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Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
REVISED
This Version Includes All Amendments Adopted
on Second Reading in the Second House
LLS NO. 26-0622.01 Jed Franklin x5484 SENATE BILL 26-040
Senate Committees House Committees
Local Government & Housing Transportation, Housing & Local Government
A BILL FOR AN ACT
CONCERNING THE AFFORDABLE HOME OWNERSHIP PROGRAM.101
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov.)
The division of housing in the department of local affairs
(division) administers an affordable home ownership program (program)
that makes grants to nonprofit organizations, local governments, tribal
governments, community development financial institutions, and
community land trusts (eligible organizations) to support affordable home
ownership, including the development of residential housing units that are
described in an eligible organization's funding request (project). Current
law specifies that only a household with an income less than or equal to
HOUSE
Amended 2nd Reading
April 20, 2026
SENATE
3rd Reading Unamended
March 31, 2026
SENATE
Amended 2nd Reading
March 30, 2026
SENATE SPONSORSHIP
Simpson and Amabile, Ball, Benavidez, Bridges, Catlin, Coleman, Cutter, Daugherty,
Exum, Frizell, Gonzales J., Jodeh, Kipp, Kirkmeyer, Kolker, Lindstedt, Marchman, Mullica,
Pelton R., Roberts, Snyder, Wallace, Weissman
HOUSE SPONSORSHIP
Stewart K. and Smith,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law.
120% of the area median income is eligible for assistance through the
program, but it is unclear whether this requirement applies to housing
units constructed by an eligible organization through one of its projects.
The bill clarifies that only a household with an income less than or equal
to 120% of the statewide area median income is eligible for housing
constructed by an eligible organization through one of its projects.
In addition, the program requires that housing offered through the
program, including all taxes and fees, costs not more than 35% of a
household's monthly income. The bill allows the division to modify this
percentage as applied to a residential unit constructed by an eligible
organization as part of an affordable housing project pursuant to a waiver
process initiated by an eligible organization if a substantial need for
housing the project's target population exists, the unit has been adequately
marketed to eligible buyers for purchase for at least 6 months after the
issuance of a certificate of occupancy, and the unit has not been
purchased by an eligible buyer within that 6-month period. In lieu of this
process, the division may approve an eligible organization's process for
determining when to exceed the maximum monthly household income for
a unit funded by the program.
The division may issue a waiver with a different housing cost limit
from the limit requested by the eligible organization if a different limit
would better serve needs identified in a housing assessment and the
project remains financially feasible in the division's discretion.
For an eligible organization, the bill specifies that the division is
required to accept a local affordability mechanism in lieu of any
state-prescribed use covenant if the division determines that the local
affordability mechanism allows the state to maintain its obligations for
compliance and compliance monitoring and is substantially equivalent to
or more protective of long-term affordability and primary occupancy than
a state-prescribed use covenant or the local affordability mechanism is
necessary to access financing for disproportionately impacted
communities.
