(1) As used in this section, unless the context otherwise requires: (a) "Affordable housing" means: (I) For a household residing in housing on a rental basis, annual income of the household is at or below eighty percent of the area median income of households of that size in the county in which the housing is located; (II) For a household residing in housing on a home ownership basis, annual income of the household is at or below one hundred forty percent of the area median income of households of that size in the county in which the housing is located; or (III) Housing that incorporates mixed-income development. (b) "Department" means the department of local affairs. (c) "Eligible recipient" means a local government that is eligible to receive a grant through the housing development incentives grant program or the planning grant program. (d) "Housing development incentives grant program" means the local government affordable housing development incentives grant program created in subsection (2) of this section. (e) "Local government" means a county, a municipality, or a city and county. (f) "Mixed income development" means housing that incorporates mixed income development in that some, but not all, housing units within a particular development have restricted rates at or below the income levels specified in subsection (1)(a) of this section in addition to some units that are above such income levels with or without such restricted rates. (g) "Planning grant program" means the local government planning grant program created in subsection (5) of this section. (2) There is hereby created in the department the local government affordable housing development incentives grant program to provide grants to local governments that adopt one or more policy or regulatory tools that create incentives to promote the development of affordable housing. A local government that adopts such tools in accordance with this section is eligible for a grant from the housing development incentives grant program as an incentive to develop one or more affordable housing developments in their community or region that are driven by community benefits and that focus on critical housing needs as identified by the local government. The division shall administer the housing development incentives grant program. (3) (a) As part of the policies, procedures, and guidelines the division is required to adopt for the housing development incentives grant program pursuant to subsection (6)(a) of this section, the division shall develop a menu of different policy or regulatory tools that local governments may adopt as incentives to promote affordable housing development within their territorial boundaries or across their region. (b) (I) The menu of tools the division must develop pursuant to subsection (3)(a) of this section must include such incentives to promote affordable housing development including but not limited to: (A) The use of vacant publicly owned real property within the local government for the development of affordable housing; (B) The creation of a program to subsidize or otherwise reduce local development review or fees, including but not limited to building permit fees, planning waivers, and water and sewer tap fees, for affordable housing development; (C) The creation of an expedited development review process for affordable housing aimed at households the annual income of which is at or below one hundred twenty percent of the area median income of households of that size in the county in which the housing is located; (D) The creation of an expedited development review process for acquiring or repurposing underutilized commercial property that can be rezoned to include affordable housing units, including the preservation of existing affordable housing units; (E) The establishment of a density bonus program to increase the construction of units that meet critical housing needs in the local community; (F) With respect to water utility charges, the creation of processes to promote the use of sub-metering of utility charges for affordable housing projects and the creation of expertise in water utility matters dedicated to affordable housing projects; (G) With respect to infrastructure, the creation of a dedicated funding source to subsidize infrastructure costs and associated fees related to publicly owned water, sanitary sewer, storm sewers, and roadways infrastructure; (H) Granting duplexes, triplexes, or other appropriate multi-family housing options as a use by right in single-family residential zoning districts; (I) The classification of a proposed affordable housing development as a use by right when it meets the building density and design standards of a given zoning district; (J) Authorizing accessory dwelling units as a use by right on parcels in single family zoning districts that meet the safety and infrastructure capacity considerations of local governments; (K) Allowing planned unit developments with integrated affordable housing units; (L) Allowing the development of small square footage residential unit sizes; (M) Lessened minimum parking requirements for new affordable housing developments; and (N) The creation of a land donation, land acquisition, or land banking program. (II) In addition to the items listed in subsection (3)(b)(I) of this section, the policies, procedures, and guidelines adopted by the division must also allow for the adoption by a local government of additional policy or regulatory tools that provide novel, creative, or innovative incentives to the development of affordable housing. (4) (a) In the policies, procedures, and guidelines the division is required to adopt for the housing development incentives grant program pursuant to subsection (6)(a) of this section, the division shall specify, without limitation: (I) The manner by which a local government becomes an eligible recipient for the grant program and the criteria used to determine eligibility; (II) The manner in which a local government's ongoing commitment to refine and expand its land use policies affects the competitiveness of its grant application; and (III) A requirement that a local government shall select not less than three options from the menu of policy or regulatory tools specified in subsection (3)(b) of this section. (b) In evaluating applications for grants from the housing development incentives grant program, the division shall prioritize proposals submitted by local governments based on the degree to which the grant award, either on its own, or as part of other incentives made available to the eligible recipient: (I) Represents geographic diversity throughout the state with respect to the different kinds of communities being awarded grants; (II) Satisfies the goal of achieving best practices in affordable housing development whether with respect to the menu of policy or regulatory tools adopted by the local government or that represents a novel, creative, or innovative approach to the development