Colo. Rev. Stat. § 24-38.5-125 – Building decarbonization enterprise - creation - membership - powers and duties - building decarbonization enterprise cash fund - legislative declaration - definitions - rules - report - repeal.

(1) Legislative declaration. (a) The general assembly finds that:
1. (I) Reducing greenhouse gas emissions from combustion devices in residential and commercial buildings is necessary to help the state achieve its statewide greenhouse gas emission reduction goals set forth in section 25-7-102 (2)(g);
2. (II) Covered building owners are required to comply with benchmarking requirements and performance standard requirements and would benefit from additional financial and technical assistance to meet those requirements; and
3. (III) With additional financing and technical assistance, covered building owners may more effectively and efficiently implement building decarbonization measures, including, but not limited to, programs that provide assistance for conducting building energy audits, developing analyses to help building owners evaluate the best strategies for achieving future performance standard targets, employing or consulting with building engineers, purchasing energy use tracking software for covered building owners to more effectively track energy use, and providing training on such software.
4. (b) Now, therefore, the general assembly declares that:
  1. (I) It is in the public interest to create an enterprise within the office that is committed to financing and providing technical and other support for the implementation of building decarbonization measures;
  2. (II) The activities of the enterprise shall be funded by revenue generated from a building decarbonization fee paid by covered building owners and any gifts, grants, and donations received;
  3. (III) It is appropriate that covered building owners should pay a building decarbonization fee, as covered building owners are the direct beneficiaries of services provided by the enterprise, which services include the financing and technical assistance provided for the building decarbonization measures described in subsection (1)(a)(III) of this section;
  4. (IV) Covered building owners benefit from the implementation of building decarbonization measures because such measures can reduce covered building owners' long-term costs related to energy use;
  5. (V) Consistent with the determination of the Colorado supreme court in Nicholl v. E-470 Public Highway Authority, 896 P.2d 859 (Colo. 1995), that the power to impose taxes is inconsistent with enterprise status under section 20 of article X of the state constitution, the general assembly concludes that the building decarbonization fee is a fee, not a tax, and the enterprise operates as a business because the building decarbonization fee is:
    1. (A) Imposed for the specific business purposes of providing financing and technical assistance to covered building owners to more effectively and efficiently implement building decarbonization measures, including feasibility analyses and improvements that will reduce energy use and emissions; and
    2. (B) Collected at a rate that is reasonably related to the overall cost of the business services being provided; and
  6. (VI) So long as the enterprise qualifies as an enterprise for purposes of section 20 of article X of the state constitution, the revenue from the building decarbonization fee imposed, collected, and administered by the enterprise is not state fiscal year spending, as defined in section 24-77-102 (17), or state revenues, as defined in section 24-77-103.6 (6)(c), and does not count against either the state fiscal year spending limit imposed by section 20 of article X of the state constitution or the excess state revenues cap, as defined in section 24-77-103.6 (6)(b)(I)(G).
(2) As used in this section, unless the context otherwise requires:
1. (a) Benchmarking requirements means the energy benchmarking requirements set forth in section 25-7-142 (3) with which an owner or operator of a covered building is required to comply.
2. (b) Board means the board of directors of the enterprise appointed pursuant to subsection (4)(a) of this section.
3. (c) Building decarbonization enterprise cash fund or building decarbonization fund means the building decarbonization enterprise cash fund created in subsection (6)(a) of this section.
4. (d) Building decarbonization fee or fee means the fee paid by the owner of a covered building pursuant to subsection (5)(b) of this section.
5. (e) Covered building has the meaning set forth in section 25-7-142 (2)(j).
6. (f) Covered building owner means an owner, as defined in section 25-7-142 (2)(r), of a covered building.
7. (g) Enterprise means the building decarbonization enterprise created in subsection (3) of this section.
8. (h) Inflation means the annual percentage change in the in the United States department of labor's bureau of labor statistics consumer price index, or a successor index, for Denver-Aurora-Lakewood for all items paid for by urban consumers.
9. (i) Office means the Colorado energy office created in section 24-38.5-101.
10. (j) Performance standards has the meaning set forth in section 25-7-142 (2)(s).
