Colorado § 31-15-302 - Financial powers - legislative declaration.

§ 31-15-302. Financial powers - legislative declaration.

(1) The governing bodies in municipalities shall have the following general powers in relation to the finances of the municipality:

(a) To control the finances and property of the corporation;

(b) To appropriate money for municipal purposes only and provide for payment of debts and expenses of the municipality;

(c) To levy and collect taxes for general and special purposes on real and personal property;

(d) (I) To contract indebtedness on behalf of the municipality and upon the credit thereof by borrowing money or issuing the bonds of the municipality for any public purpose of the municipality, including but not limited to the following purposes: Supplying water, gas, heating and cooling, and electricity; purchasing land; and purchasing, constructing, extending, and improving public streets, buildings, facilities, and equipment; and for the purpose of supplying a temporary deficiency in the revenue for defraying the current expenses of the municipality.

(II) The total amount of indebtedness for all such purposes shall not at any time exceed three percent of the actual value, as determined by the assessor, of the taxable property in the municipality except such debt as may be incurred in supplying water. No loan for any purpose shall be made except by ordinance, which shall be irrepealable until the indebtedness provided for is fully paid or discharged, specifying the purposes to which the funds to be raised shall be applied and providing for the levying of a tax which, together with such other revenue, assets, or funds as may be pledged, is sufficient to pay the annual interest and extinguish the principal of said debt within the time limited for the debt to run, which, except such debt as may be incurred in supplying water, shall not be more than thirty years, and further providing that said tax, when collected, shall only be applied for the purposes specified in said ordinance until the indebtedness is paid and discharged. No debt shall be created, except in supplying water, unless the question of incurring the same is submitted, at a regular or special election of the municipality, to the registered electors thereof as defined by the "Colorado Municipal Election Code of 1965" and a majority of the registered electors voting upon the question vote in favor of creating such debt.

(III) No statutory provisions of any other law limiting or fixing tax rates shall limit the provisions of this paragraph (d).

(IV) Bonds issued under this paragraph (d) may mature serially during a period of not more than thirty years from the date thereof, in which event the amounts of such annual maturities shall be fixed by the governing body; except that bonds issued to supply water may mature over a longer period. If the governing body so determines, said bonds may be redeemable prior to maturity with or without payment of a premium, not exceeding three percent of the principal thereof. In any event said bonds shall be subject to call commencing not later than fifteen years after the date thereof. The right to redeem all or part of said bonds prior to their maturity and the order of any such redemption shall be reserved in the ordinance authorizing the issuance of bonds and shall be set forth on the face of said bonds.

(V) The ordinance or resolution submitting the question of contracting an indebtedness shall contain a statement of the maximum net effective interest rate at which said indebtedness may be incurred.

(VI) (A) The governing body of any municipality, having received approval at an election to issue bonds and having determined that the limitations of the original election question are too restrictive to permit the advantageous sale of the bonds so authorized, may submit at another regular or special election the question of issuing the bonds or any portion thereof at a higher maximum net effective interest rate than the maximum interest rate or maximum net effective interest rate approved at the original election; the question of issuing the bonds or any portion thereof to mature over a longer period of time than the maximum period of maturity approved at the original election; or both such questions.

(B) An election held pursuant to this subparagraph (VI) shall be held in substantially the same manner as an election to authorize bonds initially except as may be required for the submission of the limited question permitted under this subparagraph (VI).

(C) At an election held pursuant to this subparagraph (VI), if the changes submitted are not approved, such result shall not impair the authority of the governing body at a later time to issue the bonds originally approved within the limitations established at the first election.

(e) To prescribe, by general ordinance, the manner in which the charge on the respective owners of lots or lands, and on the lots or lands, shall be assessed and determined for the purposes so authorized by law. Such charge, when assessed, shall be payable by the owners at the time of the assessment, personally, and also shall be a lien upon the respective lots or parcels of land from the time of the assessment. Such charge may be collected and such lien enforced by a proceeding at law or in equity, either in the name of such municipality or of any person to whom it has directed payment be made. In any such proceedings, where pleadings are required, it shall be sufficient to declare generally for work and labor done and materials furnished on the particular street, alley, or highway or for water rent or gas used. Proceedings may be instituted against all the owners, or any of them, to enforce the lien against all the lots or land, or each lot or parcel, or any number of them embraced in any one assessment; but the judgment or decree shall be entered separately for the amount properly chargeable to each. Any proceedings may be severed in the discretion of the court for the purpose of trial, review, or appeal.

