Proposition 123 Implementation

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Several hundred million dollars for affordable housing will become available in the second half of 2023 due to the enactment of Proposition 123 by Colorado’s voters in 2022. This funding will be overseen by the Department of Local Affairs and the Governor's Office of Economic Development and International Trade, and may be granted or loaned to the following types of organizations:

  • Non-profits
  • Community land trusts
  • Private entities
  • Local governments

Organizations are only eligible for this funding if their project or program take place in municipalities, counties, or tribes that have committed to increasing their affordable housing stock above a baseline amount; jurisdictions that have accepted commitment filings can be found at this link . Stakeholders should regularly visit this site to find explanatory articles and resources, and to offer feedback that shapes future materials, policies, and procedures relating to affordable housing commitments, and funding programs overseen by the Department of Local Affairs.

Several hundred million dollars for affordable housing will become available in the second half of 2023 due to the enactment of Proposition 123 by Colorado’s voters in 2022. This funding will be overseen by the Department of Local Affairs and the Governor's Office of Economic Development and International Trade, and may be granted or loaned to the following types of organizations:

  • Non-profits
  • Community land trusts
  • Private entities
  • Local governments

Organizations are only eligible for this funding if their project or program take place in municipalities, counties, or tribes that have committed to increasing their affordable housing stock above a baseline amount; jurisdictions that have accepted commitment filings can be found at this link . Stakeholders should regularly visit this site to find explanatory articles and resources, and to offer feedback that shapes future materials, policies, and procedures relating to affordable housing commitments, and funding programs overseen by the Department of Local Affairs.

  • Free Technical Assistance | Proposition 123 Information Webinar Series

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    The Department of Local Affairs (DOLA) is engaging consulting firm Logan Simpson to provide free technical assistance to help local governments understand Prop 123, establish their baselines and file their commitments, in order to opt in to Prop 123. Join DOLA for a series of webinars through August 2023. Each of these webinars will be tailored for the following types of communities: large municipalities, smaller munis, rural, rural resort, and unincorporated county.

    Recordings and slides of recent webinars

    Each session will be interactive and all sessions will be recorded and posted to DOLA’s Prop 123 website.

    These interactive webinars will feature some example communities for a demo of the baseline tool and explore how adjusting the data impacts the growth calculations.

    Attending one of these webinars will be a prerequisite to receiving the more tailored technical assistance, which will take the form of small-group work sessions for regional groupings. These 2-hour work sessions may be sufficient to address all questions for each participating jurisdiction. Additional support may be available, depending on the need.


  • Commitment Filings for 2023

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    Commitment filings to increase affordable housing have been accepted for the following municipalities, counties, and tribes:


    Arvada, City of

    Aurora, City of

    Bayfield, Town of

    Bennett, Town of

    Boulder, City of

    Boulder, County of

    Breckenridge, Town of

    Broomfield, City and County of

    Brush, City of

    Buena Vista, Town of

    Canon City, City of

    Chaffee, County of

    Colorado Springs, City of

    Craig, City of

    Cripple Creek, City of

    Denver, City and County of

    Durango, City of

    Eagle, Town of

    Edgewater, City of

    Englewood, City of

    Erie, Town of

    Estes Park, Town of

    Flagler, Town of

    Fort Collins, City of

    Frisco, Town of

    Fruita, City of

    Gilpin, County of

    Glenwood Springs, City of

    Golden, City of

    Grand Junction, City of

    Gunnison, County of

    Hayden, Town of

    Ignacio, City of

    Lafayette, City of

    Lake, County of

    Lakewood, City of

    La Junta, City of

    Leadville, City of

    Littleton, City of

    Lone Tree, City of

    Longmont, City of

    Mesa, County of

    Monte Vista, City of

    Montrose, City of

    Mountain Village, Town of

    Naturita, Town of

    Ordway, Town of

    Paonia, Town of

    Parachute, Town of

    Pritchett, Town of

    Pueblo, City of

    Rangely, Town of

    Ridgway, Town of

    Rifle, City of

    Rio Grande, County of

    Rocky Ford, City of

    Saguache, County of

    Salida, City of

    Sheridan, City of

    Silt, Town of

    Silverthorne, Town of

    Snowmass Village, Town of

    Steamboat Springs, City of

    Summit, County of

    Telluride, Town of

    Ute Mountain Ute, Tribe of

    Westminster, City of


    Revisit this page regularly for updates on accepted commitments.

