Colorado Investment Program Gets Bad Review

A state audit concluded Tuesday that a $200 million state-sponsored investment program is badly flawed and needs to be overhauled. Lawmakers on the Legislative Audit Committee said they will push for statutory changes that could radically change the Certified Capital Company program, known as the CAPCO program, which is backed by tax credits.

The state legislature created the CAPCO program in 2001 to spur economic growth by giving $200 million in tax credits to insurance companies that, in turn, lend money to CAPCOs to invest in small Colorado businesses.

The 29-page audit report found that, since their inception, the CAPCOs have invested $14.1 million in 13 companies and collected $15 million in startup, management and other fees. While Colorado CAPCOs reported a net increase of 157 jobs, one company experienced a net decrease and two companies had no net change in jobs.

The one observation I would make at this point is that it is early to assess the program's effectiveness and impact. Yes, state officials should be monitoring program efforts, but more time is needed to assess the full costs and benefits. Moreover, it is important to keep in mind the dismal state of the economy during the last few years, which is when the program was launched.

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