(f) (I) For the purpose of providing and accumulating funds for the construction, acquisition, or improvement of public buildings, water facilities, sewer facilities, heating and cooling works, or other public works or to supplement bond issues for the same purpose, the governing body of each municipality is authorized to create, by resolution, a public works fund, setting forth in such resolution the description and location of the buildings, water facilities, sewer facilities, heating and cooling works, or other public works to be constructed, acquired, or improved; the estimated cost of the same; the annual tax levy required; and the number of years such a levy should be made; and the time of a public hearing. In lieu of an ad valorem levy, the governing body of the municipality may provide for other taxes or revenues authorized by law which will produce equivalent funds.

(II) If the amount needed does not require a tax levy in excess of two mills, the governing body is authorized, after a public hearing, to make such a levy without putting the proposition to a vote of the qualified electors. If a special levy in excess of two mills for any one fiscal year is required, the governing body, by resolution, in their discretion may submit to the registered electors of such municipality the question of making such a special levy. The special election may be held on the same day as any other special or general election.

(III) In submitting the question to said electors, a ballot shall be printed giving the description and location of the public buildings, water facilities, sewer facilities, or other public works to be constructed, acquired, or improved; the estimated maximum amount to be expended for each single purpose; and the maximum mill levy, if any, required for each specified year. Each project shall be printed separately on the ballot.

(IV) The money derived from the special levy authorized shall be credited by the treasurer of the respective municipality to a special fund to be known as the public works fund. Such funds may be accumulated and held over for expenditure in subsequent years, but they shall be used only for the public works authorized. The governing body may change the purpose for which the fund may be expended after holding a public hearing. When the public works have been constructed, acquired, or improved and paid for, any unexpended balance in the public works fund shall be transferred to the general fund of the municipality.

(g) To deposit any moneys of general or special funds in any depository authorized in section 24-75-603, C.R.S. For the purpose of making such deposits, the governing body of a municipality may appoint, by written resolution, one or more persons to act as custodians of the moneys of the municipality. Such persons shall give surety bonds in such amounts and form and for such purposes as the governing body requires.

(h) To enter into installment purchase contracts or shared-savings contracts or otherwise incur indebtedness under section 29-12.5-103, C.R.S., to finance energy conservation and energy saving measures and enter into contracts for an analysis and recommendations pertaining to such measures under section 29-12.5-102, C.R.S.;

(i) (I) For a municipality that has a population of twenty thousand or fewer residents, to enter into contracts with a health-care provider, who is licensed in this state, to provide health-care services to such municipality. Such health-care providers shall be known as "community contracted health-care providers".

(II) The general assembly hereby finds, determines, and declares that access to health-care services in rural areas is an increasing problem in Colorado. Some rural Coloradans do not have access to a primary care provider in their town and are forced to travel. It is the intent of the general assembly to ease the strain on rural Coloradans' health-care needs by allowing a municipality with twenty thousand or fewer residents to contract with a health-care provider to provide health-care services to rural areas.

(III) (Deleted by amendment, L. 2008, p. 212, § 1, effective March 26, 2008.)

(j) To establish and administer an incentive program to directly incentivize improvement in an area of specific local concern related to the use of real property in the municipality in accordance with section 31-20-101.7.

Source: L. 75: Entire title R&RE, p. 1106, § 1, effective July 1. L. 79: (1)(g) added, p. 1618, § 20, effective June 8. L. 81: (1)(d)(I) and (1)(f)(I) amended, p. 1454, § 2, effective May 27. L. 91: (1)(h) added, p. 733, § 6, effective May 1. L. 2001: (1)(i) added, p. 1164, § 13, effective June 5. L. 2007: (1)(i)(III) amended, p. 2046, § 85, effective June 1. L. 2008: (1)(i) amended, p. 212, § 1, effective March 26. L. 2024: (1)(j) added, (SB 24-002), ch. 25, p. 74, § 4, effective August 7.