  • Commitment Filings Live and More Helpful Resources

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    The entire team at the State of Colorado would like to thank our stakeholders for your vital feedback on the implementation of Proposition 123 over the past several months. We have integrated what we have learned and developed so far into a series of new processes and resources below:

    • Municipalities, counties, and tribes may submit a commitment to annual increases in affordable housing at this link using our online form.
    • The Baseline Assistance Tool can be used by any interested stakeholder to develop a baseline amount of affordable housing, so that it can be incorporated into a commitment to annual increases in affordable housing at this link.
    • Several answers to frequently asked questions have been added, find these on the right side of the page under the heading "FAQs".

    This update is the first of many as the State and our partners continue to create and improve processes surrounding the programs and commitments created by Proposition 123. Come back to this site and subscribe to our newsletter to stay involved and up to date on this rapidly evolving project.

  • New Content on Proposition 123 Concepts

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    We are excited to announce that articles detailing Proposition 123 implementation concepts are being run on the main website of the Department of Local Affairs.

    These articles are categorized into series, with the first series covering definitions of important terms in the proposition. Check out Defined: Local Government Affordable Housing Commitment and Defined: Local Government Affordable Housing Baseline to read the first articles in this series.

    A separate series is being published about resources that local governments and other stakeholders can use to assist in their own research and development work surrounding Proposition 123, with the first article titled Resources: Affordable Housing Baseline Estimate References discussing the methods that the Division of Housing used to calculate non-binding reference data that can be used in affordable housing commitment drafting.

  • Defined: Local Government Affordable Housing Commitment

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    Local Government Affordable Housing Commitments must be filed with the Division of Housing to receive funding made available by Proposition 123. Municipalities make commitments on behalf the entirety of their jurisdiction, while counties are responsible only for unincorporated areas. Entities will be ineligible for Proposition 123 funding if their project is located in, or program operates within, a municipality or unincorporated area of a county that has not filed, or is out of compliance with, their commitment -- even if the entity is otherwise eligible.

    Drafting a commitment

    Once an interested local government has determined its baseline amount of affordable housing units, it can then plan its commitment to increase that number by 3% each year for a 3-year period ending on December 31, 2026. Ultimately, DOH and its partners will be working with any interested local government to submit its commitment no later than the deadline established in Proposition 123, which is November 1, 2023. Funding programs may be available sooner than the November 1st deadline, so DOH encourages local governments to commit as soon as possible. The dissemination of baseline data for a local government’s consideration is the first step toward achieving this important goal; additional information on the process through which commitments may be filed will be made available in the next several weeks.

    Compliance

    It is important to note that Proposition 123 requires a local government to file a commitment specifying how it will increase a combination of its newly constructed affordable housing units and its existing units converted to affordable housing over its determined baseline number of affordable housing units by 3% each year. The Division of Housing interprets this to mean that ultimately a demonstration of a 9% increase over the baseline at the end of the 3-year commitment period ending on December 31, 2026, satisfies this requirement even if a 3% increase may not be accounted for in a particular year during that time frame.

    If a commitment is not filed by November 1, 2023, then a local government and any development project in its jurisdiction are ineligible to receive any funding established by Proposition 123 during the 2024 calendar year. If this is to occur, a local government may file a commitment by November 1, 2024, for a 2-year commitment to increase its affordable housing stock by a total of 6% by December 31, 2026.

