(1) Definitions. As used in this section, unless the context otherwise requires: (a) "Administrator" means a third-party entity or entities that the division contracts with to administer all or any part of the loan program pursuant to subsection (2)(b) of this section. (b) "Community partner" means a nonprofit organization that undertakes any of the activities or services described in subsection (3) of this section. (c) "Department" means the department of local affairs. (d) "Eligible recipient" means a local government, a for-profit developer, a community partner, or a political subdivision of the state that applies for a loan through the loan program. (e) "Fund" means the transformational affordable housing revolving loan fund created in subsection (9)(a) of this section. (f) "Loan program" means the transformational affordable housing revolving loan fund program created in subsection (2)(a) of this section. (g) "Local government" means a county, municipality, city and county, tribal government, special district organized under title 32, school district, district, or a housing authority created under part 2 of article 4 of title 29. (2) Creation of loan program - administration. (a) The transformational affordable housing revolving loan fund program is hereby created in the division as a revolving loan program in accordance with the requirements of this section and the policies established by the division pursuant to subsection (5) of this section. The loan program is established to provide flexible, low-interest, and below-market rate loan funding to assist eligible recipients in completing the eligible loan projects identified in subsection (3) of this section. (b) The division may administer the loan program or, if it determines that it would be more efficient and effective to contract out full or partial administration of the program, it may enter into a contract with a business nonprofit organization, bank, nondepository community development financial institution, business development corporation, nonprofit organization that administers gap financing, construction, or mortgage loan programs, or other entity as determined by the division to administer the loan program in whole or in part. If the division contracts with an entity or entities to administer the program, the division shall use an open and competitive process to select the entity or entities. A contract with an administrator may include an administration fee established by the division at an amount reasonably calculated to cover the ongoing administrative costs of the division in overseeing the loan program. The division may advance money to an entity under a contract in preparation in the form of a grant or payment for issuing loans and administering the loan program. (c) The division may work with the Colorado housing and finance authority, created in section 29-4-704 (1), to assist in offering loans under the loan program. (d) Any loan made under the loan program by the state, any department, division, or agency of the state, or any administrator to a district, as defined in section 20 (2)(b) of article X of the state constitution, must either be approved by the voters of the district in accordance with section 20 (4)(b) of article X of the state constitution or be structured so that it is not a multiple- fiscal year direct or indirect district debt or other financial obligation whatsoever that requires voter approval under section 20 (4)(b) of article X of the state constitution. (3) Eligible loan projects. In order to receive loan funding under the loan program, the project for which the loan applicant seeks loan funding must do one or more of the following: (a) Develop and integrate housing-related infrastructure to offset construction and predevelopment costs; (b) Provide gap financing for housing development, including transactions under the federal low-income tax credit defined in section 39-22-2101 (7) and the affordable housing tax credit created in section 39-22-2102 (1). For purposes of this subsection (3)(b), gap financing includes financing mechanisms that allow persons seeking affordable housing to purchase existing affordable housing, multi-family structures, land, and buildings, particularly in communities where efforts have been made to encourage affordable housing development or in communities in which low concentrations of affordable housing exist. (c) Increase the supply of new affordable for-sale housing stock by providing funding to assist with the cost of construction, including but not limited to costs associated with construction costs, land acquisition, tap fees, building permits, or impact fees; (d) Maintain existing affordable housing through funding for the preservation and restoration of affordable housing stock through rehabilitation, retrofitting, renovation, capital improvements, and repair of current affordable housing stock, including housing made available under 42 U.S.C. sec. 1437f and affordable housing for populations and households disproportionately impacted by the COVID-19 pandemic with commitments for long-term affordability. The uses covered by this subsection (3)(d) must include investments in one or more of the following: (I) Senior housing; (II) The purchase of and the remediation of low-quality or condemned properties; (III) Housing units, integrated into nonsegregated housing developments, specifically designed for people living with disabilities; (IV) Weatherization and energy improvements to multi-family and singe-family residents to maintain and improve the quality of affordable homes and rental units; (V) The purchase and transition of current housing stock into affordable housing, including properties currently in use on a short-term rental basis; (VI) Programs or initiatives to ensure that existing housing remains affordable for local workforce or community households; (VII) Land acquisition for affordable housing; (VIII) Property