§ 29-4-1107 — Powers of the board - selection of projects - ownership - report

Colorado § 29-4-1107

• Jurisdiction: Colorado
• Title 29: Government
• Art.: Housing

Text

(1) (a) On or before April 1, 2023, the authority shall publish the first solicitation for
proposals as part of an initial pilot program and must complete the review and
selection process on or before July 1, 2023, in accordance with the requirements set
forth in this section. The authority may continue to solicit proposals as part of the
initial pilot program; except that the authority shall select proposed affordable
rental housing projects that will develop an aggregate of not more than three
thousand five hundred units. Affordable rental housing projects selected in the
initial pilot program must have geographic, income, and project-size diversity and
be by a variety of developer entities. When the authority has determined it has
enough information from the pilot program set forth in this subsection (1)(a), the
authority shall prepare a report and publicly present to the general assembly a
comprehensive evaluation of the authority's impact on middle-income individuals
and families and on housing of all types in the state. The report must include
recommendations on whether the pilot program should end and recommendations
for legislative changes to improve or modify the program as implemented by the
authority.

(b) Subject to the provisions of subsection (1)(a) of this section, the authority
shall select affordable rental housing projects based on proposals from local
governments, housing authorities, nonprofit organizations specializing in housing,
and experienced real estate professionals with proven track records in developing
and operating projects of similar scale and complexity using a fair and transparent
process that creates competition and limits private sector development fees to an
amount that is less than the private sector development fees that are customarily
received as of June 3, 2022, for projects receiving a federal low-income housing tax
credit provided by section 42 of the Internal Revenue Code of 1986, referred to in
this section as the LIHTC. The authority's overall portfolio of affordable rental
housing projects must maintain that eighty percent are new build construction
projects.

(c) The authority shall establish a process for soliciting and evaluating
proposals and selecting projects that includes but is not limited to prioritization
criteria that gives preference to proposed affordable rental housing projects that
promote one or more of the following goals and objectives:

(I) Increase the supply of affordable workforce housing in urban, rural, and
rural resort communities across the state, as each term is classified pursuant to
subsection (1)(d) of this section, that responds to each community's demonstrated
need for middle-income projects in which at least sixty percent of units within a
particular development are available to rent or are actively rented to middle-income
individuals and families as defined in section 29-4-1103 (7);

(II) Create opportunities to build intergenerational wealth for families;

(III) Meaningfully contribute to the alleviation of housing pressures the local
workforce faces;

(IV) Provide for the long-term affordability of rental units;

(V) Have minimal negative impact on existing or planned affordable housing
projects in the state, which impacts shall be evaluated by the authority in
consultation with other housing authorities, nonprofits, local governments, or any
other applicable entity;

(VI) Target a diverse range of income levels within the income restricted
housing component for middle-income individuals and families as set forth in
section 29-4-1103 (7) and proposes at least thirty percent of the rental units for
individuals and families with annual income of the household at eighty percent of
the area median income of households of that size in the county in which the
housing is located or demonstrably targets the lowest possible area median income
for middle-income individuals and families as set forth in section 29-4-1103 (7)
given the proposed scope of the development; and

(VII) Promote mixed-income development where a percentage of units,
proportional to the local demonstrated housing needs within a particular
development, have restricted availability to households at the income levels for
middle-income individuals and families as set forth in section 29-4-1103 (7). The
percentage of restricted units and affordability levels must comply with any local
laws promoting the development of new affordable housing units pursuant to
section 29-20-104 (1).

(d) On or before September 1, 2022, the division of housing, created in
section 24-32-704 (1), shall classify each county in the state as urban, rural, or
rural resort based upon the definitions of the terms as specified in the final report
of the Colorado strategic housing working group, dated July 6, 2021. The division of
housing shall regularly update and publish modifications of this initial
classification.

