C.R.S. § 29-32-105.7: Home ownership program flexibility - waiver - affordability mechanisms - legislative declaration - definitions.

(1) (a) The general assembly finds and declares that:

(I) Proposition 123, approved by a majority of eligible electors during the November 2022 general election, was intended to reach all communities in the state;

(II) Affordable home ownership opportunities are limited by changing economic conditions throughout the state;

(III) The funding provided pursuant to proposition 123 should be allocated to building housing that would not otherwise be built without financial assistance; and

(IV) Statutory restrictions on eligibility for assistance using proposition 123 funding, including limitations on household income and maximum allowable monthly housing costs, coupled with increased interest rates, land costs, and building material costs, are preventing the proposition 123 home ownership program from being used in some communities.

(b) The general assembly further finds and declares that it is the general assembly's intent that the waiver process set forth in this section will allow the division more flexibility to allocate funding for affordable home ownership projects in communities across the state.

(2) As used in this section, unless the context otherwise requires:

(a) "Eligible organization" means a nonprofit organization, local government, community development financial institution or community land trust that is eligible for funding pursuant to section 29-32-104 (3)(a).

(b) "Project" means a residential housing unit or group of units described within an eligible organization's request for funding pursuant to section 29-32-104 (3)(a)(I).

(3) (a) Notwithstanding the provisions of section 29-32-104 (3)(a), an organization that was awarded money for an affordable home ownership project pursuant to section 29-32-104 (3)(a) and that constructed a residential unit as part of the project that has not been purchased within six months of the issuance of a certificate of occupancy, may submit a request to the division for a waiver of the maximum monthly housing cost limit for that residential unit.

(b) The division may approve a waiver request if an eligible organization awarded money for an affordable home ownership program pursuant to section 29-32-104 (3)(a) establishes that:

(I) A substantial need for housing the project's target population exists; and

(II) The unit has been adequately marketed to eligible buyers for purchase for at least six months after final completion of the unit, and the unit has not been purchased by an eligible buyer within that six-month period.

(c) The division may:

(I) Issue a waiver with housing cost limits that are different from those requested by the eligible organization in the waiver request if different housing cost limits would better serve needs identified in the community, the project remains financially feasible in the division's discretion, and there are eligible buyers that meet the parameters set by the division pursuant to this subsection (3)(c)(I); or

(II) Modify the total amount of funding provided pursuant to section 29-32-104 (3)(a) to account for an increase in the sale price of the unit.

(4) In lieu of the process described in subsection (3) of this section, the division may approve an eligible organization's process for determining when to exceed the maximum monthly household income for a unit funded pursuant to section 29-32-104 (3)(a). An eligible organization's process approved under this subsection (4) shall not require a six-month marketing period.

(5) (a) For projects funded pursuant to section 29-32-104 (3)(a), an eligible organization may request that the division allow it to rent residential units constructed as part of the project. The division has the authority to rent or allow the rental of a residential unit constructed as part of the project.

(b) On or before December 31, 2026, the division shall issue guidance for when an eligible organization may rent units within a project and develop a process by which rented units may return to the for-sale market.

(c) A homeowner may rent a unit funded pursuant to section 29-32-104 (3)(a) as long as the unit remains their primary residence.