(3) Enterprise created - loan from the office - repayment. (a) The building decarbonization enterprise is created in the office and exercises its powers and performs its duties and functions as a government-owned business in the office to execute its business purposes set forth in this subsection (3). The enterprise is created for the purposes of:
1. (I) Imposing and assessing a building decarbonization fee on owners of covered buildings;
2. (II) Providing technical assistance, financing, and other programmatic support for covered building owners' building decarbonization measures, including, but not limited to, conducting building energy audits, developing analyses to help building owners evaluate the best strategies for achieving future performance standard targets, consulting building engineers, purchasing energy use tracking software, and providing training on such software;
3. (III) Having and exercising all rights and powers necessary or incidental to or implied from the specific powers and duties granted under this section; and
4. (IV) Ensuring that the building decarbonization fee paid by covered building owners is used solely to support programs, technical assistance, and financial assistance for the covered building owners that pay the building decarbonization fee.
5. (b) The board, in consultation with the office, shall administer the enterprise in accordance with this section.
6. (c)
  1. (I) The enterprise constitutes an enterprise for purposes of section 20 of article X of the state constitution so long as it retains the authority to issue revenue bonds and receives less than ten percent of its total revenues in grants, as defined in section 24-77-102 (7), from all Colorado state and local governments combined. So long as it constitutes an enterprise, the enterprise is not subject to section 20 of article X of the state constitution.
  2. (II) The enterprise is authorized to issue revenue bonds for the expenses of the enterprise, secured by revenue of the enterprise.
7. (d)
  1. (I) The office may transfer money from any legally available source to the enterprise for the purpose of defraying expenses incurred by the enterprise before it receives fee revenue. The enterprise may accept and expend any money so transferred, and, notwithstanding any state fiscal rule or generally accepted accounting principle that could otherwise be interpreted to require a contrary conclusion, such a transfer is a loan from the office to the enterprise that is required to be repaid and is not a grant for purposes of section 20 (2)(d) of article X of the state constitution or as defined in section 24-77-102 (7).
  2. (II) As the enterprise receives sufficient revenue in excess of its expenses, the enterprise shall reimburse the office for the principal amount of any loan made by the office, plus interest at a rate agreed upon by the office and the enterprise.
(4) Enterprise board of directors created - membership - duties - repeal. (a) The enterprise board of directors is created to administer the enterprise. The board consists of the following nine members:
1. (I) The following six members appointed by the governor and confirmed by the senate:
  1. (A) A representative of residential buildings;
  2. (B) Two representatives of commercial buildings, such as offices, mixed-use properties, multifamily homes, or hospitals;
  3. (C) An expert in building energy efficiency and decarbonization;
  4. (D) A local government representative with expertise in planning, energy codes, or building decarbonization; and
  5. (E) A utility representative;
2. (II) The director of the office or the director's designee;
3. (III) The executive director of the department of public health and environment or the executive director's designee; and
4. (IV) The director of the public utilities commission or the director's designee.
5. (b)
  1. (I) The governor shall appoint initial members to the board pursuant to subsection (4)(a)(I) of this section on or before September 1, 2025.
  2. (II) This subsection (4)(b) is repealed, effective July 1, 2026.
6. (c)
  1. (I) Board members appointed pursuant to subsection (4)(a)(I) of this section serve three-year terms. A board member may serve an unlimited number of terms.
  2. (II) Notwithstanding subsection (4)(c)(I) of this section, the governor shall make the initial terms of two of the board members who are appointed pursuant to subsection (4)(a)(I) of this section two years.
7. (d) Board members serving pursuant to subsection (4)(a)(I) of this section may receive compensation from the enterprise on a per diem basis for reasonable expenses actually incurred in the performance of their duties.
8. (e)
  1. (I) The chair and vice-chair of the board are selected by the members of the board in accordance with the board's bylaws.
  2. (II)
    1. (A) The director of the office or the director's designee shall call the first meeting of the board, and the board shall select the chair and vice-chair at that meeting in accordance with subsection (4)(e)(I) of this section.
    2. (B) This subsection (4)(e)(II) is repealed, effective July 1, 2026.
(5) Powers and duties - building decarbonization fee - rules. (a) In addition to any other powers and duties specified in this section, the board has the following powers and duties on behalf of the enterprise:
1. (I) To adopt procedures for conducting the board's affairs;
2. (II) To engage the services of contractors, consultants, the division of administration described in section 25-1-102 (2)(a), and the staff of the office for professional and technical assistance and advice and to supply other services related to the conduct of the affairs of the enterprise without regard to the Procurement Code, articles 101 to 112 of this title 24. The enterprise shall engage the attorney general's office for legal services. The enterprise may contract with the office for the provision of office space and administrative staff to the enterprise at a fair market rate.