(2) (a) In addition to any other criteria established by the authority, a
proposal must:

(I) Include a comprehensive plan of finance to finance the affordable rental
housing project from the proceeds of bonds issued by the authority and sold by
approved underwriters identified in the proposal and other sources, with all bonds
issued by the authority being payable solely from revenue generated by and
secured solely by the affordable rental housing project using initial restricted rents
and with no upward trending of rents, except as otherwise allowed under this part
11, with no financial obligation or other liability of the state;

(II) Show how the development aligns with the identified needs of a
community where the proposed affordable rental housing project will be located, as
defined in the community's housing needs assessment, where available;

(III) Include an estimate of the rent savings to income-restricted tenants, an
estimate of the tax savings resulting from the affordable rental housing project's
exemption from state and local taxes, a comparison of the estimated rent savings
and estimated tax savings, and a description of how the tax savings will be used to
produce rent savings or other benefits to income-restricted tenants;

(IV) Limit private sector development fees to an amount less than the private
sector development fees that are customary for LIHTC projects as of June 3, 2022;

(V) Comply with all terms of this part 11; and

(VI) Include an explicit disclaimer that the state has no liability for any
obligations of the authority, that the bonds, contractual, and other obligations and
liabilities of the authority are special limited obligations of the authority and are not
bonds, obligations, or liabilities of the state, and that the state shall have no
obligation or liability with respect to any of the bonds, contractual, or other
obligations or liabilities of the authority.

(b) In addition to any other criteria established by the authority, a proposal
may provide that a portion of the bonds issued by the authority to finance the
affordable rental housing project be sold to investors identified in the proposal.

(c) An applicant may, at any time, request that the board grant the applicant
an exception to the upper limits of the area median income levels for middle-income individuals and families as set forth in section 29-4-1103 (7) based upon
demonstrated unique economic and housing cost attributes in the local community
in which the affordable rental housing project is proposed to be located.

(d) If required by a local community in which a proposed affordable rental
housing project will be located, an applicant may request that the board grant the
applicant an ability to provide a limited number of units in the affordable rental
housing project below eighty percent of area median income, only as is required by
local ordinance, zoning incentives, or similar rules and regulations in the local
community in which the proposed affordable rental housing project will be located.
A proposed affordable rental housing project that receives a waiver by the board
pursuant to this subsection (2)(d) must still have a primary purpose of providing
rental housing for middle-income individuals and families.

(3) To incentivize quality affordable rental housing projects that will operate
consistently and efficiently, in evaluating proposals the authority shall favor
proposals that include an agreement from the developer and the operator identified
in the proposal to continue as developer and operator of the affordable rental
housing project for a period of at least ten years, subject to the authority's right to
remove them.

(4) (a) The authority shall establish a process to provide notification to local
governmental entities where a proposed affordable rental housing project will be
located prior to selection of the project.

(b) (I) The authority must provide and deliver written notice of a proposed
affordable rental housing project to the county and municipality where the project
is proposed to be located within fourteen days of the authority receiving a project
proposal. The county or municipality may object to a project in accordance with this
subsection (4)(b) at any time within ninety days after receipt of the notice. The
authority shall not select a proposed affordable rental housing project if the county
or municipality in which the project is to be located objects to the project in
accordance with this subsection (4)(b).

(II) Each county and municipality in which a proposed affordable rental
housing project will be located must solicit feedback from other local governmental
jurisdictions in the area in which the project will be located to determine the impact
of the proposed affordable rental housing project on the other local governmental
jurisdictions.

(III) During the ninety day notice period pursuant to subsection (4)(b)(I) of this
section, the authority shall use best efforts to work in cooperation with overlapping
local governmental entities for any proposed affordable rental housing project. If
after negotiations, a county or a municipality, or both, within which boundaries a
proposed affordable rental housing project will be located and that has opted into
the pilot program set forth in subsection (1)(a) of this section, provides written
notice to the authority that the proposed affordable rental housing project is not
feasible as proposed, with the reasons why the project is not feasible, the authority
shall not select the proposed affordable rental housing project or shall request that
the proposal be resubmitted for reconsideration by the authority and the applicable
county or municipality, or both, and shall take into account feedback received from
the local governmental entities. Nothing in this subsection (4)(b)(III) precludes a
local government from objecting to a project proposal that is resubmitted to the
authority. If the proposal is approved by the county or municipality, or both as
applicable, or if no feedback is received by the authority from the county or
municipality, or both as applicable, then the authority may select the affordable
rental housing project.

(IV) If a county or municipality has not approved or objected to the project
within seventy-five days of the date the authority delivers its first notice regarding
the proposed project in accordance with subsection (4)(b)(I) of this section, the
authority must deliver a second notice reminding the county or municipality that
any objections to the proposed project are due within ninety days after receipt of
the first notice sent pursuant to subsection (4)(b)(I) of this section.

(V) A county or municipality may approve a proposed affordable rental
housing project at any time, which approval ends the ninety day objection period set
forth in this subsection (4)(b). The authority may offer incentives to obtain such
approval.

