A Bill for an Act
Page 1, Line 101Concerning the affordable home ownership program.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
The division of housing in the department of local affairs (division) administers an affordable home ownership program (program) that makes grants to nonprofit organizations, local governments, tribal governments, community development financial institutions, and community land trusts (eligible organizations) to support affordable home ownership, including the development of residential housing units that are described in an eligible organization's funding request (project). Current law specifies that only a household with an income less than or equal to 120% of the area median income is eligible for assistance through the program, but it is unclear whether this requirement applies to housing units constructed by an eligible organization through one of its projects. The bill clarifies that only a household with an income less than or equal to 120% of the statewide area median income is eligible for housing constructed by an eligible organization through one of its projects.
In addition, the program requires that housing offered through the program, including all taxes and fees, costs not more than 35% of a household's monthly income. The bill allows the division to modify this percentage as applied to a residential unit constructed by an eligible organization as part of an affordable housing project pursuant to a waiver process initiated by an eligible organization if a substantial need for housing the project's target population exists, the unit has been adequately marketed to eligible buyers for purchase for at least 6 months after the issuance of a certificate of occupancy, and the unit has not been purchased by an eligible buyer within that 6-month period. In lieu of this process, the division may approve an eligible organization's process for determining when to exceed the maximum monthly household income for a unit funded by the program.
The division may issue a waiver with a different housing cost limit from the limit requested by the eligible organization if a different limit would better serve needs identified in a housing assessment and the project remains financially feasible in the division's discretion.
For an eligible organization, the bill specifies that the division is required to accept a local affordability mechanism in lieu of any state-prescribed use covenant if the division determines that the local affordability mechanism allows the state to maintain its obligations for compliance and compliance monitoring and is substantially equivalent to or more protective of long-term affordability and primary occupancy than a state-prescribed use covenant or the local affordability mechanism is necessary to access financing for disproportionately impacted communities.
The division may allow an eligible organization to rent residential units constructed as part of the project. On or before December 31, 2026, the division is required to issue guidance for when units within a project may be rented.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. In Colorado Revised Statutes, 29-32-104, amend
Page 2, Line 3(3)(a) as follows:
Page 2, Line 429-32-104. Permissible expenditures - affordable housing
Page 3, Line 1programs - report - definitions.
Page 3, Line 2(3) The division of housing and the division of local government
Page 3, Line 3shall expend the money transferred to the support fund in section
Page 3, Line 429-32-103 (1) to support the following programs only:
Page 3, Line 5(a) (I) An affordable home ownership program administered by
Page 3, Line 6the division or one or more contractors of the division. The program shall
Page 3, Line 7offer home ownership down-payment assistance to first-time homebuyers
Page 3, Line 8and shall prioritize assistance, to the extent practicable, to first-generation
Page 3, Line 9homebuyers. The assistance shall be provided to households with income
Page 3, Line 10less than or equal to one hundred twenty percent of the area median
Page 3, Line 11income of households of that size in the territory or jurisdiction of local
Page 3, Line 12government or tribal government in which the housing is located, as
Page 3, Line 13calculated and published for a given year by the United States department
Page 3, Line 14of housing and urban development, and the cost of the monthly housing
Page 3, Line 15payment toward mortgage principal, mortgage interest, property taxes,
Page 3, Line 16mortgage and homeowner's insurance, homeowner association fees, land
Page 3, Line 17lease fees, and metropolitan district fees
shallPage 3, Line 18thirty-five percent of monthly household income. The program shall also
Page 3, Line 19make grants or below-market-rate loans to nonprofit organizations,
Page 3, Line 20local governments, tribal governments, community development financial
Page 3, Line 21institutions, and community land trusts to support affordable home
Page 3, Line 22ownership for households with income less than or equal to one
Page 3, Line 23hundred twenty percent of the statewide area median income of
Page 3, Line 24households of that size, as calculated and published for a given
Page 3, Line 25year by the United States department of housing and urban
Page 3, Line 26development, and the cost of the monthly housing payment
Page 3, Line 27toward mortgage principal, mortgage interest, property taxes,
Page 4, Line 1mortgage and homeowner's insurance, homeowners' association
Page 4, Line 2fees, land lease fees, and metropolitan district fees must not
Page 4, Line 3cost more than thirty-five percent of monthly household
Page 4, Line 4income. The program shall also make grants or loans to groups or
Page 4, Line 5associations of mobile home owners and their assignees to assist them
Page 4, Line 6with the purchase of a mobile home park pursuant to section 38-12-217.
