Bill Summary
HB26-1065 creates a state-approved framework for “transit investment projects” inside mapped “transit and housing investment zones.” Local governments may apply (starting January 1, 2027) to create a “transit investment area” and capture a portion of state sales tax increment revenue for eligible improvements, for a financing term up to 30 years.
The bill also creates a new state income tax credit for qualified low- and middle-income housing developments located in transit and housing investment zones, administered by the Colorado Housing and Finance Authority, beginning in calendar year 2027.
- Creates the “Transit Investment Area Act” and a state approval process through the Colorado Economic Development Commission.
- Defines “state sales tax increment revenue” as revenue above a base amount, plus an added 20% of base year revenue.
- Limits approvals to 3 projects per calendar year and 6 total, and limits statewide dedication to no more than $75 million per fiscal year.
- Allows a new transit investment authority or use of an urban renewal authority, county revitalization authority, or metropolitan district as the financing entity.
- Creates a new affordable housing tax credit for 2027 through 2033, with annual allocation limits set in statute.
Position: Oppose
This bill diverts state tax dollars that would otherwise support statewide priorities and earmarks them for a small number of state-approved zones for up to 30 years. It also creates a financing structure that can require a transfer from the General Fund when in-area sales tax collections are insufficient.
Colorado can support transit and housing without building new pipelines that carve up state revenue and layer on additional tax credit programs.
Why I Am Taking This Position
1) It centralizes decisions that should stay local. Local governments can apply, but the Colorado Economic Development Commission is the gatekeeper. That sets up a state-run winners-and-losers system: if your community is selected, you get the benefit; if not, you still help fund it through statewide sales tax revenue.
2) The increment formula is not clean “growth-only” financing. The bill’s definition of “state sales tax increment revenue” includes not only collections above a base year and baseline growth rate, but also an added 20% of base year revenue. If we are diverting state revenue, the math should be transparent and directly tied to real, in-zone activity.
3) The General Fund backfill creates a real risk for taxpayers statewide. The bill provides that if there is insufficient state sales tax collected at physical sites in the area to make the increment allocation, the state treasurer must transfer the difference from General Fund state sales tax revenue into the project’s special fund. In plain English: if projections miss, the rest of the state covers the gap.
4) Eligible costs are extremely broad. Eligible costs include far more than construction. They include overhead and administrative staffing, legal and accounting, operations, interest, bond issuance and underwriting, developer-advanced funds, and interest on those advances. A big bucket of diverted revenue invites spending far beyond core infrastructure.
5) It weakens local accountability for certain financing entities. The bill states that authorization for a county revitalization authority, urban renewal authority, or metropolitan district to receive this state sales tax increment revenue is not a “substantial modification” requiring the usual county or municipal approval steps. That is a significant shift away from local oversight.
6) It adds a second subsidy stream through a new tax credit. The bill creates a new affordable housing tax credit in these zones. Tax credits are still spending, just routed through the tax code. If the policy goal is more housing near transit, we should prioritize predictable local processes and accountability first.
Call to Action – What You Should Do!
Contact your state representative and senator and ask them to vote no on HB26-1065. If they want to keep working on the concept, ask for fixes that protect taxpayers and local control, including:
- No General Fund backfill mechanism.
- Tighter, infrastructure-focused eligible cost definitions.
- Stronger local approval and accountability for any financing entity that receives diverted state revenue.
- A shorter financing term that does not tie up revenue for a generation.
If you agree, share this with a neighbor who is tired of the state playing SimCity with other people’s tax dollars.