The division may allow an eligible organization to rent residential
units constructed as part of the project. On or before December 31, 2026,
the division is required to issue guidance for when units within a project
may be rented.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 29-32-103, amend2
(1)(a) as follows:3
29-32-103. Transfers of money - permitted uses of the fund -4
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continuous appropriation.1
(1) (a) The affordable housing support fund is hereby created in2
the state treasury. The support fund consists of money deposited into it3
under subsections (1)(b)(II) and (3) of this section. The division of4
housing shall administer the support fund and expend the money in the5
support fund only for the purposes set forth in section 29-32-104 (3)(a)6
and (3)(b). The division of local government in the department of local7
affairs created in section 24-32-103 shall expend the money in the support8
fund only for the purposes set forth in section 29-32-104 (3)(c). Except9
as otherwise provided in subsection (1)(b) of this section, all money not10
expended or encumbered, and all interest earned on the investment or11
deposit of money in th e support fund, remains in the support fund and12
does not revert to the general fund or any other fund at the end of any13
fiscal year. Except as otherwise provided in subsections (1)(b) and (1)(c)14
of this section and section 29-32-104 (3)(b)(II), all money transferred to15
the support fund pursuant to subsection (3) of this section is continuously16
appropriated to the division of housing for the purposes set forth in17
section 29-32-104 (3)(a) and (3)(b) and, to the extent allocated by the18
division of housing, to the division of local government for the purposes19
set forth in section 29-32-104 (3)(c).20
SECTION 2. In Colorado Revised Statutes, 29-32-104, amend21
(1)(a) and (3)(a) as follows:22
29-32-104. Permissible expenditures - affordable housing23
programs - report - definitions.24
(1) The office shall contract with the administrator. The office25
may select an administrator without a competitive procurement process26
but shall announce the contract opening publicly and select the27
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administrator in a meeting that is open to the public, no less than1
seventy-two hours after notice of such meeting is publicly available. No2
single contract may exceed five years in duration. Upon the expiration of3
any contract term, the office may renew the contract with the same4
administrator or may select another administrator. The administrator5
selected by the office shall expend the money transferred to the financing6
fund in section 29-32-103 (2) that the administrator receives from the7
office to support the following programs only:8
(a) (I) A land banking program to be administered by the9
administrator. The program shall provide grants to local governments and10
tribal governments and loans to non-profit organizations with a11
demonstrated history of providing affordable housing to acquire and12
preserve land for the development of affordable housing. For purposes of13
this subsection (1)(a), "affordable housing" means rental housing that has14
a designated imputed income limit by household size not to exceed sixty15
percent of the area median income as established by the United States16
Department of Housing and Urban Development and published by the17