conversion and adaptive reuse; or (IX) Permanent supportive housing; (e) Finance energy improvements in affordable housing, which will provide funding for incremental up-front costs for efficient, electric measures, and renewable energy systems for both existing buildings and new housing construction; (f) Create permanently or long-term affordable homeownership opportunities. (4) Loan program goals. (a) The loan program must be administered with a goal of generating enough return on loans made under the loan program to replenish the loan program for future loan allocations. (b) All loans financed through the loan program must offer flexible terms and low- interest and below-market rates. (5) Loan program policies - eligibility for loan funding. (a) The division or the administrator, as applicable, shall establish and publicize policies for the loan program. At a minimum, the policies must address: (I) The process and deadlines for applying for and receiving a loan under the loan program, including the information and documentation required for a loan application; (II) Eligibility criteria for individuals or entities applying for a loan under the loan program; (III) The maximum assistance levels for loans; (IV) Loan terms, including interest rates and repayment terms; (V) Reporting requirements for loan recipients; (VI) Loan program fees, including the application fee, origination fee, and closing cost policies; (VII) Underwriting and risk management policies; (VIII) The amount of any application or origination fees and closing cost policies; (IX) The means by which eligible recipients who face barriers in establishing borrower relationships with traditional lenders will be informed of the loan program and encouraged to apply for a loan financed through the loan program; and (X) Any additional requirements that the division deems necessary to administer the loan program. (a.5) The application process for the loan program must be in accordance with the process set forth in section 24-32-705.7. On or before September 1, 2024, the division shall amend any policies, procedures, and guidelines for the grant program that are not consistent with the application process set forth in section 24-32-705.7. (b) (I) In connection with the policies for the loan program that the division or the administrator is required to establish and publicize pursuant to subsection (5)(a) of this section, the policies must specify that, in order for an eligible recipient to obtain loan funding directly from the division, an eligible recipient must follow procedures that shall be specified by the division to document the amount of leveraged funds proposed or committed as part of a loan application and the amount of funding sought from other sources, including demonstrated efforts by the eligible recipient to obtain financing for loan funding from financial institutions. (II) Notwithstanding any other provision of law, a lien filed by the division, is superior only to any other lien placed on the same assets that is filed later in time except for a lien for unpaid property taxes. (6) Prioritization criteria. (a) The general assembly hereby encourages the division, to the extent practicable, in reviewing loan applications, to consider prioritizing applications for projects that: (I) Increase the supply of housing in communities across the state in proportion to each community's demonstrated housing needs through: (A) A preference for mixed-income projects in which a percentage of units, proportional to the demonstrated housing needs of the local community, within a particular development have restricted availability to households at and below the income levels specified in subsection (6)(b)(I) of this section. The percentage of restricted units and affordability levels must comply with laws enacted by local governments promoting the development of new affordable housing units pursuant to section 29-20-104 (1). (B) Developments in which housing units are restricted at income levels demonstrated by local community needs as specified in subsection (6)(b)(I) of this section; (II) Are located in or serve communities that: (A) Face barriers to accessing capital from traditional sources; (B) Have suffered significant negative financial or other impacts resulting from the COVID-19 pandemic; or (C) Are otherwise underserved; (III) Align with other state economic development efforts; (IV) Create permanently affordable home ownership opportunities; (V) Ensure the long-term affordability of any development or projects funded by the loan program; (VI) Include units that are restricted for rental usage to persons with disabilities or that include universal design features that allow individuals to reside in their dwelling units as they age; or (VII) Are highly energy efficient or use high-efficiency electric equipment for space and water heating. The division may consult with the Colorado energy office created in section 24- 38.5-101 (1) to develop criteria for meeting the objectives described in this subsection (6)(a)(VII). (b) (I) The rental and home ownership targets applicable to local communities across the state as required by subsection (6)(a)(I) of this section are specified in this subsection (6)(b)(I) in accordance with the following: (A) For a household residing in housing on a rental basis, annual income of the household 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; (B) For a household residing in housing on a home-ownership basis, annual income of the household 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; (C) For a household residing in housing on a rental basis in rural resort counties, 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; and (D) For a household residing in housing on a home ownership basis in rural resort counties, annual income of the household is at or below one hundred sixty percent of the area median income of households of that size in the county