Page 4, Line 7Said grants and loans shall be used to support affordable home ownership
Page 4, Line 8for households with income less than or equal to one hundred percent of
Page 4, Line 9the area median income of households of that size in the territory or
Page 4, Line 10jurisdiction of local government or tribal government in which the
Page 4, Line 11households are located, as calculated and published for a given year by
Page 4, Line 12the United States department of housing and urban development, and the
Page 4, Line 13cost of the monthly housing payment toward mortgage principal,
Page 4, Line 14mortgage interest, property taxes, mortgage and homeowner's insurance,
Page 4, Line 15homeowner association fees, land lease fees, and metropolitan district
Page 4, Line 16fees
shallPage 4, Line 17household income. All principal and interest payments on loans made
Page 4, Line 18under this subsection (3)(a) shall be paid to the division and used by the
Page 4, Line 19division for the purposes set forth in this subsection (3). Up to fifty
Page 4, Line 20percent of money transferred to the support fund annually may be used for
Page 4, Line 21the program. The division shall determine how much of the available
Page 4, Line 22funding shall be allocated to each aspect of the program. The division
Page 4, Line 23may utilize up to five percent of the funds it receives from the fund for
Page 4, Line 24the program to pay for the direct and indirect costs of administering the
Page 4, Line 25program.
Page 4, Line 26(II) For projects undertaken by an eligible organization,
Page 4, Line 27as defined in section 29-32-105.7 (2)(a), the division may increase
Page 5, Line 1or waive the maximum percentage of income that a household
Page 5, Line 2may allocate for monthly housing costs otherwise required by
Page 5, Line 3subsection (3)(a)(I) of this section pursuant to the process set
Page 5, Line 4forth in section 29-32-105.7.
Page 5, Line 5SECTION 2. In Colorado Revised Statutes, add 29-32-105.7 as
Page 5, Line 6follows:
Page 5, Line 729-32-105.7. Home ownership program flexibility - waiver -
Page 5, Line 8affordability mechanisms - legislative declaration - definitions.
Page 5, Line 9(1) (a) The general assembly finds and declares that:
Page 5, Line 10(I) Proposition 123, approved by a majority of eligible
Page 5, Line 11electors during the November 2022 general election, was
Page 5, Line 12intended to reach all communities in the state;
Page 5, Line 13(II) Affordable home ownership opportunities are limited
Page 5, Line 14by changing economic conditions throughout the state;
Page 5, Line 15(III) The funding provided pursuant to proposition 123
Page 5, Line 16should be allocated to building housing that would not
Page 5, Line 17otherwise be built without financial assistance; and
Page 5, Line 18(IV) Statutory restrictions on eligibility for assistance
Page 5, Line 19using proposition 123 funding, including limitations on
Page 5, Line 20household income and maximum allowable monthly housing
Page 5, Line 21costs, coupled with increased interest rates, land costs, and
Page 5, Line 22building material costs, are preventing the proposition 123 home
Page 5, Line 23ownership program from being used in some communities.
Page 5, Line 24(b) The general assembly further finds and declares that
Page 5, Line 25it is the general assembly's intent that the waiver process set
Page 5, Line 26forth in this section will allow the division more flexibility to
Page 5, Line 27allocate funding for affordable home ownership projects in
Page 6, Line 1communities across the state.
Page 6, Line 2(2) As used in this section, unless the context otherwise
Page 6, Line 3requires:
Page 6, Line 4(a) "Eligible organization" means a non-profit
Page 6, Line 5organization, local government, community development
Page 6, Line 6financial institution, tribal government, or community land
Page 6, Line 7trust that is eligible for funding pursuant to section 29-32-104
Page 6, Line 8(3)(a).
Page 6, Line 9(b) "Project" means a residential housing unit or group of
Page 6, Line 10units described within an eligible organization's request for
Page 6, Line 11funding pursuant to section 29-32-104 (3)(a)(I).
Page 6, Line 12(3) (a) Notwithstanding the provisions of section 29-32-104
Page 6, Line 13(3)(a) that specify that monthly housing costs shall not exceed
Page 6, Line 14thirty-five percent of monthly household income, an eligible
Page 6, Line 15organization that was awarded money for an affordable home
Page 6, Line 16ownership project pursuant to section 29-32-104 (3)(a) and that
Page 6, Line 17constructed a residential unit as part of the project that has
Page 6, Line 18not been purchased within six months of the issuance of a
Page 6, Line 19certificate of occupancy, may submit a request to the division
Page 6, Line 20for a waiver of the maximum monthly housing cost limit for that
Page 6, Line 21residential unit.