department or a statewide political subdivision or authority on housing,18
and regulated units in the project must have a gross rent limit that does19
not exceed thirty percent of the imputed income limitation applicable to20
the units and for-sale housing that could be purchased by a household21
with an annual income of at or below one hundred TWENTY percent of the22
area median income. Mixed use development is an allowable use of land23
purchased under this program if the predominant use of the land is24
affordable housing. Loans made by the program shall be forgiven if land25
acquired with the assistance of the program is properly zoned with an26
active plan for the development of affordable housing within 5 years of27
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date the loan is made and if the development is permitted and funded1
within 10 years. The lender and borrower may establish additional terms2
if needed. If land acquired with the assistance of the program is not3
developed within the timeline above, the loan must be repaid, with4
interest, as soon as practical, but not more than six months after5
expiration of said timeline, unless the office agrees to extend all or a6
portion of the timeline in its reasonable discretion. Land acquired with the7
assistance of the program that is not developed within the timeline above8
may be used by the owner for any purpose upon payment of the loan with9
interest or, in exchange for a waiver of interest, conveyed to a state10
agency or other entity for the development of affordable housing with the11
approval of the administrator. All principal and interest payments on12
loans made under this paragraph (a) SUBSECTION (1)(a) shall be paid to13
the administrator and used by the administrator for the purposes set forth14
in this subsection (1). As determined by the administrator, a minimum of15
15% and a maximum of 25% of monies transferred to the financing fund16
annually may be used for the program. The administrator may utilize the17
funds it receives from the office for the program to pay for the costs of18
administering the program; except that the total combined annual19
administrative expenditures of money from the financing fund by the20
administrator and the office shall not exceed two percent of the funds the21
administrator receives from the office for the program for the state fiscal22
year.23
(II) F OR LAND BANKING PROGRAM GRANTS TO SUPPORT TRIBAL24
GOVERNMENT PROGRAMS, THE TRIBE SHALL ESTABLISH INCOME LIMITS BY25
HOUSEHOLD SIZE AND GROSS RENT LIMITS REQUIRED BY SUBSECTION26
(1)(a)(I) OF THIS SECTION. THE TRIBAL GOVERNMENT SHALL SUBMIT27
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EVIDENCE TO THE OFFICE OR ADMINISTRATOR THAT IT HAS SATISFIED THE1
REQUIREMENTS OF THIS SUBSECTION (1)(a)(II), INCLUDING BY PROVIDING2
GENERAL INFORMATION ABOUT THE PROCESS IT USED TO ESTABLISH THESE3
LIMITATIONS, BUT SHALL NOT BE REQUIRED TO DISCLOSE CONFIDENTIAL4
TRIBAL DATA, INCLUDING THE SPECIFIC LIMITATIONS IT SETS PURSUANT TO5
THIS SUBSECTION (1)(a)(II).6
(3) The division of housing and the division of local government7
shall expend the money transferred to the support fund in section8
29-32-103 (1) to support the following programs only:9
(a) (I) An affordable home ownership program administered by10
the division or one or more contractors of the division. The program shall11
offer home ownership down-payment assistance to first-time homebuyers12
and shall prioritize assistance, to the extent practicable, to first-generation13
