Government Affairs Monthly Report11-20-2018
|Commercial Airline Proposal Fails by Narrow Margin
A measure designed to recreate a program that guaranteed the attractiveness of air travel to the area failed on Tuesday night by 32 votes in an election that saw around 7000 votes cast. The referendum, supported by SSBR, called for increasing the sales tax rate in the city of Steamboat Springs by 0.2 percent for the next 10 years. The tax would have generated an estimated $1.3 million annually
Voters last approved the airline program tax at a rate of 0.25 percent in 2011. The tax expired in 2016, and supporters did not push to renew it immediately because there were adequate reserves to fund the air program for several years. If the measure had passed, Steamboat Ski and Resort Corp. was going to increase their contribution to the airline program by 45 percent from $1.1 million to $1.6 million.
It is unclear what choices will be made regarding the airline program in the future.
Business Improvement District Plan Fails for Third Time
The third time was definitely not a charm for supporters of the creation of a Downtown Improvement District. The third go round at this issue was defeated by a count of 64 supporting and 108 against.
The BID funding would have been spent on improvements within the district, including snow removal, more frequent trash pick up, marketing, way-finding signage and other services.
Under the BID plan, downtown was split into two zones. Businesses on Yampa Street and Lincoln Avenue and the side streets between them were in the premium zone. If the BID funding were approved, these businesses would have paid a special frontage assessment of $10.29 per linear foot and a mill levy of 2.22 mills. Nonprofits in the areas of Lincoln and Yampa would only have paid the special assessment and could have applied to waive or reduce what they paid on the special assessment. Nonprofits on Oak Street would not have paid any additional taxes. All other businesses in the district would have been in the standard zone and would only have paid the 2.22 mill levy.
It is unclear what will happen moving forward.
State News: Colorado Legislature Turns More Blue, Most Statewide Ballot Issues Fail
Colorado Democrats had a huge night on Tuesday, gaining control of all houses of the Colorado General Assembly. Jarod Polis becomes Colorados Governor, Democrats held their majority in the House of Representatives, and were able to gain three seats in the Senate to gain a 19-16 advantage. For the Colorado Association of REALTORS®, there were many wins and losses across the state. Groups like CAR are always hoping for a split legislature, which makes it tougher for bad ideas to make it all the way through the legislature. However, CAR remains excited to greet and work with the many new members of the legislature and work with them to insure that housing issues remain high on their lists of priorities.
On the ballot measure side, Colorado voters rejected nearly every proposal put in front of them that included tax increases. Both transportation funding measures (Prop 109 and the CAR supported Prop 110) failed to gain approval by similar 40-60 margins of defeat. Amendment 73 (Opposed by CAR) would have significantly raised taxes for education funding was defeated by a 55-45 margin. Proposition 112 was opposed by CAR and would have significantly increased restrictions on the oil and gas industry was also defeated by a 56-44 measure.
National News: The Election Shows Political Divide Still Strong Across the Country
As is the case in almost every mid term election in the modern area, the party not in the White House experienced large gains across the country on Election Night. However, the party in the White House actually strengthened its majority in the Senate, a phenomenon that does not usually occur in the midterms.
The end result is that the Democrats regained control of the House of Representatives after 10 years of Republican control and the Republicans increased their majority in the Senate. While its easy to lament these results as a forbearance of gridlock for the next two years, its important to remember that balance between the parties isnt a bad thing. The founding fathers of this country sought balance in the structure of our government and gave us a system to fully debate and vet all ideas before they become law. It might feel like gridlock, but it is actually our country at work making sure bad ideas dont get fast tracked into law.
Opportunity Zone Proposed Rules Released
On October 19, the Treasury Department released proposed rules for Qualified Opportunity Zones, a federal program created by the Tax Cuts and Jobs Act in 2017. The program incentivizes investment and development in distressed communities, designated as Qualified Opportunity Zones (QOZs) through tax benefits for investors. These benefits include deferral of federal capital gains tax on qualified capital gains reinvested into a QOZ (via an Opportunity Fund), and potential reduction in the tax ultimately paid on those gains (if held for five years they receive a step-up in basis of 10%; if held for seven, 15%). In addition, gains accrued on investments while in an Opportunity Fund and invested into a QOZ may be exempted from federal capital gains tax, if the investments are from a proper deferral election (reinvested capital gains that the tax is deferred on) and held for at least ten years.
The proposed rules provide important clarifications for interested investors, including the type of gains eligible for tax deferral (capital only), how investments into Opportunity Funds made of both capital gains proceeds and non-gains funds are treated, the overall timeline for the program, how to certify an Opportunity Fund and meet the 90% asset requirement (that 90% of a funds assets be held in a QOZ), and how they will determine that an Opportunity Fund has substantially improved a QOZ business property. Further proposed rules are expected on other aspects of the program, and the IRS will hold a hearing on the issue on January 10, 2019.