    If a local government is unable to meet its 9% total commitment by December 31, 2026, then it and any development project in its jurisdiction are ineligible to receive any funding established by Proposition 123 for calendar year 2027. The good news is it may file a new commitment by November 1, 2027, for a 2-year commitment to increase its affordable housing stock by a total of 6% by December 31, 2029.

    As an interested local government works to package its commitment and file it with DOH by November 1, 2023, it does not have to include verification of a “fast-track approval process” in this initial commitment. This will be a requirement in future commitments starting with the one due by November 1, 2026. However, Proposition 123 does provide that for this first commitment and future ones, “local governments should prioritize high-density housing, mixed-income housing, and projects consistent with the goal of environmental sustainability, when appropriate, and should prioritize affordable housing in communities in which low concentrations of affordable housing exist.”

  • Resources: Affordable Housing Baseline Estimate References

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    Introduction

    Reference data is available within this table (External Link) to assist local governments in understanding how an affordable housing baseline and annual goal can differ based on the income limit used to calculate that baseline. This data is not the local government affordable housing baselines of localities — these will be developed by local governments, not the State — but are rather to assist in the development of baselines and to inform the design of other resources.

    Data sources

    The data used to create the baseline references are sourced from the U.S. Census Bureau American Community Survey, and the U.S. Department of Housing and Urban Development Comprehensive Housing Affordability Strategy. These sources are used to determine the estimated number of rental units at given gross rent range¹, ownership units at given value ranges², in addition to the portion of rental or ownership stock³ that may be available as suggested by recent movers over the past four years.

    Statistical calculations

    Estimates for municipalities are provided by the Census Bureau without the need for further analysis, municipalities are already included in Census Bureau datasets that contain places (though these do include Census Designated Places that are unincorporated). Conversely, we calculate estimates for unincorporated areas of counties by subtracting the estimates of municipalities from the county or counties that they lie within.

    Data from the American Community Survey was collected from the period of 2017 to 2021 and may be considered as roughly from 2019 while data from the Comprehensive Housing Affordability Strategy⁴ was collected from 2015 through 2019 and may be considered as roughly from 2017. Income limits are provided by the U.S. Department of Housing and Urban Development in the form of Area Median Incomes for Federal Fiscal Year 2022⁵, and from the American Community Survey 2021 for the state median household income⁶.

    The proposition allows for baselines to be calculated using the income limit of an adjacent jurisdiction. Adjacency is determined based on a county adjacency file from the National Bureau of Economic Research⁷. For these references, income limits are displayed for counties that may nor necessarily border municipalities yet do border the county or counties that the municipality lies within. This is done to provide more options for municipalities compared to determining adjacency based on coterminous borders which would be more restrictive.

    Analysis and results

    The home value, gross rent, and recent mover estimate data provided by HUD and the ACS is joined with income limit data to determine the portion of units that are affordable within each range for homes (for example, from $400,000 to $499,999) and rental units (for example, from $1,000 to $1,249) based on each income limit (for example, the area median income of the jurisdiction’s own county). The resulting dataset illustrates how the amount of housing that is considered as affordable within a jurisdiction differs based on the income limit that drives the affordability calculation.

    Rental units are affordable if the gross rent of the unit is affordable at 60% of the selected income limit, while home ownership units are affordable if the value of the home is equal to or less than the income limit multiplied by 3.5 (to calculate the home value to income ratio). The home value to income ratio was derived from mortgages originated for home purchase in Colorado in 2019, made available through the Home Mortgage Disclosure Act Dataset published by the Consumer Finance Protection Bureau⁸.

    The estimated baseline amount is further adjusted to consider the amount of housing that is not just affordable, but also available, by prorating the estimated amount of affordable housing by the portion of recent movers within that type of stock (owned or rented) for each jurisdiction. The end result of these aggregations gives localities a potential baseline and annual commitment estimates outlined by Proposition 123.

    References

    Note: Links to U.S. Census Bureau data are directed to a server that contains individual files for American Community Survey tables for the entire United States, these files are very large and require technical skill to analyze. To view this data more intuitively, we recommend visiting data.census.gov and searching for the relevant table (for example, Table B25063 regarding Gross Rents).