homebuyers. The assistance shall be provided to households with income14
less than or equal to one hundred twenty percent of the area median15
income of households of that size in the territory or jurisdiction of local16
government or tribal government in which the housing is located, as17
calculated and published for a given year by the United States department18
of housing and urban development, and the cost of the monthly housing19
payment toward mortgage principal, mortgage interest, property taxes,20
mortgage and homeowner's insurance, homeowner association fees, land21
lease fees, and metropolitan district fees shall MUST not cost more than22
thirty-five THIRTY-EIGHT percent of monthly household income. INCOME;23
EXCEPT THAT THE COST OF THE MONTHLY HOUSING PAYMENT MUST NOT24
BE CONSIDERED WHEN PROVIDING HOMEOWNERS WITH ASSISTANCE FOR25
HOME REHABILITATION . The program shall also make grants to26
nonprofit organizations, local governments, tribal governments,27
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community development financial institutions, and community land trusts1
to support affordable home ownership FOR HOUSEHOLDS WITH INCOME2
LESS THAN OR EQUAL TO EITHER ONE HUNDRED TWENTY PERCENT OF THE3
AREA MEDIAN INCOME OF HOUSEHOLDS OF THAT SIZE IN THE TERRITORY4
OR JURISDICTION OF A LOCAL GOVERNMENT IN WHICH THE HOUSEHOLDS5
ARE LOCATED, OR ONE HUNDRED TWENTY PERCENT OF THE STATEWIDE6
AREA MEDIAN INCOME OF HOUSEHOLDS OF THAT SIZE , AS CALCULATED7
AND PUBLISHED FOR A GIVEN YEAR BY THE UNITED STATES DEPARTMENT8
OF HOUSING AND URBAN DEVELOPMENT, AND THE COST OF THE MONTHLY9
HOUSING PAYMENT TOWARD MORTGAGE PRINCIPAL, MORTGAGE INTEREST,10
PROPERTY TAXES , MORTGAGE AND HOMEOWNER 'S INSURANCE ,11
HOMEOWNERS' ASSOCIATION FEES, LAND LEASE FEES, AND METROPOLITAN12
DISTRICT FEES MUST NOT COST MORE THAN THIRTY -FIVE PERCENT OF13
MONTHLY HOUSEHOLD INCOME . T HE AREA MEDIAN INCOME ELECTION14
DESCRIBED IN THIS SUBSECTION (3)(a)(I) MUST BE MADE AT THE15
BEGINNING OF THE ASSISTANCE AGREEMENT AND MUST NOT BE REVOKED16
OR CHANGED UNTIL THE END OF THE ASSISTANCE AGREEMENT . The17
program shall also make grants or loans to groups or associations of18
mobile home owners and their assignees to assist them with the purchase19
of a mobile home park pursuant to section 38-12-217. Said grants and20
loans shall be used to support affordable home ownership for households21
with income less than or equal to one hundred TWENTY percent of the area22
median income of households of that size in the territory or jurisdiction23
of local government or tribal government in which the households are24
located, as calculated and published for a given year by the United States25
department of housing and urban development, and the cost of the26
monthly housing payment toward mortgage principal, mortgage interest,27
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property taxes, mortgage and homeowner's insurance, homeowner1
association fees, land lease fees, and metropolitan district fees shall MUST2
not cost more than thirty-five percent of monthly household income. All3
principal and interest payments on loans made under this subsection4
(3)(a) shall be paid to the division and used by the division for the5
purposes set forth in this subsection (3). Up to fifty percent of money6
transferred to the support fund annually may be used for the program. The7
division shall determine how much of the available funding shall be8