Editor's note: The provisions of this section are similar to provisions of several former sections as they existed prior to 1975. For a detailed comparison, see the comparative tables located in the back of the index.

Cross references: (1) For the "Colorado Municipal Election Code of 1965", see article 10 of this title.

(2) For the legislative declaration contained in the 2001 act enacting subsection (1)(i), see section 1 of chapter 300, Session Laws of Colorado 2001. For the legislative declaration in SB 24-002, see section 1 of chapter 25, Session Laws of Colorado 2024.

ANNOTATION

I. General Consideration.

II. Levying and Collecting Taxes.

III. Contracting Indebtedness.

IV. Charges on the land.

I. GENERAL CONSIDERATION.

Annotator's note. Since § 31-15-302 is similar to provisions of former § 31-12-101 prior to the 1975 repeal and reenactment of this title, and laws antecedent thereto, relevant cases construing those provisions have been included in the annotations to this section.

The governing bodies in cities and towns have the power to control the finances and property of the corporation. City of Trinidad v. Haxby, 136 Colo. 168, 315 P.2d 204 (1957).

Spending money for newsletters, annual reports and news releases may be for city purposes and is not necessarily personal or political. Gude v. City of Lakewood, 636 P.2d 691 (Colo. 1981).

No authority for expenditures relating to proposed constitutional amendment. This section does not empower a city council to make expenditures or contributions to further the defeat of a proposed constitutional amendment. Campbell v. Joint Dist. 28-J, 704 F.2d 501 (10th Cir. 1983).

City employees do not have a vested contractual right in the continuance of a particular rate or method of compensation. A city council, in the exercise of its legislative power, cannot enter into a contract which will bind succeeding city councils and thereby deprive them of the unrestricted exercise of their legislative power. Colo. Springs Fire Fighters v. Colo. Springs, 784 P.2d 766 (Colo. 1989).

Plaintiffs' assertion that they detrimentally relied upon the continuation of certain employee benefits was without merit since persons dealing with the city were on constructive notice of the scope of authority possessed by the municipal officials with whom they are dealing, and such constructive notice includes the knowledge that the city council acted pursuant to the authority granted it by the city charter and subject to the limitations provided therein which prohibited the imposition of future liability upon the city, unless prior appropriation was made. Colo. Springs Fire Fighters v. Colo. Springs, 784 P.2d 766 (Colo. 1989).

Applied in Lujan v. Colo. State Bd. of Educ., 649 P.2d 1005 (Colo. 1982).

II. LEVYING AND COLLECTING TAXES.

Among the powers possessed by cities in this state is the power of taxation. Lewis v. State Bd. of Agriculture, 138 Colo. 540, 335 P.2d 546 (1959).

Constitutional and statutory sources of tax power. The source by which a municipality may impose either a general ad valorem tax or special assessment tax upon the properties within its corporate limits is found under the provisions of § 7 of art. X, Colo. Const.; in turn, this power is specifically amplified or implemented by the provisions of subsection (1)(c) of this section. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

When tax unconstitutional. Where taxes result in a flagrant inequality between the burden imposed and the benefit received, such is confiscatory and unconstitutional. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

Taxation and assessment are not synonymous terms; each is a separate and distinct exercise of the sovereign power to tax. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

Taxation defined. Taxation, as the word is employed in the Colorado constitution and statutes generally, is that burden or charge upon all property laid for raising revenue for general public purposes in defraying the expense of government. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

Assessments defined. Assessments are local and resorted to for making local improvements on the theory that the property affected is increased in value at least to the amount of the levy. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

An assessment in the nature of a special tax is for purposes of municipal improvement conferring a special benefit upon the property being assessed. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

If a tax is for a "general" purpose it must be an ad valorem tax. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

