Proposition 123 Implementation

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.

DLG has awarded $1.7 million in its latest round of Local Planning Capacity grants, a new program established by Proposition 123, the State Affordable Housing Fund. These awards support local governments implementing Prop 123 goals including fast tracking review of affordable housing and achieving Prop 123 commitments. Review a list of awardees and project descriptions.

The next round of funding opens September 1 - 30, 2024 with $4.8 million available. An informational webinar for prospective applicants is scheduled for Wednesday, July 31 at 2:00 PM. All application materials are available on the website, and interested applicants will need to schedule a pre-application meeting with Program Manager Robyn DiFalco to discuss your proposed project.

In order to remain eligible for Prop 123, local governments must demonstrate they have implemented an expedited review process for affordable housing by the end of 2026. This LPC grant program provides funding to support local governments with implementation of this requirement and can also support local government capacity to achieve local affordable housing goals and Prop 123 commitments.

Today, Gov. Jared Polis, the Colorado Office of Economic Development and International Trade (OEDIT), and the Colorado Housing and Finance Authority (CHFA) announced the preliminary selection of the first six recipients of the voter-approved Proposition 123 Equity program. These funds will provide investment capital for low- and middle-income multifamily affordable rental housing projects, supporting the creation of an estimated 628 affordable housing units.

“We need more housing now, and the recipients announced today will help create 628 affordable housing units so more Coloradans can live where they want Today, Gov. Jared Polis, the Colorado Office of Economic Development and International Trade (OEDIT), and the Colorado Housing and Finance Authority (CHFA) announced the preliminary selection of the first six recipients of the voter-approved Proposition 123 Equity program. These funds will provide investment capital for low- and middle-income multifamily affordable rental housing projects, supporting the creation of an estimated 628 affordable housing units.

For complete details, refer to the press release.

The Department of Local Affairs has posted detailed guidance on the Proposition 123 expedited review (fast-track) requirements. These are provided to help local governments (municipalities, counties, and tribal governments) navigate the requirements.

Local governments that file a commitment by November 1, 2026 for the next funding cycle (2027-2029), must demonstrate they have implemented an expedited review process for housing projects where at least half of the units are affordable.

This guidance is intended to provide strategies and examples on how local governments can create an expedited review process that takes into account their unique local context.

Join Webinars

To learn more, you can also join upcoming webinars about the requirement.

The Division of Housing was grateful to have about 60 community partners attend our Proposition 123 homeownership feedback forum on April 17.

Throughout the forum, stakeholders added helpful questions and insights about the proposed allocation and distribution of Proposition 123 funding to address homeownership, outlined in these four documents:

• Down Payment Assistance (DPA)
• New Construction and Acquisition Rehabilitation
• Mobile Home Programs
• Single Family Owner-Occupied (SFOO) Rehabilitation

You can review the session slides and session recording.

Feedback

You can submit additional feedback or ideas by taking the feedback survey, which will be open through April 26.

The Department of Local Affairs (DOLA) will host informational webinars on April 22 and 25 to provide guidance and clarity around the Proposition 123 requirement to expedite review of affordable housing.

Proposition 123 states that, in order to remain eligible for Proposition 123 funds in the next three-year cycle (2027 to 2029), local governments must demonstrate they have implemented an expedited review process for housing projects where at least half of the units are affordable. While the law states that expedited review must take place within 90 calendar days of a complete application submission, there are many additional details to consider.

DOLA’s guidance does not prescribe an approach but instead provides a list of strategies and approaches. Each community will need to determine which strategies are most effective for their local processes. Grant funding is available to support local governments with the implementation process.

Upcoming Webinars

• Monday, April 22, noon to 1:30 p.m.
• Thursday, April 25, 2 to 3:30 p.m.

Note that webinar registration has closed.

Introduction

Chaffee County 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 Land Banking Program (C.R.S. 29-32-105.5 (3)(a)) and the Concessionary Debt Program (C.R.S. 29-32-105.5 (3)(c)). 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 Chaffee County receiving funds through the Land Banking Program and applicable activities within the Concessionary Debt Program* to 80% of Area Median Income (AMI), either on a per-unit basis or on average for all units in a project as allowable by statute. This does not include the Affordable Housing Equity Program. 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

*In cases where debt financing is provided to low and middle-income multi-family housing rental developments, existing affordable housing projects, or preserving existing affordable multi-family rental units.

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 Chaffee County, 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: “[T]his project is funded through a mix of private investments, yet due to excessive costs for land and construction in our rural mountain community, requires grant support to achieve unit pricing that will allow for affordable housing offerings.”

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.

The Division of Housing's Office of Housing Finance and Sustainability has prepared four outlines detailing the proposed allocation and distribution of Proposition 123 funding to address homeownership.

The outlines are based on a two-pronged approach that expands on what works while also supporting new and innovative program ideas.

Review the Proposed Outlines and Take the Survey

The four initial guideline documents are:

• Down Payment Assistance (DPA)
• New Construction and Acquisition Rehabilitation
• Mobile Home Programs
• Single Family Owner-Occupied (SFOO) Rehabilitation

You can review the documents that interest you and provide your feedback through this survey, which will be open through April 26.

Join the April 17 Forum

You can also join the virtual Stakeholder Feedback Forum on Wednesday, April 17 from 12:30 to 2 p.m. Staff will review the outlines and take questions, comments, and suggestions.

Next Steps and Questions

Staff will post final homeownership program guidelines on May 31 and begin accepting initial applications on July 1.

If you have any questions, let us know.

The Division of Housing (DOH) will post proposed Proposition 123 homeownership program outlines on Engage DOLA on Friday, March 29, 2024. Stakeholders will be able to provide written feedback on the outlines between March 29 and April 26.

DOH will hold an online Stakeholder Feedback Forum on the outlines on Wednesday, April 17 from 12:30 to 2 p.m. Staff will review the outlines and take questions, comments, and suggestions from stakeholders. To join the forum, use this Zoom link or call +1 719-359-4580 or +1 669-900-6833 and enter the code 87970042641#.

Staff will post final homeownership program guidelines on May 31 and begin accepting initial applications on July 1.

If you have any questions, let us know.

Division of Local Governments has awarded $2.6 million in grant awards to 25 projects in the first round of Local Planning Capacity grants, a new grant program established by Proposition 123, the State Affordable Housing Fund. View a list of awardees and project descriptions.

The next round of applications will be open May 1 - 31, 2024 with an informational webinar for prospective applicants scheduled on April 11 from 12:30 - 2pm. Grant application materials will be posted in early April and interested applicants are encouraged to register for the webinar and book a pre-application meeting with the LPC Program Manager Robyn DiFalco to discuss your proposed project.

Local Planning Capacity grants support local government efforts to implement systems that fast track or expedite the development review process for affordable housing. These funds can also support local government capacity to achieve local affordable housing goals and local governments’ Prop 123 commitments. Most grantees will be exploring land use code amendments, implementing process improvements to streamline the development review process, or investing in permitting software as part of their strategy. Others will use grant funds to inventory potential properties for future affordable housing projects, designate a liaison to work with developers, implement a housing action plan, or work on other projects such as preservation of mobile home parks.