Title
A Resolution of the Colorado Springs City Council approving the boundaries of a proposed area of the city to be submitted to the director of the Colorado Office of Economic Development for designation as a CHIPS Zone under the Colorado CHIPS Zone Act.
Presenter:
Shawna Lippert, Economic Development Manager
Jessie Kimber, Economic Development Officer
Body
Summary:
The CHIPS Zone Program is a State of Colorado incentive program, managed by the Global Business Development Division at the Colorado Office of Economic Development & International Trade (OEDIT). Local municipalities must apply for a CHIPS Zone for their respective area with a signed Resolution. The goal of the CHIPS Zone is to enhance and strengthen the efforts to attract semiconductor manufacturing and advanced industry companies and to retain existing sector businesses in the state. Approval of a Zone would enable local businesses to apply for tax credits through the State of Colorado under state law. There are no fiscal impacts to the municipality. The program does not require financial support from the City. The program is a State of Colorado tool to attract and retain eligible companies in the specified sectors. The program does not affect City zoning, City overlays, or City land use. The Executive Branch is recommending that the City approve the State of Colorado tax incentive program to attract and retain local businesses in eligible sectors.
Background:
The CHIPS Zone Program is a State of Colorado incentive program, managed by the Global Business Development Division at the Colorado Office of Economic Development & International Trade (OEDIT). The CHIPS Zone was created through House Bill 23-1260 in May 2023 to maximize incentives available to eligible semiconductor and advanced manufacturing companies in Colorado. Municipalities, counties, and groups of the two may apply through the Colorado Office of Economic Development and International Trade to the Economic Development Commission (EDC) to designate a geographical area within its governance as a CHIPS Zone. The goal of the CHIPS Zone is to enhance and strengthen the efforts to attract semiconductor manufacturing and advanced industry companies and to retain existing sector businesses in the state. Local municipalities must apply for a CHIPS Zone for their respective area. The CHIPS Zone application requires a signed resolution from the municipality to be included.
CHIPS ZONE OVERVIEW
Taxpayers in semiconductor manufacturing -- defined as “the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors, materials used to manufacture or enhance semiconductors, or semiconductor manufacturing equipment” -- can access the following state income tax credits from the Enterprise Zone Program:
- $1,100 New Employee Tax Credit
- 3% Research and Development Tax Credit
- 3% Investment Tax Credit, which includes a 1.5% Commercial Vehicle Investment Tax Credit and a 12% Job Training Tax Credit
OEDIT’s CHIPS Zone Administrator will review and evaluate all CHIPS Zones every five years, including any zones in which no companies have pre-certified or claimed credits, and will recommend whether or not these Zones should expire in consultation with the EDC. Communities may request a renewal of the Zones for an additional five-year period on the condition that they provide documentation or evidence to establish the necessity of the Zone’s continued existence for their economy or community. CHIPS zones may be modified or terminated at the discretion of the EDC between income tax years 2023 and 2040; however, all CHIPS zones will terminate as a matter of law on December 31, 2040.
ECONOMIC DEVELOPMENT STRATEGIES
The economic development teams at the City, El Paso County, and Chamber & EDC are collaborating to seek a CHIPS Zone in Colorado Springs to:
- Retain existing advanced manufacturing companies in Colorado Springs by incentivizing existing companies to stay and expand in Colorado Springs by utilizing either the Enterprise Zone or CHIPS Zone.
- Attract new advanced manufacturing companies with a new incentive and enhance efforts. CHIPS Zone would incentivize business growth in areas that are not in the EZ and are already zoned for advanced manufacturing uses.
CITY CONSIDERATIONS
Approval would enable businesses to apply for tax credits through the State of Colorado under state law. There are no fiscal impacts to the municipality. The program does not require financial support from the City. The program is a State of Colorado tool to attract and retain eligible companies in the specified sectors. The program does not affect:
- City zoning
- City overlays
- City land use
PROPOSED RESOLUTION
- Approve the boundaries of the proposed area of the city to be submitted to the director of the Colorado Office of Economic Development for designation as a CHIPS Zone under the Colorado CHIPS Zone Act.
- Delegate authority to the Mayor to seek future modifications of the boundaries of the Proposed Zone, once it is designated as a CHIPS Zone, within the City of Colorado Springs.
ANTICIPATED NEXT STEPS AND TIMELINE
1. If the Resolution is approved, Colorado Springs will collaboratively submit CHIPS Zone application to the Colorado Office of Economic Development in November 2025.
2. Request the State’s Economic Development Commission to vote in December 2025.
3. If approved, Colorado Springs CHIPS Zone would take effect on January 1, 2026.
4. If approved, Colorado Springs Chamber & Economic Development Corporation (EDC) staff will connect CHIPS Zone eligible companies to Colorado Office of Economic Development & International Trade (OEDIT) to begin the process.
Previous Council Action:
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Financial Implications:
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City Council Appointed Board/Commission/Committee Recommendation:
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Stakeholder Process:
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Alternatives:
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Recommended Action
Proposed Motion:
Approve the Resolution of the Colorado Springs City Council approving the boundaries of a proposed area of the city to be submitted to the director of the Colorado Office of Economic Development for designation as a CHIPS Zone under the Colorado CHIPS Zone Act.
Summary of Ordinance Language
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