If "taxes" are special assessments upon the certain properties, the revenues therefrom cannot be diverted to providing for general town purposes, but will necessarily have to be used and confined to payment for the capital improvement resulting in an equivalent benefit to the properties. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

When special assessment improper. So much of an improvement as is designated and utilized for the general benefit of the inhabitants and property within the limits of a municipality is in no sense local, and special assessments to raise funds to construct, purchase, pay for, or maintain that portion of it cannot be lawfully levied. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

Special benefits which will sustain a special assessment must be immediate, and of such a character that they can be seen and traced, remote or contingent benefits enjoyed by the general public will not sustain a special assessment. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

To enforce a special assessment for a purpose which does not confer a special benefit upon the property upon which it is levied would result in taking private property without compensation, and without due process of law. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

When special tax proper. Authority to levy a special frontage tax can only be upheld on the theory that the property upon which it is levied is specially benefited by the purposes to which such tax may be applied. Ochs v. Town of Hot Sulphur Springs, 158 Colo. 456, 407 P.2d 677 (1965).

III. CONTRACTING INDEBTEDNESS.

Ordinance required. Under subsection (1)(d), no loan can be contracted on behalf of a municipal corporation save by authority of an ordinance. Town of Aurora v. Hayden, 23 Colo. App. 1, 126 P. 1109 (1912).

Resolution not sufficient. The general rules are that where authority to exercise a corporate power by ordinance is granted, an attempt to exercise it by resolution is futile, and that where the constitution or this section which permits or grants the right to exercise a corporate power expressly designates the way in which it may be exercised, such designation limits the right to exercise it to the way specified, and renders its attempted exercise in any other way ineffectual. Bosworthchanute & Co. v. Town of Brighton, 272 F. 964 (8th Cir. 1921).

Municipal bonds are clothed with all the attributes of negotiable or commercial paper, pass by delivery or endorsement, and are not subject to equities (where the power to issue them exists) in the hands of holder for value, before due, without notice. Hyden v. Town of Aurora, 57 Colo. 389, 142 P. 183 (1914).

Statutory recital creates justified reliance by purchasers. Recital in municipal bonds that they were issued in accordance with the provisions of the enabling statute imports that they were sent forth in pursuant of a lawful and proper resolution or ordinance and of just and proper action by the governing board of a municipality. Such relieves the innocent purchaser of all inquiry, notice, or knowledge of the record, action, or omission of the municipal board or council or of the other officers of the municipality, and estops the municipality from denying that a lawful resolution or ordinance was passed and proper action was taken. Hayden v. Town of Aurora, 57 Colo. 389, 142 P. 183 (1914).

And estoppel applies. A municipality, a quasi-municipality, or a corporation and its officers, who by the apparent legality of their obligations or by recitals of their validity have induced innocent purchasers to invest in them are estopped from denying their legality on the ground that in some of the preliminary proceedings which led to their execution, or in their execution itself, they failed to comply with some law or rule of action relative to the mere time or manner of action relative to the mere time or manner of their procedure, with which they might have lawfully complied, but which they carelessly disregarded. Hayden v. Town of Aurora, 57 Colo. 389, 142 P. 183 (1914).

A municipality or a quasi-municipality may not, by the recital of certificates in its bonds, estop itself from denying that it is without power to issue them when the laws are such that there can be no state of facts or of circumstances under which it would have authority to emit them. Town of Aurora v. Gates, 208 F. 101 (8th Cir. 1913); Hayden v. Town of Aurora, 57 Colo. 389, 142 P. 183 (1914).

Municipal actions to which subsection is applicable. Although a contract for the purchase of electrical machinery by a town provides that the price shall be paid from the net revenues of its lighting plant, yet, if the contract creates other obligations which the town must meet, and which cannot be paid out of plant income, or if a diversion of the plant profits will deplete the current revenue of the town, necessitating increased taxation, a debt is thereby created within the meaning of subsection (1)(d). Reimer v. Holyoke, 93 Colo. 571, 27 P.2d 1032 (1933).

