is required if the owner qualifies to sign the
declaration only. If the declaration is signed, and the total use of the
property by all users other than the owner exceeds two hundred eight hours and
results in $25,000 or more in gross rental income, the owner must provide a
list of all users that the owner claims used the property for purposes
specified in sections
39-3-106 to
39-3-116 and
39-3-127.7, C.R.S., and a brief
description of those uses.
5.
Calculating Adjusted Hours - See Rule
I.B.27.
6. For the purposes of
39-3-111, and 39-2-117 (3)(a)(I), C.R.S., "gross rental income" means all
income received by an owner related to the use of the subject property. This
includes, but is not limited to, rents, donations, contributions, or any other
compensation given to an owner in exchange for the use of the
property.
7. Only an owner
specifically exempted under 39-3-111, C.R.S., as a fraternal or veteran's
organization may elect to sign the declaration in lieu of an annual report. If
a fraternal or veteran's organization is exempt under a statute other than
39-3-111, C.R.S., they must file an annual report.
8. For every owner of real or personal
property for which exemption from general taxation has previously been granted
pursuant to the provisions of 39-3-111, C.R.S., and which does not file either
the declaration or annual report with the appropriate fee by July 1, such
failure shall operate as a forfeiture of any right to claim exemption of
previously exempt property from general taxation for the current
year.
G.
APPLICABLE FOR PROPERTIES APPLIED FOR/EXEMPTED UNDER 39-3-112, C.R.S.,
ONLY
1. "Annual determination" - See
Rule IV.D.2.
2. "Orphanage" means
an institution for the care and protection of orphans and abandoned
children.
3. The administrator
shall provide the necessary forms for reporting the occupancy of residential
property exempt under 39-3-112, C.R.S.
Such forms must be completed and returned to the
administrator before a decision can be issued on any application considered
under this statute.
Such forms must also be completed and returned by July 1 of
each succeeding year to maintain exemption.
4. When a property is partially exempted
under section
39-3-112, C.R.S., which requires
annual occupancy information, and partially exempted under another statute
which does not require annual occupancy information, the Administrator may
require that an annual report be filed for each portion exempted pursuant to
each specific statute.
5. When
annual occupancy information is required to be filed under 39-3-112, C.R.S. and
these rules, any exemption will be revoked if the annual occupancy reports
filed in compliance with Rule IV.G.3. show no qualified occupants for two
consecutive years.
The exemption will be revoked as of January 1 of the second
of those consecutive years.
6. For the purposes of 39-3-112 (1)(c)
C.R.S., occupants will be qualified as "abused" if they, or some member of
their immediate family, were physically, mentally, sexually and/or emotionally
injured by another person prior to occupying a housing facility and if the
abused individual is occupying this housing facility as a direct result of that
abuse.
7. For properties to qualify
as family service facilities under 39-3-112 C.R.S., those properties must be
restricted to occupancy by only single parent families (except for resident
managerial personnel). There will be no apportionment into exempt and nonexempt
portions.
8. For the purposes of
39-3-112 (1)(c) and 39-3-112.5, C.R.S. "homeless" individuals or families
include only those persons who, immediately prior to occupying a housing
facility for the homeless:
(a) had a primary
nighttime residence that was a supervised publicly or privately operated
shelter designed to provide temporary living accommodations (including welfare
hotels, congregate shelters, and transitional housing for the mentally ill, but
excluding prisons or other detention facilities); or
(b) had a primary nighttime residence that
was a public or private place not designed for, or ordinarily used as, a
regular sleeping accommodation for human beings; or
(c) were at imminent risk of homelessness
because they faced immediate eviction and had been unable to identify a
subsequent residence, which would result in emergency shelter placement;
or
(d) are handicapped, had been
released from an institution, and were at risk of imminent homelessness because
no subsequent residences were identified.
9. For the purposes of C.R.S.
39-3-112, when more than one
income level is used by the low-rent public housing project nearest in distance
to a potentially exempt residential property, the highest level may be used in
calculating one hundred fifty percent of the limits prescribed for similar
individuals or families.
10. For
the purposes of 39-3-112 and 39-3-127.7, C.R.S., income shall include all money
and other compensation received during a given year, regardless of whether it
is considered as taxable income pursuant to state or federal income tax
regulations.
11. For each unit
claimed to qualify for exemption pursuant to C.R.S.
39-3-112, each adult occupant, or
at least one member of a married couple who are occupants, must annually
provide to the Division, on a form provided by the Administrator, a signed
declaration indicating that the occupant is 62 years of age or over; disabled;
homeless or abused; or the head of a single parent family occupying a family
service facility.
At least one member of any married couple, and all other
adult residents in a unit, must be either 62 years of age or over; disabled;
homeless or abused; or the head of a single parent family occupying a family
service facility for that unit to qualify.
12. For each unit claimed to qualify for
exemption pursuant to C.R.S.
39-3-112, each occupant, or each
married couple if filing jointly, must annually provide to the Division, on a
form provided by the Administrator, a breakdown of the gross income received by
that occupant for the prior calendar year and a copy of any Federal Income Tax
return that was required to be filed for that year.
Only those units occupied by qualified residents where the
total income is less than 150% of the limits on the income allowed for similar
persons at the low-rent public housing property nearest in distance to the
subject property will be deemed to qualify for exemption.
13. For the purposes of 39-3-112(1)(b.5)(II),
C.R.S. "utilities" includes water, heat, and electricity, but does not include
telephone.
