Amendment U proposes amending the Colorado Constitution to:

beginning with tax year 2018, eliminate property taxes for individuals
or businesses that use government-owned property for a private
benefit worth $6,000 or less in market value; and
‚ beginning with tax year 2019, and every two years thereafter, adjust the
$6,000 exemption threshold to account for inflation.

Summary and Analysis

Property taxes and possessory interests. Property taxes are primarily based
on the value of land, houses, other buildings, and business equipment. Individuals
and businesses pay property taxes to various local governments, such as cities,
counties, school districts, and special districts, each of which imposes its own tax rate
on property. Property taxes pay for a variety of local government services, including
public education, police and fire services, roads and bridges, parks and recreation
facilities, hospitals, and libraries.

When an individual or business uses government-owned land or equipment for
private purposes, a possessory interest is created. Although government-owned
property is exempt from taxes, the financial benefit that a business or individual
obtains from using that land or equipment is not. For example, some ranchers lease
land from the federal government for cattle grazing. Other businesses lease land to
provide a recreational activity, such as skiing or river rafting, or are given a contract to
provide a specific service on public land, such as operating a snack bar at a national
park. Under current law, the value of a private financial benefit is considered a
possessory interest and is subject to property taxes. Typically, the value assigned to
a possessory interest is equal to the cost of the lease to use the government-owned
land; however, county assessors may use other methods to determine the actual
value of a possessory interest prior to determining the tax owed.

There are about 7,000 total possessory interests in Colorado. In 2015, the market
value of all possessory interests is about $315.0 million, which is 0.04 percent of the
total market value of all taxable property in the state. At this value, total property tax
payments for all possessory interests of any value are approximately $7.0 million
annually.
– 1 –Blue Book

How does Amendment U change the taxation of possessory interests?
Starting in 2018, Amendment U exempts a possessory interest from property taxation
if the market value of the interest is $6,000 or less. Beginning in tax year 2019, and
every two years thereafter, the $6,000 threshold is adjusted to account for inflation.
Amendment U exempts approximately 5,100 of the 7,000 possessory interests in the
state. In total, these possessory interests pay about $125,000 in property taxes
annually, or about $24, on average, for each possessory interest.