allocated to each aspect of the program. The division may utilize up to9
five percent of the funds it receives from the fund for the program to pay10
for the direct and indirect costs of administering the program.11
(II) FOR PROJECTS UNDERTAKEN BY AN ELIGIBLE ORGANIZATION,12
AS DEFINED IN SECTION 29-32-105.7 (2)(a), THE DIVISION MAY INCREASE13
OR WAIVE THE MAXIMUM PERCENTAGE OF INCOME THAT A HOUSEHOLD14
MAY ALLOCATE FOR MONTHLY HOUSING COSTS OTHERWISE REQUIRED BY15
SUBSECTION (3)(a)(I) OF THIS SECTION PURSUANT TO THE PROCESS SET16
FORTH IN SECTION 29-32-105.7. IF A WAIVER IS GRANTED, THE DIVISION IS17
AUTHORIZED TO AMEND EXISTING CONTRACTS ENTERED INTO AFTER JULY18
1, 2026, EVEN IF THE PROJECT WAS ORIGINALLY AWARDED UNDER A19
SOLICITATION ISSUED PRIOR TO JULY 1, 2026.20
(III) FOR GRANTS TO SUPPORT TRIBAL GOVERNMENT PROGRAMS,21
THE TRIBE SHALL ESTABLISH LIMITATIONS ON HOUSEHOLD INCOME AND22
MAXIMUM PERCENTAGE OF INCOME THAT A HOUSEHOLD MAY ALLOCATE23
FOR MONTHLY HOUSING COSTS REQUIRED BY SUBSECTION (3)(a)(I) OF THIS24
SECTION AND SHALL ESTABLISH A TRIBAL AFFORDABILITY MECHANISM IN25
LIEU OF ANY STATE -PRESCRIBED USE COVENANT. THE TRIBAL26
GOVERNMENT SHALL SUBMIT EVIDENCE TO THE DIVISION THAT IT HAS27
040-8-
SATISFIED THE REQUIREMENTS OF THIS SUBSECTION (3)(a)(III), INCLUDING1
BY PROVIDING GENERAL INFORMATION ABOUT THE PROCESS IT USED TO2
ESTABLISH THESE LIMITATIONS AND MECHANISMS BUT IS NOT REQUIRED3
TO DISCLOSE CONFIDENTIAL TRIBAL DATA, INCLUDING THE SPECIFIC4
LIMITATIONS OR MECHANISMS IT SETS UNDER THIS SUBSECTION. UNLESS5
OTHERWISE AUTHORIZED BY LAW, THE DIVISION OF HOUSING AND THE6
DIVISION OF LOCAL GOVERNMENT SHALL ADMINISTER AND EXPEND7
FUNDING TO TRIBAL GOVERNMENTS UNDER THIS SECTION ONLY FOR THE8
PURPOSES SET FORTH IN SECTIONS 29-32-104 (3)(a), (3)(b), OR (3)(c).9
SECTION 3. In Colorado Revised Statutes, add 29-32-105.7 as10
follows:11
29-32-105.7. Home ownership program flexibility - waiver -12
affordability mechanisms - legislative declaration - definitions.13
(1) (a) THE GENERAL ASSEMBLY FINDS AND DECLARES THAT:14
(I) P ROPOSITION 123, APPROVED BY A MAJORITY OF ELIGIBLE15
ELECTORS DURING THE NOVEMBER 2022 GENERAL ELECTION , WAS16
INTENDED TO REACH ALL COMMUNITIES IN THE STATE;17
(II) AFFORDABLE HOME OWNERSHIP OPPORTUNITIES ARE LIMITED18
BY CHANGING ECONOMIC CONDITIONS THROUGHOUT THE STATE;19
(III) T HE FUNDING PROVIDED PURSUANT TO PROPOSITION 12320
SHOULD BE ALLOCATED TO BUILDING HOUSING THAT WOULD NOT21
OTHERWISE BE BUILT WITHOUT FINANCIAL ASSISTANCE; AND22
(IV) STATUTORY RESTRICTIONS ON ELIGIBILITY FOR ASSISTANCE23
USING PROPOSITION 123 FUNDING , INCLUDING LIMITATIONS ON24
HOUSEHOLD INCOME AND MAXIMUM ALLOWABLE MONTHLY HOUSING25
COSTS, COUPLED WITH INCREASED INTEREST RATES , LAND COSTS , AND26
BUILDING MATERIAL COSTS, ARE PREVENTING THE PROPOSITION 123 HOME27
040-9-
OWNERSHIP PROGRAM FROM BEING USED IN SOME COMMUNITIES.1
(b) THE GENERAL ASSEMBLY FURTHER FINDS AND DECLARES THAT2
IT IS THE GENERAL ASSEMBLY 'S INTENT THAT THE WAIVER PROCESS SET3
FORTH IN THIS SECTION WILL ALLOW THE DIVISION MORE FLEXIBILITY TO4
ALLOCATE FUNDING FOR AFFORDABLE HOME OWNERSHIP PROJECTS IN5
COMMUNITIES ACROSS THE STATE.6
(2) AS USED IN THIS SECTION , UNLESS THE CONTEXT OTHERWISE7
REQUIRES:8
(a) "E LIGIBLE ORGANIZATION " MEANS A NON -PROFIT9
ORGANIZATION, LOCAL GOVERNMENT , COMMUNITY DEVELOPMENT10
FINANCIAL INSTITUTION OR COMMUNITY LAND TRUST THAT IS ELIGIBLE11
FOR FUNDING PURSUANT TO SECTION 29-32-104 (3)(a).12
(b) "PROJECT" MEANS A RESIDENTIAL HOUSING UNIT OR GROUP OF13