14. Rent schedules that
conform to those published annually by the Colorado Housing and Finance
Authority which indicate acceptable rents for households whose incomes do not
exceed thirty percent of the area median income shall satisfy the requirement
of 39-3-112(1)(b.5)(II), C.R.S.
15.
To determine comparable facilities the administrator will consider unit
type(s), square footage, number of bedrooms, number of bathrooms, location,
quality, amenities, date built, and management and maintenance services.
"Fair market rents" as established by the United States
Department of Housing and Urban Development pursuant to
24 CFR
888 shall be considered rents for comparable
facilities.
16. The value
of an exemption will be determined by multiplying the assessed value of the
subject property, as listed in the records of the county assessor, by the mill
levy of the tax area in which the subject property is located, and multiplying
that product by the potential exemption attributable to units used to house
low-income households.
17. To
determine when rents are reduced sufficiently to meet the requirement of
39-3-112(1)(b.5)(III), C.R.S., the actual rents paid by the tenant for the
subject property will be subtracted from rents equivalent to those charged at a
comparable facility.
18. Each unit
will be examined individually to determine whether the rent reduction
requirement of 39-3-112(1)(b.5)(III), C.R.S. is met.
19. For the purposes of low income household
residential facilities "income" for households shall be as determined by United
States Department of Housing and Urban Development pursuant to
24 CFR
5.609.
H.
APPLICABLE FOR PROPERTIES APPLIED
FOR/EXEMPTED UNDER 39-3-113, C.R.S., ONLY
1. The "process of being constructed" begins
with actual physical preparation of the land.
2. "Irrevocably committed to residential use
in accordance with the requirements set forth in sections
39-3-109 (1) or
39-3-112 (2) or
(3)" shall be evidenced by certifying, under
the penalty of perjury in the second degree, on a form provided by the
Administrator, that the property is so committed, and that upon occupancy, said
property will be occupied by one or more qualified occupants.
I.
APPLICABLE FOR PROPERTIES
APPLIED FOR/EXEMPTED UNDER 39-3-113.5, C.R.S., ONLY
1. In accordance with the requirements set
forth in 39-3-113.5(2)(b)(II), C.R.S., the property may qualify for exemption
until a certificate of occupancy is issued, but under no circumstance can the
property qualify for exemption more than one year after the provider sells the
property to the low-income applicant. The administrator will recognize the date
of sale as the date the exemption ends, unless the owner can provide proof that
a certificate of occupancy has been or will be issued. Owner shall also notify
the county assessor in the event that a certificate of occupancy has not been
issued at the time of sale.
J.
APPLICABLE FOR PROPERTIES APPLIED
FOR/EXEMPTED UNDER 39-3-114, C.R.S., ONLY
1. "Burden", for the purpose of 39-3-114,
C.R.S., means burden of proof.
K.
APPLICABLE FOR PROPERTIES APPLIED
FOR/EXEMPTED UNDER 39-3-127.7, C.R.S., ONLY
1. The administrator shall provide the
necessary forms for reporting the occupancy of residential property claimed to
be exempt under 39-3-127.7, C.R.S.
Such forms must be completed and returned to the
administrator before a decision can be issued on any application considered
under this statute.
Such forms must also be completed and returned by July 1 of
each succeeding year to maintain exemption.
2. "Annual Determination" - See Rule.
IV.D.2.
3. "Income" - See Rule
IV.G.10.
4. For the purposes of
determining area median income of households, "households" shall be as
determined by United States Department of Housing and Urban Development
pursuant to 24 CFR
570.3.
5. Areas classified as "urban", "rural", or
"rural resort" shall be classified by the Division of Housing pursuant to
29-4-1107 (2)(d), C.R.S.
6. Owners
of residential property claiming it is exempt as held by a community land trust
or a nonprofit affordable homeownership developer as an affordable
homeownership property shall submit to the administrator existing and/or
ongoing proof of a property held and/or leased as an affordable homeownership
property, including but not limited to proof of lease to a qualifying owner or
owners of the improvements as an affordable homeownership property, and
prevailing deed restrictions and other conditions imposed on the property. An
annual attestation to that fact, or any other supplemental report on forms
provided by the administrator, may take the place of the filing of such
proof.
7. In order to determine
whether the property is deemed to be an affordable homeownership property, the
Administrator will consider the prevailing deed restriction(s) and other
conditions imposed on the property, including but not limited to the annual
household income of the owners of the improvements at the time of purchase, the
amount(s) charged on the ground lease, and any subsequent resales of the
property, the conditions attached thereto, and the qualifications of the
subsequent buyers.
The amount charged as a ground lease to qualifying homeowners
shall not exceed more than one dollar plus an equitable portion of the
reasonable expenses attributable to the direct costs, maintenance and operation
of the land, including interest expenses, depreciation, long-term maintenance
expenses allowed in accordance with generally accepted accounting principles,
capital expenses dedicated to refurbishing the property, any administrative
expenses associated with the land, and expenses incurred to allow the property
to conserve energy, water, or other natural resources, but do not include any
amount expended to reduce debt.
8. The property tax administrator may grant a
partial exemption based on a parcel or parcels being sold or leased not in
accordance with 39-3-127.7, C.R.S. and in accordance with 39-3-129, C.R.S.
Partial exemptions may be calculated by dividing the square
footage of non-qualifying land by the total square footage of the
property.