    ¹ U.S. Census Bureau (2022). Table B25063: Gross Rent, 2017-2021 American Community Survey 5-year estimates.(External link)(External link)

    ² U.S. Census Bureau (2022). Table B25075: Value, 2017-2021 American Community Survey 5-year estimates.(External link)(External link)

    ³ U.S. Census Bureau (2022). Table B25038: Tenure By Year Householder Moved Into Unit, 2017-2021 American Community Survey 5-year estimates.(External link)(External link)

    ⁴ U.S. Department of Housing and Urban Development (2022). Comprehensive Housing Affordability Strategy, 2015-2019.(External link)(External link)

    ⁵ U.S. Census Bureau (2022). Table B19013: Median Household Income, 2021 American Community Survey 1-year estimates.(External link)(External link)

    ⁶ U.S. Department of Housing and Urban Development (2022). Data for Section 8 Income Limits in MS EXCEL.(External link)(External link)

    ⁷ National Bureau of Economic Research (2017). County adjacency.(External link)(External link)

    ⁸ Home Mortgage Disclosure Act (2019). Loan Application Register.(External link)


  • Defined: Local Government Affordable Housing Baseline

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    The baseline number of affordable housing units within municipalities and counties is a major component of local government affordable housing commitments. These commitments must be filed for affordable housing projects and programs to receive funding made available through Proposition 123.

    Proposition 123 requires the governing body of a local government (municipality or county) to first determine its own baseline number of affordable housing units by referencing one of the following:

    • The 2017-2021 American Community Survey (ACS) published by the U.S. Census Bureau.
    • The current version of the Comprehensive Housing Affordability Strategies (CHAS) estimates published by the U.S. Department of Housing and Urban Development.

    Scope of housing units included in baselines

    Housing units are considered as affordable if:

    • Rental units:
      • Costs less than 30% of the monthly income for a household at or below 60% of the median income.
    • For-sale units:
      • The mortgage payment costs less than 30% of the monthly income for a household at or below 100% of the median income.
      • The unit could be purchased by a household at or below 100% of the median income.

    Income limits applied in baselines

    The following types of income limits may be used to determine if a housing unit is affordable for the purposes of a baseline calculation:

    • The Area Median Income of the county that jurisdiction is within.
    • The Area Median Income of a county adjacent to the jurisdiction.
    • The state median household income.

    Flexibilities allowed in baseline development

    Proposition 123 is unspecific about how some of these requirements are and applied by local governments. We are currently aware of the following implied flexibilities in baseline calculation at:

    • Area Median Income Limits may be selected from past years. For example, income limits from Federal Fiscal Year 2021 may be selected instead of the most recently available limits from Federal Fiscal Year 2022.
    • For municipalities that choose an income limit of an adjacent jurisdiction, they could choose an income limit for a county that the municipality is not directly adjacent to, but is adjacent to a county that their municipality resides within. The boundaries of municipalities are not necessarily coterminous with the boundaries of one or more counties; so this interpretation affords both municipalities and counties similar levels of flexibility in selecting income limits.
    • Area Median Income Limits can be selected based on various household sizes. Household size is calculated by counting the number of people in a housing unit. Income limits are available for household sizes ranging from one to eight persons. The Median Family Income across households of all sizes may also be used as an alternative.
    • The median household income for Colorado could be selected instead of an Area Median Income. This may be especially applicable for municipalities and counties where median family income and median household income differ, for example in areas with large portions of college students that have low to no earnings, resulting in a median household income that is much lower than a median family income.
    • All affordable for-sale units do not have to be included in the baseline amount of affordable for-sale units. This amount can be prorated to only the units that are available.
    • The amount of housing units at each rent or value level can be adjusted to bring the data closer in line with current housing market conditions. For example, a home price to income ratio can be chosen based on current market conditions instead of those in 2019.


Page last updated: 15 Sep 2023, 03:44 PM