of affordable housing; (III) Offers maximum impact in initiating affordable housing creation within the local community or region that is driven by community benefits and that focuses on critical housing needs as identified by the local government; (IV) Extends or advances existing approaches by the local government to initiate housing creation whether with respect to the production of housing units or longer term policy changes; (V) Represents diversity in the type of affordable housing created for rental housing in accordance with subsection (1)(a)(I) of this section and for home ownership in accordance with subsection (1)(a)(II) of this section; (VI) Initiates or preserves housing affordability that can be maintained for a long-term period of affordability as negotiated by the department and the local government and that allows the local government to determine the method for achieving affordability; and (VII) Supports sustainable development patterns such as infill and the redevelopment of existing buildings. (c) Notwithstanding any other provision of law, with respect to the awarding of grants under the housing development incentives grant program, the division shall prioritize its funding in favor of those local governments that demonstrate the sufficient use of local incentives for affordable housing development in such manner as to be able to leverage funding for the maximum impact on the number of affordable housing units built over time and that are affordable as negotiated by the department and local governments. (5) There is hereby created in the department the local government planning grant program to provide grants to local governments that lack one or more of the policy and regulatory tools that provide incentives to promote the development of affordable housing as described in subsection (3) of this section and that could benefit from additional funding to be able to create and make use of these policy and regulatory tools. Money under the planning grant program will be available to a local government to enable the government to retain a consultant or a related professional service to assess the housing needs of its community, including considerations of equity, or to make changes to its policies, programs, development review processes, land use codes, and related rules to become an eligible recipient of a grant under the housing development incentives grant program. The planning grant program will be administered by the division. As part of its administration of the planning grant program, the division shall provide assistance to local governments on best land use practices and tools and shall update and publish model county and municipal land use codes for the benefit of local governments across the state. (6) (a) On or before September 1, 2021, the executive director of the department or the executive director's designee shall adopt policies, procedures, and guidelines for the housing incentives grant program and planning grant program that include, without limitation: (I) Procedures and timelines by which an eligible recipient may apply for a grant; (II) Criteria for determining the amount of grant awards; (III) Performance criteria for grant recipients' projects; and (IV) Reporting requirements for grant recipients. (b) Notwithstanding any other provision of this section, the amount of any grant award under either the housing development incentives grant program or the planning grant program and any restrictions or conditions placed upon the use of grant money awarded is within the discretion of the division in accordance with the requirements of this section. (c) To the extent applicable, and unless otherwise required by this section, requirements governing the process of awarding a Colorado heritage planning grant under part 32 of this title 24 govern the process for obtaining a grant from the housing development incentives grant program or the planning grant program under this section. (7) All funding of any grants awarded under either the housing development incentives grant program or the planning grant program must be made entirely out of the money transferred from the general fund and the affordable housing and home ownership cash fund created in section 24-75-229 (3)(a), that originates from money the state received from the federal coronavirus state fiscal recovery fund, to the Colorado heritage communities fund created in section 24-32-3207 (1) in accordance with section 24-32-3207 (6). All costs incurred by the division in administering either the housing development incentives grant program or the planning grant program must be paid out of the money transferred under section 24-32-3207 (6). The division may use up to four percent of any money transferred to it under this section to cover its administrative costs in administering or evaluating either the housing development incentives grant program or the planning grant program. All money transferred into the Colorado heritage communities fund in accordance with section 24-32-3207 (6) must be expended before July 1, 2025. Any money transferred into the fund in accordance with this subsection (7) that is not expended or encumbered from any appropriation at the end of any fiscal year is available for expenditure before July 1, 2025, without further appropriation. (8) (a) On or before November 1, 2022, and on or before November 1, 2023, the executive director of the department or the executive director's designee shall publish a report summarizing the use of all money that was awarded as grants from the housing development incentives grant program in the preceding fiscal year. At a minimum, the report must specify the number of local governments that applied for a grant award, including the number of local governments that were not awarded a grant; the policy or regulatory tools adopted by the local governments that qualified for a grant award; the amount of grant money distributed to each grant recipient; and a description of each grant recipient's use of the grant money. In the report, the division shall also provide its recommendations concerning future administration of the grant program. The report must be shared with the general assembly and posted on the department's website. (b) On or before November 1, 2022, and on or before November 1, 2023, the executive director of the department or the executive director's designee shall publish a report summarizing the use of all money that was awarded as grants from the planning grant program in the preceding fiscal year. At a minimum, the report must specify the amount of grant money distributed to each grant recipient and a description of each grant recipient's use of the grant money. In the report, the division shall also provide its recommendations concerning future administration of the grant program. The report must be shared with the general assembly and posted on the department's website.
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