Authority to issue bonds to purchase water rights. Subsection (1)(d) empowers towns and cities to contract an indebtedness for the purpose of purchasing or constructing waterworks for fire and domestic purposes and for the purpose of constructing or purchasing canals or some suitable system of supplying water for irrigation. When considered in connection with §§ 31-15-708 (1)(a) and (1)(b) and 31-15-707 (1)(e), relating to the condemnation of property, the power to construct and purchase reservoirs, to provide pumps, conducting pipes and ditches, to take water from the public streams, and to purchase water and water rights, it gives authority to such municipalities to issue bonds for the purchase of water rights to secure water for its inhabitants. City of Cripple Creek v. Adams, 36 Colo. 320, 85 P. 184 (1906).

But when constant supply involved resubmission to voters not required. Where the court ruled that the money was not for the purpose of purchasing of constructing waterworks, but that such waterworks had already been authorized and the city legislative body found the indebtedness necessary to supply the city with water, it was said that to render the waterworks effective so as to supply the city with water does not require constant submission to the voters for every improvement necessary to handle the water supply. Hiatt v. City of Manitou, 154 Colo. 525, 392 P.2d 282 (1964).

Municipal actions to which subsection is inapplicable. An agreement of a municipality, by ordinance, to pay a certain amount annually into a fund to be used for the payment of bonds to be issued for the constriction of a municipal lighting plant, was held not to be the creation of a debt as that term is used in the constitution and in subsection (1)(d). Shields v. City of Loveland, 74 Colo. 27, 218 P. 913 (1923).

Applied In Nat'l Bank of Commerce v. Town of Granada, 54 F. 100 (8th Cir 1893).

IV. CHARGES ON THE LAND.

Scope of power. Subsection (1)(e) shows a deliberate intention to invest the city council with ample power over the subject of municipal improvements, not only by means of general and special taxes, but also by means of special charges or assessments, in all cases where the same are applicable and allowable by the constitution and laws of the state, and to authorize the collection thereof by suit in court, or by the county treasurer, in the same manner as other delinquent taxes are collected. City of Pueblo v. Robinson, 12 Colo. 593, 21 P. 899 (1889).

Authorized for purposes other than gas or water rents. The provisions of subsection (1)(e) stating that "In any such proceedings, where pleadings are required, it shall be sufficient to declare generally for work and labor done and materials furnished on the particular street, alley or highway, or for water rent or gas used" plainly shows that it was the design of this subdivision to authorize special assessments for other purposes than gas or water rents. City of Pueblo v. Robinson, 12 Colo. 593, 21 P. 899 (1889).

Apportionment authorized. In cases where special assessments are authorized, the city council may prescribe the rule of apportionment, having reference to the special benefits accruing to the property by reason of the improvement, the same to be such as will secure an assessment in proportion to the benefits accruing as nearly as practicable. City of Pueblo v. Robinson, 12 Colo. 593, 21 P. 899 (1889).

Mode of assessment proper. When the property consists of lots of substantially equal depth abutting the local improvement, and there is nothing in the nature and circumstances of the particular case showing that an assessment in proportion to the frontage of the lots upon the improvement would work manifest injustice, such a mode of assessment should be upheld. City of Pueblo v. Robinson, 12 Colo. 593, 21 P. 899 (1889).

Authority for lien must be by ordinance. A municipal corporation cannot acquire a lien on town lots for unpaid water assessments unless and until the adoption of an ordinance authorizing such a lien under this subdivision. Ordway v. Kaiser, 90 Colo. 313, 9 P.2d 287 (1932).

Foreclosure of a trust deed cuts out all junior liens, including statutory liens, unless these be specifically excluded, hence the lien of a municipality for water assessments authorized under subsection (1)(e) is not superior to that of a trust deed on the property affected unless it attached under appropriate ordinance prior to the recording of the trust deed. Ordway v. Kaiser, 90 Colo. 313, 9 P.2d 287 (1932).

Sewer assessments. By subsection (1)(e) sewer assessments may be collected and the lien thereof enforced by the city council in a proceeding at law or in equity. City of Highlands v. Johnson, 24 Colo. 371, 51 P. 1004 (1897).

PART 4

POLICE REGULATIONS