C.R.S. § 39-22-5703: Credit against tax - affordable housing located in a transit and housing investment zone.

(1) For income tax years during the credit period, there is allowed to any qualified taxpayer a credit with respect to the income taxes imposed by this article 22 in the amount determined by the authority pursuant to this part 57.

(2) (a) During each calendar year of the period beginning on January 1, 2027, and ending on December 31, 2033, the authority may allocate a credit, the full amount of which may be claimed against the taxes imposed by this article 22, for each income tax year of the six-year credit period. During each calendar year of the period beginning on January 1, 2027, and ending on December 31, 2033, the aggregate amount of the credits allocated by the authority shall not exceed eight million three hundred thirty-three thousand three hundred thirty-three dollars.

(b) The authority may also allocate any unallocated credits from the immediately preceding calendar year so long as unallocated credits do not exceed more than half of the annual dollar limits specified in subsection (2)(a) of this section, and these unallocated credits are not included in the annual dollar limits specified in subsection (2)(a) of this section.

(c) The aggregate amount of credits allocated by the authority in each of the 2027 through 2033 calendar years must not exceed the aggregate amount of any credit recaptured or otherwise returned to the authority in the calendar year.

(3) The authority may allocate credits to an owner of a qualified development by issuing to the owner an allocation certificate. The authority may determine the time at which the allocation certificate is issued. The credit must be in an amount determined by the authority, subject to the following guidelines:

(a) The credit must be necessary for the financial feasibility of the development; and

(b) The aggregate sum of credits allocated annually must not exceed the limits set forth in subsection (2) of this section.

(4) If an owner of a qualified development receiving an allocation of a credit is a partnership, limited liability company, S corporation, or similar pass-through entity, the owner may allocate the credit among its partners, shareholders, members, or other qualified taxpayers in any manner agreed to by such persons regardless of whether any such persons are deemed a partner for federal income tax purposes. The owner shall certify to the department the amount of credit allocated to each partner, shareholder, member, or other qualified taxpayer. Each partner, shareholder, member, or other qualified taxpayer admitted as a partner, shareholder, member, or other qualified taxpayer of the owner prior to the filing of a tax return claiming the credit is allowed to claim such amount subject to any restrictions set forth in this part 57.

(5) (a) The authority may allocate credits to a governmental or quasi-governmental entity, including the middle-income housing authority created in section 29-4-1104, with respect to a qualified development that is owned by such entity.

(b) (I) A governmental or quasi-governmental entity may transfer credits that the authority has allocated to it pursuant to this subsection (5) to a transferee.

(II) A governmental or quasi-governmental entity that transfers a credit pursuant to subsection (5)(b)(I) of this section shall invest in the relevant qualified development any compensation received in connection with the transfer made pursuant to subsection (5)(b)(I) of this section and shall notify the department of the identity of the transferee.

(III) A transferee to which a credit is transferred by a governmental or quasi-governmental entity pursuant to this subsection (5)(b) is entitled to claim the credit in the same manner and subject to the same conditions and allocation rights as an owner of a qualified development to which the authority has allocated a credit pursuant to subsection (3) of this section.

(c) (I) Credits that the authority has allocated to a governmental or quasi-governmental entity pursuant to subsection (5)(a) of this section or a credit that a governmental or quasi-governmental entity transfers pursuant to subsection (5)(b) of this section are subject to recapture if, as of the last day of any taxable year during the compliance period, the amount of the qualified basis of the governmental or quasi-governmental entity is less than the qualified basis of the governmental or quasi-governmental entity as of the last day of the prior taxable year.

(II) If a credit transferred by a governmental or quasi-governmental entity is recaptured pursuant to subsection (5)(c)(I) of this section, the government or quasi-governmental entity shall notify the department of the identity of the transferee to which it transferred the credit and the transferee must increase the transferee's state income tax liability pursuant to section 39-22-5704 in the same manner and to the same extent as a partner, shareholder, member, or other qualified taxpayer of an owner allocated a credit pursuant to subsection (4) of this section.

(6) No credit shall be allocated pursuant to this part 57 unless the qualified development is the subject of a recorded deed restriction requiring the development to be maintained and operated as a qualified development, and is in accordance with the accessibility and adaptability requirements of the federal tax credits and title VIII of the "Civil Rights Act of 1968", as amended by the "Fair Housing Amendments Act of 1988", 42 U.S.C. sec. 3601 et seq., for a period of fifteen income tax years, or a longer period as may be agreed to between the authority and the owner, beginning with the first income tax year of the credit period unless corrected within the time that is applicable to developments receiving federal tax credits pursuant to section 42(h)(6)(J) of the internal revenue code as applicable to the covenant described in this subsection (6).

(7) The allocated credit amount may be taken against the taxes imposed by this article 22 for each income tax year of the credit period as set forth in subsection (2) of this section. Any amount of credit that exceeds the tax due for an income tax year may be carried forward as a tax credit against the income tax liability for the three subsequent tax years and must be applied first to the earliest years possible. Any amount of the credit that is not used must not be refunded to the taxpayer.

(8) Unless otherwise provided in this part 57 or the context clearly requires otherwise, the authority shall determine eligibility for a credit and allocate credits in accordance with the standards and requirements set forth in the allocation plan; however, the authority shall administer the credit allowed pursuant to this part 57 consistently with the credit pursuant to part 21 of this article 22 except to the extent the allocation plan is inconsistent with part 21 of this article 22, in which case the allocation plan controls. Notwithstanding the foregoing, any combination of federal and state credits, or standalone amount of state credits, allowed must be the least amount necessary to ensure the financial feasibility of a qualified development.