3. (III) To establish and administer a program through which owners of covered buildings may apply for, and the board may review and approve applications for, financing or technical assistance for building decarbonization measures, including, but not limited to, participating in programs that help finance energy efficiency measures, electrification measures, and other energy upgrades; conducting building energy audits; employing or consulting with building engineers; and purchasing energy use tracking software and providing training on such software;
4. (IV) To impose the building decarbonization fee described in subsection (5)(b) of this section; and
5. (V) To have and exercise all rights and powers necessary or incidental to or implied from the specific powers and duties granted by this section.
6. (b)
  1. (I) Beginning in state fiscal year 2026-27 and in furtherance of the enterprise's business purposes, the board shall adopt rules for the purpose of setting the amount of the building decarbonization fee at the maximum amount authorized in this subsection (5) to be imposed upon all covered building owners; except that the fee shall not be imposed on the owner of a public building, as defined in section 25-7-142 (2)(t).
  2. (II) On or before November 1, 2025, and on or before each November 1 of each year thereafter, and except as provided in subsection (5)(b)(III) of this section, each owner of a covered building shall pay a building decarbonization fee in an amount of four hundred dollars to the office, which shall collect the building decarbonization fee on behalf of the enterprise.
  3. (III) Beginning in state fiscal year 2027-28, the board may only increase the building decarbonization fee from the previous year's building decarbonization fee to adjust for inflation and, on or before March 15 of each of the state fiscal years thereafter, shall notify the office of the adjusted amount of the building decarbonization fee, if the building decarbonization fee has been adjusted. On or before April 15 of each of the state fiscal years thereafter, the enterprise shall publish the updated amount of the fee on the enterprise's website.
  4. (IV) Money collected as a building decarbonization fee shall be credited to the building decarbonization enterprise cash fund.
  5. (V) Notwithstanding subsection (5)(b)(I) of this section, the board shall not set the building decarbonization fee in an amount higher than that authorized by subsections (5)(b)(II) and (5)(b)(III) of this section.
  6. (VI) Money collected by the office for transfer to the building decarbonization fund pursuant to subsection (5)(b)(IV) of this section:
    1. (A) Is collected for the enterprise;
    2. (B) Is custodial money intended for the enterprise and held temporarily by the office and the state treasurer solely for the purpose of transferring the money to the building decarbonization fund for use by the enterprise; and
    3. (C) Based on the enterprise's status as an enterprise, is not subject to section 20 of article X of the state constitution at any time during the money's collection, transfer, and use.
(6) Building decarbonization enterprise cash fund - creation - repeal. (a) The building decarbonization enterprise cash fund is created in the state treasury. The building decarbonization fund consists of:
1. (I) Money received from a building decarbonization fee imposed pursuant to subsection (5)(b) of this section;
2. (II) Any money received from the issuance of revenue bonds, as described in subsection (3)(c)(II) of this section; and
3. (III) Any other money that the general assembly may appropriate or transfer to the building decarbonization fund.
4. (b)
  1. (I) Section 24-77-108 does not apply to the enterprise because the total amount of money credited or appropriated to the building decarbonization fund as a building decarbonization fee shall not exceed one hundred million dollars in the first five fiscal years of the enterprise's existence.
  2. (II) This subsection (6)(b) is repealed, effective July 1, 2031.
5. (c) Subject to annual appropriation by the general assembly, the enterprise may expend money from the building decarbonization fund for the purposes set forth in this section and to pay the enterprise's reasonable and necessary operating expenses. The state treasurer shall credit all interest and income derived from the deposit and investment of money in the building decarbonization fund to the building decarbonization fund.
6. (d) Any unexpended and unencumbered money remaining in the building decarbonization fund at the end of a fiscal year remains in the building decarbonization fund and is not credited or transferred to the general fund.
(7) Legislative review of building decarbonization enterprise. On or before December 1 of each year, the enterprise shall submit an annual report to the general assembly detailing the enterprise's expenditures and program outcomes from the preceding year and the enterprise's financial projections for the following year.

Source: L. 2025: Entire section added, (HB 25-1269), ch. 216, p. 985, § 4, effective May 20.

Editor's note: Section 10 of chapter 216 (HB 25-1269), Session Laws of Colorado 2025, provides that the act adding this section applies to conduct occurring on or after May 20, 2025.