8 Colo. Code Regs. § 1304-2-IV

Current through Register Vol. 47, No. 22, November 25, 2024

Section 8 CCR 1304-2-IV - CHARITABLE

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 26.5, Article 5, 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 26.5, Article 5, C.R.S., unless that owner can provide proof that their property is licensed by the Department of Early Childhood under Title 26.5 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, 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 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, 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.

Partial exemptions may be calculated by dividing the square footage of non-qualifying land by the total square footage of the property.

9. Parcels previously part of a whole parcel and were subdivided according to this statute may be applied for under one application or reported under one report, provided that the accompanying fees for the application or annual Exempt Property Report are commensurate with the number of parcels applied for or reported. Once a land lease is issued for a separated parcel, it must be applied for or reported under its own application or annual Exempt Property Report. Parcels may be included under one application or annual Exempt Property Report if they are contiguous as defined in 39-1-102(14.4)(a)(III).

8 CCR 1304-2-IV

39 CR 23, December 10, 2016, effective 12/30/2016

46 CR 23, December 10, 2023, effective 1/1/2024

47 CR 15, August 10, 2024, effective 6/28/2024, exp. 10/26/2024 (Emergency)

47 CR 18, September 25, 2024, effective 10/15/2024