Page 6, Line 22(b) A waiver request must include the following
Page 6, Line 23information:
Page 6, Line 24(I) A housing-needs assessment completed within six years
Page 6, Line 25of the waiver request;
Page 6, Line 26(II) A proposed maximum percentage of monthly income
Page 6, Line 27that a household may allocate for monthly housing costs; and
Page 7, Line 1(III) Evidence that the unit has been adequately marketed
Page 7, Line 2to eligible buyers for purchase for at least six months after the
Page 7, Line 3unit's final completion and that the unit has not been purchased.
Page 7, Line 4(c) The division may approve a waiver request if an eligible
Page 7, Line 5organization awarded money for an affordable home ownership
Page 7, Line 6project pursuant to section 29-32-104 (3)(a) establishes that:
Page 7, Line 7(I) A substantial need for housing the project's target
Page 7, Line 8population exists; and
Page 7, Line 9(II) The unit has been adequately marketed to eligible
Page 7, Line 10buyers for purchase for at least six months after final
Page 7, Line 11completion of the unit and the unit has not been purchased by an
Page 7, Line 12eligible buyer within that six-month period.
Page 7, Line 13(d) The division may:
Page 7, Line 14(I) Issue a waiver with housing cost limits that are
Page 7, Line 15different from those requested by the eligible organization in
Page 7, Line 16the waiver request if different housing cost limits would better
Page 7, Line 17serve needs identified in the housing-needs assessment, the
Page 7, Line 18project remains financially feasible in the division's discretion,
Page 7, Line 19and there are eligible buyers that meet the parameters set by
Page 7, Line 20the division pursuant to this subsection (3)(d)(I); or
Page 7, Line 21(II) Modify the total amount of funding provided
Page 7, Line 22pursuant to section 29-32-104 (3)(a) to account for an increase
Page 7, Line 23in the sale price of the unit.
Page 7, Line 24(4) In lieu of the process described in subsection (3) of this
Page 7, Line 25section, the division may approve an eligible organization's
Page 7, Line 26process for determining when to exceed the maximum monthly
Page 7, Line 27household income for a unit funded pursuant to section
Page 8, Line 129-32-104 (3)(a).
Page 8, Line 2(5) (a) For projects funded pursuant to section 29-32-104
Page 8, Line 3(3)(a), the division shall accept a local affordability mechanism,
Page 8, Line 4including a deed restriction, community land trust ground
Page 8, Line 5lease, secured recapture lien, or comparable recorded
Page 8, Line 6instrument in lieu of any state-prescribed use covenant if the
Page 8, Line 7division determines that:
Page 8, Line 8(I) The local affordability mechanism allows the state to
Page 8, Line 9maintain its obligations for compliance and compliance
Page 8, Line 10monitoring; and
Page 8, Line 11(II) (A) The local affordability mechanism is
Page 8, Line 12substantially equivalent to or more protective of long-term
Page 8, Line 13affordability and primary occupancy than a state-prescribed
Page 8, Line 14use covenant; or
Page 8, Line 15(B) The local affordability mechanism is necessary for
Page 8, Line 16access to financing for a disproportionately impacted
Page 8, Line 17community, as defined in section 24-4-109 (2)(b)(II).
Page 8, Line 18(b) If the division accepts a local affordability mechanism
Page 8, Line 19in lieu of a state-prescribed use covenant, the division shall not
Page 8, Line 20require a state-prescribed use covenant on a unit, except to
Page 8, Line 21incorporate non-duplicative federal or state requirements not
Page 8, Line 22addressed in the local affordability mechanism.
Page 8, Line 23(6) (a) For projects funded pursuant to section 29-32-104
Page 8, Line 24(3)(a), an eligible organization may request that the division
Page 8, Line 25allow it to rent residential units constructed as part of the
Page 8, Line 26project.
Page 8, Line 27(b) On or before December 31, 2026, the division shall issue
Page 9, Line 1guidance for when an eligible organization may rent units
Page 9, Line 2within a project.
Page 9, Line 3SECTION 3. Effective date - applicability. This act takes effect
Page 9, Line 4July 1, 2026, and applies to requests for waivers received by the division
Page 9, Line 5on or after said date.
Page 9, Line 6SECTION 4. Safety clause. The general assembly finds,
Page 9, Line 7determines, and declares that this act is necessary for the immediate
Page 9, Line 8preservation of the public peace, health, or safety or for appropriations for
Page 9, Line 9the support and maintenance of the departments of the state and state
Page 9, Line 10institutions.