UNITS DESCRIBED WITHIN AN ELIGIBLE ORGANIZATION 'S REQUEST FOR14
FUNDING PURSUANT TO SECTION 29-32-104 (3)(a)(I).15
(3) NOTWITHSTANDING THE PROVISIONS OF SECTION 29-32-10416
(3)(a) THAT SPECIFY THAT MONTHLY HOUSING COSTS SHALL NOT EXCEED17
THIRTY-FIVE PERCENT OF MONTHLY HOUSEHOLD INCOME, ORGANIZATION18
THAT WAS AWARDED MONEY FOR AN AFFORDABLE HOME OWNERSHIP19
PROJECT PURSUANT TO SECTION 29-32-104 (3)(a) AND THAT20
CONSTRUCTED A RESIDENTIAL UNIT AS PART OF THE PROJECT THAT HAS21
NOT BEEN PURCHASED WITHIN SIX MONTHS OF THE ISSUANCE OF A22
CERTIFICATE OF OCCUPANCY, MAY SUBMIT A REQUEST TO THE DIVISION23
FOR A WAIVER OF THE MAXIMUM MONTHLY HOUSING COST LIMIT FOR THAT24
RESIDENTIAL UNIT.25
26
(b) THE DIVISION MAY APPROVE A WAIVER REQUEST IF AN ELIGIBLE27
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ORGANIZATION AWARDED MONEY FOR AN AFFORDABLE HOME OWNERSHIP1
PROGRAM PURSUANT TO SECTION 29-32-104 (3)(a) ESTABLISHES THAT:2
(I) A SUBSTANTIAL NEED FOR HOUSING THE PROJECT 'S TARGET3
POPULATION EXISTS; AND4
(II) T HE UNIT HAS BEEN ADEQUATELY MARKETED TO ELIGIBLE5
BUYERS FOR PURCHASE FOR AT LEAST SIX MONTHS AFTER FINAL6
COMPLETION OF THE UNIT, AND THE UNIT HAS NOT BEEN PURCHASED BY7
AN ELIGIBLE BUYER WITHIN THAT SIX-MONTH PERIOD.8
(c) THE DIVISION MAY:9
(I) I SSUE A WAIVER WITH HOUSING COST LIMITS THAT ARE10
DIFFERENT FROM THOSE REQUESTED BY THE ELIGIBLE ORGANIZATION IN11
THE WAIVER REQUEST IF DIFFERENT HOUSING COST LIMITS WOULD BETTER12
SERVE NEEDS IDENTIFIED IN THE COMMUNITY , THE PROJECT REMAINS13
FINANCIALLY FEASIBLE IN THE DIVISION 'S DISCRETION, AND THERE ARE14
ELIGIBLE BUYERS THAT MEET THE PARAMETERS SET BY THE DIVISION15
PURSUANT TO THIS SUBSECTION (3)(c)(I); OR16
(II) M ODIFY THE TOTAL AMOUNT OF F UNDING PROVIDED17
PURSUANT TO SECTION 29-32-104 (3)(a) TO ACCOUNT FOR AN INCREASE IN18
THE SALE PRICE OF THE UNIT.19
(4) IN LIEU OF THE PROCESS DESCRIBED IN SUBSECTION (3) OF THIS20
SECTION, THE DIVISION MAY APPROVE AN ELIGIBLE ORGANIZATION 'S21
PROCESS FOR DETERMINING WHEN TO EXCEED THE MAXIMUM MONTHLY22
HOUSEHOLD INCOME FOR A UNIT FUNDED PURSUANT TO SECTION23
29-32-104 (3)(a). A N ELIGIBLE ORGANIZATION 'S PROCESS APPROVED24
UNDER THIS SUBSECTION (4) SHALL NOT REQUIRE A SIX -MONTH25
MARKETING PERIOD.26
27
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1
(5) (a) FOR PROJECTS FUNDED PURSUANT TO SECTION 29-32-1042
(3)(a), AN ELIGIBLE ORGANIZATION MAY REQUEST THAT THE DIVISION3
ALLOW IT TO RENT RESIDENTIAL UNITS CONSTRUCTED AS PART OF THE4
PROJECT. T HE DIVISION HAS THE AUTHORITY TO RENT OR ALLOW THE5
RENTAL OF A RESIDENTIAL UNIT CONSTRUCTED AS PART OF THE PROJECT.6
(b) ON OR BEFORE DECEMBER 31, 2026, THE DIVISION SHALL ISSUE7
GUIDANCE FOR WHEN AN ELIGIBLE ORGANIZATION MAY RENT UNITS8
WITHIN A PROJECT AND DEVELOP A PROCESS BY WHICH RENTED UNITS MAY9
RETURN TO THE FOR-SALE MARKET.10
(c) A HOMEOWNER MAY RENT A UNIT FUNDED PURSUANT TO11
SECTION 29-32-104 (3)(a) AS LONG AS THE UNIT REMAINS THEIR PRIMARY12
RESIDENCE.13
SECTION 4. Effective date - applicability. This act takes effect14
July 1, 2026, and applies to requests for waivers received by the division15
on or after said date.16
SECTION 5. Safety clause. The general assembly finds,17
determines, and declares that this act is necessary for the immediate18
preservation of the public peace, health, or safety or for appropriations for19
the support and maintenance of the departments of the state and state20
institutions.21
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