2018 Midterm Election Results: The Bottom Line for Colorado Business
What are the economic implications of the amendments and propositions, passed or failed?
The 2018 Colorado midterm ballot covered a lot of ground. Now that the results are in, what are the business implications of the amendments and propositions, passed or failed? Here’s a high-level breakdown for some of these measures below:
PROPOSITION 112 – DID NOT PASS
New oil and gas wells and related facilities would have to located at least:
- 2,500 feet from “vulnerable areas” (playgrounds, permanent sports fields, amphitheaters, public parks, public open space, public and community drinking water sources, irrigation canals, reservoirs, lakes, rivers, perennial or intermittent streams and creeks and any additional vulnerable areas designated by the state or a local government.)
- 2,500 feet from “occupied structures”
- The setback requirements would not have applied to oil and gas development on designated federal lands.
- The setback requirements would have applied to any new oil and gas development permitted on or after the effective date of the measure on any non-federal lands in the state.
- Development of abandoned oil and gas wells would have been considered new development under the measure, and the setback requirements would have applied.
Instead, Colorado’s existing rules on energy production remain in effect:
- 1,000 feet from high-occupancy buildings, including schools and hospitals
- 500 feet from occupied buildings including homes
- 350 feet from outdoor areas like playgrounds
Many entities attempted to quantify what the passing of Proposition 112 would have meant for the oil and gas industry in terms of number of jobs lost and decreases in total revenue.
AMENDMENT 74 – DID NOT PASS
Amendment 74 sought to amend the Colorado constitution, so property owners could bring claims when the government acted in a manner that resulted in a reduction “in fair market value” of private property. Under current law, to bring a successful claim, the government action must result in a near total loss of the economic use of the property.
Amendment 74 would have added the underlined text to the Colorado Constitution:
“Private property shall not be taken or damaged, or reduced in fair market value by government law or regulation for public or private use, without just compensation.”
With the failing of both Proposition 112 and Amendment 74, from a strict business sense, nothing has changed. The oil and gas industry will continue operating under its current laws and setbacks, and the text – “or reduced in fair market value by government law or regulation” – will not be added to the state constitution, meaning private landowners will act and be compensated much as they have in years past.
PROPOSITION 109 – DID NOT PASS
The ballot initiative proposed $3.5 billion in bonds that would have been authorized to fund statewide transportation projects including bridge expansion, construction, maintenance and repairs. The state would have been required to repay the debt from the general fund and taxpayers would not have received any tax increases. The total repayment would not have been permitted to exceed $5.2 billion over 20 years.
Proposition 109 applied only to state highways. Even if passed, it would not have fulfilled transportation needs at the city and town level. There are more than 60 statewide transportation projects that would have received funding, including widening I-25 and other major highway projects in Metro Denver, lane additions and safety improvements along the I-70 corridor, toll lane additions and road improvements across the state.
The Colorado Department of Transportation identified an annual $1 billion funding shortfall needed to meet the state's transportation requirements, including widening Interstate 25. As population growth and the daily traffic continue to increase, we can expect this debate to come up again, and soon.
PROPOSITION 111 – PASSED
WHAT IT MEANS
The annual interest rate on short-term loans –payday loans – has been capped at a yearly rate of 36 percent and all other finance charges and fees associated with payday lending have been eliminated.
Those maximum charges allowed for payday loans prior to Proposition 111 passing are as follows:
- A charge of up to 20 percent of the first $300 loaned
- A charge of 7.5 percent for any amount loaned above $300
- Monthly maintenance fee up to $30 per month
- An additional annual interest rate of 45 percent
How much of an impact can we expect?
In 2016, about 207,000 people in Colorado secured more than 414,000 payday loans. These loans totaled about $166 million, and consumers paid an estimated $50 million in loan costs – any combination of fees and interest – with a default rate of 23 percent.
It comes as no surprise that vulnerable populations – including veterans, the disabled, students, individuals and families on fixed incomes – represent the majority of payday lending consumers. This proposition effectively helps a growing and vulnerable population from getting trapped in the debt cycle and resorting to undesirable outcomes like disconnected utilities and risk of homelessness.
AMENDMENTS Y AND Z PASSED: IMPLICATIONS OF REDISTRICTING
WHAT THEY MEAN
These measures (Y for Congress and Z for the state legislature) were proposed to take partisanship out of redistricting and end gerrymandering in our state – an issue of increased scrutiny across the nation.
With the passing of these amendments, an independent commission will re-draw electoral district maps after the 2020 census.
Cole Finegan is the regional managing partner of Hogan Lovells. Elizabeth (Liz) Titus is counsel.