A state tax credit was designed to help relieve congestion on major metro Denver highways. Few businesses are taking advantage.

When the state considered requiring businesses to incentivize employees to carpool or use alternative ways to commute, Denver-area business groups pushed for a voluntary program. A south-metro organization is now encouraging businesses to take advantage of state tax credits aimed at reducing the number of people driving alone in their cars to work.

Denver South works with local governments and businesses on economic development and transportation issues in communities along 8 miles of the Interstate 25 corridor in the south metro region. The area, which includes parts of Denver, Arapahoe and Douglas counties, Greenwood Village, Centennial and Lone Tree, has seen steady growth in the number of businesses and housing units in the last few years and expects more.

The area is also projected to see increased traffic, said David Worley, president and CEO of Denver South.

“What we project in the corridor is increased traffic of 15 to 30% in the coming years,” Worley said.

Growth is expected even as many employees continue to work from home for part of the week. Worley said traffic in the south-metro area is above pre-pandemic levels.

A Denver South study of the I-25 corridor forecasts traffic growing from the current daily average of 252,000 vehicles at about the I-225 exchange to 289,000 by 2050. Daily trips are expected to rise from the current 157,000 vehicles to 230,000 in 2050 in the vicinity of Ridgeway Parkway.

The traffic map in the study shows I-25 and Arapahoe Road in red, depicting congested/over-capacity conditions and other streets as congested and near their capacity by 2050.

Traffic at spots along I-25 is beyond the highway’s capacity now, said Daniel Hutton, Denver South’s vice president of transportation and mobility. He said the highway was engineered to handle roughly 200,000 vehicles a day.

The traffic volumes projected for 2050 assume people keep doing what they’re doing now, with few changes in how people commute, Hutton said.

“I-25 is a really significant corridor. A lot of people don’t realize that one-ninth of Colorado’s economy is really based in that 8 miles” in the south metro area, Worley said.

Denver South is encouraging businesses to apply for state tax credits as a means to reduce single-occupant vehicles, relieve congestion and reduce air pollution. The tax credit offers employers a 50% tax credit of up to $125,000 a year for money spent on encouraging workers to get out of their cars.

The maximum amount allowed for any one employee is $2,000 per tax year, according to the Colorado Department of Revenue.

Worley said employers could get tax credits for buying EcoPasses for employees. The Regional Transportation District pass allows for unlimited rides on buses and trains.

“It could be an e-bike program, van pool or a carpooling program designed by the employer,” Worley said. “You could put together an e-bike program with an EcoPass to get to and from work. There are a lot of creative things employers could do with this tax credit.”

Ridership on RTD buses and light rail in the south metro area is below pre-pandemic levels, Worley said. “It’s starting to come back a little, but we have a lot more capacity for light rail than ridership.”

At this point, participation in the tax-credit program is low, Worley said. “We’re struggling with people not being aware of this tax credit.”

The Department of Revenue is compiling the number of claims for credits. The 2023 tax year was the first year that Colorado businesses, nonprofits and others could claim the credit, spokesman Derek Kuhn said.

Legislation passed in 2022 created the Alternative Transportation Options Tax Credit, which was supposed to end this year.

“But we worked really diligently to try to get it extended. It’s now extended through 2027,” Worley said. “One of the reasons we’re working really hard to promote it is that the tax credits need to get used in order for it to stay on Colorado’s legislative landscape.”

Denver South hosted Josh Pens, director of tax policy with the Department of Revenue, Tuesday to talk to area employers about the incentive. The organization joined several metro-area business groups in 2021 to oppose rules that would have required large businesses to set goals to reduce the number of miles that employees drove to work.

The state Air Quality Control Commission planned to write rules for businesses to help implement a 2019 law that set goals for cutting greenhouse gas emissions by at least 26% by 2025; at least 50% by 2030; and at least 90% by 2050 from the levels that existed in 2005.

The rules would have targeted metro Denver and the northern Front Range, which is out of compliance with federal standards for ground-level ozone pollution. The pollution is prevalent on hot, sunny days when volatile organic compounds and nitrogen oxides from oil and gas operations, vehicle exhaust and fumes from industrial chemicals react in the sunlight.

Denver South, along with a broad coalition of businesses, strongly urged the Colorado Air Quality Control Commission to use voluntary measures instead, Worley said.

“While we supported the State’s efforts to improve air quality, protect public health, and mitigate climate change, we also recognized the business community’s constraints, limitations, and continuum of needs,” Worley said in a statement.

The rulemaking for the so-called Employee Trip Reduction Program didn’t happen. The Colorado Chamber of Commerce hailed the withdrawal of the proposal by the state Air Pollution Control Division. After taking input, the division said voluntary measures “can build a foundation for the future success” of the program.

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