Petition by Town of Fraser to Increase Income Limits for AHFF Programs

Introduction

The Town of Fraser has submitted a petition to the Division of Housing within the Department of Local Affairs to use different percentages of median income than those percentages specified in statute for the following programs: the Equity Program. These programs are administered by the Colorado Housing and Finance Authority and overseen by the Governor’s Office of Economic Development and International Trade. Though the Division is not responsible for these programs, it is charged by statute (C.R.S. 29-32-105.5 (2)) to review petitions by localities that eligible projects within them be subjected to different income limits from those explicated in statute.

Scope of Petition

The increase of income limits for projects sited in the Town of Fraser receiving funds through the Equity Program to 100% of Area Median Income (AMI), either on a per-unit basis or on average for all units in a project as allowable by statute. If approved, the petition will remain in effect from its approval date through December 31, 2026.

Current Area Median Income limits for these programs are as follows:

• Land Banking Program - 60% max AMI for Rental, 100% max AMI for Homeownership
• Affordable Housing Equity Program - 90% average AMI or below
• Concessionary Debt Programs - 60% average AMI or below

Process

The Division of Housing must follow the following process required by statute (C.R.S. 29-32-105.5 (5)):

The Division may approve the petition to use different percentages of area median income, but only if:

• The submitted housing needs assessment:
  • Is published by the state or is a local housing needs assessment that utilizes data from the state demographer or other publicly accessible sources, which in either case may be supported by other relevant and verifiable community data;
  • Has been completed within the past three years of the petition date; and
  • Is accompanied by a narrative description of why other funding sources cannot be utilized, are not sufficient, or are not accessible to meet the housing needs described within the petition; and
• The Division determines that the current eligibility standards would cause implementation of this article in a manner inconsistent with demonstrated housing and workforce needs within the jurisdiction, taking into consideration regional workforce commuting trends.

In the event that the petition is approved, the new income limits will be based on the average needs identified in the housing needs assessment (C.R.S. 29-32-105.5 (6)), and public comments will be considered in the review of the petition (C.R.S. 29-32-105.5 (4)). No recommendation will be made on approval or denial of the petition until the public comment period is complete and the comments are considered in the recommendation. If Division of Housing staff recommend the denial of the petition, then the petitioner may appeal the staff recommendation to the Division Director of the Division of Housing.

Implications

If the petition is approved then eligible affordable housing projects can make units available to households with higher incomes than would otherwise be possible.

If the petition is denied, then affordable housing projects currently under consideration may become financially infeasible in the event that they require higher revenues generated by higher income households. If demand for affordable housing is still present at lower income levels, they may be unable to afford the higher rents of these higher income units, potentially making less affordable housing units available for lower income households than would otherwise be required.

Basis of Petition

A housing needs assessment of the Town of Fraser, produced in 2022. In describing why other funding sources cannot be utilized, are not sufficient, or are not accessible to meet the housing needs described within the petition, the petitioner wrote:

The cost of construction and current interest rates both remain high, raising the cost of affordable housing projects. We are accessing a wide range of funding to make this project feasible and to serve the demonstrated need in our community. The planned capitol stack and financing for the project includes Town funding, multiple grants, including Strong Communities and More Housing Now funding through DOLA, and an Operation Turnkey Grant through Colorado DOH used to purchase the land, bonds, LIHTC, CHFA sub debt, developer deferred equity, and DOH gap financing. Without closing the gap that currently exists in the proforma, which the Prop 123 equity funding would allow us to do, we may need to look at other options such as raising AMIs across the project in order to make the project pencil out.

Public Comments

Public comments will be accepted for 30 days, starting on the date that the Division of Housing posts notice that a petition has been filed on its website. The petition and relevant attachments will be included in the notice, and available at this link.