(5) When an affordable rental housing project is selected, the authority shall
enter into a contract with the person or group that submits the proposal based on
the terms set forth in the proposal and any additional terms deemed appropriate by
the authority and in accordance with the provisions set forth in this part 11. The
authority may establish additional restrictions on developer fees, including caps on
operating fees and other markups, which shall be set forth in the contract.

(6) All interests of the person or group whose proposal for an affordable
rental housing project is selected will be transferred to the authority or transferred
as otherwise provided in a public-private partnership; except that, and subject to
approval by the authority, a housing authority whose proposal is selected may
retain a portion of interest in the affordable rental housing project. Notwithstanding
the provisions of this subsection (6), the person or group of a selected affordable
rental housing project shall not retain or otherwise be entitled to any interest in the
affordable rental housing project or any right to payments from the revenues from
the affordable rental housing project transferred to the authority or otherwise
transferred in accordance with a public-private partnership, except for the person's
or group's right to compensation and to reimbursement for expenses, which shall
be clearly detailed in the contract between the authority and the person or group
set forth in subsection (5) of this section. A public-private partnership may also
provide for a person's or group's right to compensation and to reimbursement for
expenses in connection with an affordable rental housing project.

(7) An affordable rental housing project and revenue from an affordable
rental housing project proposed by a person or group shall not be pledged or
otherwise used for the payment of bonds or other obligations of projects proposed
by any other person or group without the consent of both the person or group and
other person or group.

(8) The affordable rental housing projects, assets of the authority, and the
appreciation in value and proceeds of any sale of an affordable rental housing
project must be used to provide affordable middle-income workforce housing and
shall not be diverted to any other use or for any other purpose while the authority is
in existence.

(9) The authority shall contract with an outside group to evaluate the
success of its affordable rental housing projects.

(10) (a) Income-restricted rental units in affordable rental housing projects
must be affordable middle-income workforce housing, and rents for units of
affordable rental housing projects must remain as stable as is financially feasible.
To determine rent, the board shall consider information from market studies
prepared in connection with the development of the affordable rental housing
project and other available information adjusted as the board deems appropriate
for the period since the information was compiled and any additional facts and
circumstances applicable to the affordable rental housing project and the area in
which it is located, with a goal of not exceeding thirty percent of the individual's or
family's income. Rent set by the authority for income-restricted units must be at
least ten percent below market rental rates and shall not exceed maximum rents
for households of a given size and income level as established by the United States
department of housing and urban development or published by the Colorado
division of housing or other statewide authority on housing.

(b) Rental units in an affordable rental housing project shall not be rented on
a short-term basis.

(11) The authority shall create priorities for selecting tenants for units in an
affordable rental housing project that favor individuals who work, or families where
at least one member of the family works, in the area in which the affordable rental
housing project is located, in addition to other priorities that the board determines
are appropriate based on the facts and circumstances applicable to the affordable
rental housing project and the area in which it is located.

(12) The authority shall not utilize state funding where the money originates
from the federal American Rescue Plan Act of 2021, Pub.L. 117-2, as the act may
be subsequently amended, for any loan, grant, or other program established by
Senate Bills 22-146, 22-159, and 22-160, enacted in 2022, and House Bills 22-1282
and 22-1304, enacted in 2022.

(13) The authority shall not use any funding available to it to acquire existing
properties supported with the federal low-income housing tax credit provided by
section 42 of the internal revenue code, the Colorado state affordable housing tax
credit authorized under part 21 of article 22 of title 39, or the United States
department of agriculture 515 rural rental housing loan program subsidized
properties.

(14) The authority shall not issue exempt facility bonds, as defined in section
142(a) of the internal revenue code of 1986, as amended, use private activity bonds
volume cap allocation in the issuance of any bonds, or receive a direct allocation,
statewide balance award or assignment of allocation of state ceiling under the
Colorado private activity bond ceiling allocation act set forth in part 17 of article 32
of title 24, and the authority shall not use federal LIHTC or the Colorado state
affordable housing tax credit authorized under part 21 of article 22 of title 39 for its
affordable rental housing projects.

Legislative History

Source: L. 2022: Entire part added, (SB 22-232), ch. 354, p. 2527, � 2, effective June 3. L. 2023: (6) amended, (SB 23-035), ch. 317, p. 1921, � 5, effective June 2. L. 2024: (14) amended, (HB 24-1316), ch. 287, p. 1927, � 2, effective May 30.