in which the housing is located. (II) An applicant seeking funding for a particular development, project, or program that is funded by the loan program may, at any time, request that the division grant the applicant an exception to the area median income levels specified in subsection (6)(b)(I) of this section based upon demonstrated unique economic and housing costs attributes in the local community in which the development, project, or program is located. (c) (I) Not later than September 1, 2022, the division of housing, created in section 24- 32-704 (1), shall classify each county in the state as "urban", "rural", or "rural resort" as used in subsection (6)(b)(I) of this section based upon the definitions of the terms as specified in the final report of the Colorado strategic housing working group final report, dated July 6, 2021. The division of housing shall regularly update and publish modifications of the initial classification of a particular county as it receives or produces information documenting changes in local economic circumstances and housing cost factors materially affecting such classifications. (II) Notwithstanding subsection (6)(c)(I) of this section, any county may request from the division of housing: (A) A determination that a different income restriction should apply to that county from the one made applicable to the county in accordance with subsection (6)(c)(I) of this section based upon the unique economic and housing cost factors present in the county. Not later than September 1, 2022, the division of housing shall publish any such modified income restrictions and the basis for any modification approved. (B) At any time, a reclassification of the county from the category in which the county is initially classified pursuant to subsection (6)(c)(I) of this section based upon the unique economic and housing cost factors present in the county. (d) To the extent practicable, the division and the administrator, as applicable, shall support innovative funding mechanisms that allow money to revolve quickly to ensure the rapid reuse of money for ongoing projects. (7) Publicizing the loan program. The division shall work with the minority business office created in section 24-49.5-102, small business development centers, community development financial institutions, and stakeholder partners to promote the program to eligible recipients who primarily serve communities that are underserved or disadvantaged, including eligible recipients located in rural counties. On or before December 1, 2022, the division shall develop and administer a marketing initiative for the program in coordination with the minority business office created in section 24-49.5-102, the small business assistance center created in section 24-48.5-102, local chambers of commerce, and other local and regional economic development entities to promote the program to eligible recipients and target communities. The marketing initiative shall be conducted in the top spoken languages in those communities. (8) Gifts, grants, and donations - leveraging federal money. (a) The division may seek, accept, and expend gifts, grants, or donations from private or public sources for the purposes of this section. The division shall transmit all money received through gifts, grants, or donations to the state treasurer, who shall credit the money to the fund. (b) The division may expend, deploy, or leverage money received from federal government programs that support loans and investments for one or more of the eligible projects specified in subsection (3) of this section to make loans under the loan program or to otherwise market, promote, or support loans under the program, if allowed under federal law. (9) Transformational affordable housing revolving loan fund - transfer of money to fund - payment of administrative costs - appropriation. (a) The transformational affordable housing revolving loan fund is hereby created in the state treasury. The fund consists of money transferred to the fund in accordance with subsection (9)(d) of this section, any other money that the general assembly appropriates or transfers to the fund, and any gifts, grants, or donations credited to the fund pursuant to subsection (8)(a) of this section. (b) The state treasurer shall credit all interest and income derived from the deposit and investment of money in the fund to the fund. (c) Money in the fund is continuously appropriated to the department for the purposes specified in this section. The department may expend up to five percent of the money appropriated or transferred into, or repaid from, the fund on an annual basis to pay for its direct and indirect costs in administering this section. (d) On July 1, 2022, the state treasurer shall transfer one hundred fifty million dollars from the affordable housing and home ownership cash fund created in section 24-75-229 (3)(a) that originates from the general fund, to the fund. The division shall use the money transferred pursuant to this subsection (9)(d) only for: (I) Making loans to eligible recipients pursuant to the loan program; and (II) The costs of administering the loan program as may be incurred by the division or the administrator, as applicable, in accordance with subsection (9)(c) of this section. All such administrative costs must be paid out of the money either transferred to the fund pursuant to this subsection (9)(d) or that is appropriated to the fund. (10) Reporting. In connection with the public report the division prepares in accordance with section 24-32-705.5 (1), the division shall include in the report information summarizing the use of all of the money that was provided as a loan from the loan program in the preceding state fiscal year. At a minimum, the information included in the report pertaining to the loan program must specify the number of eligible recipients that applied for a loan, the number of eligible recipients that were not awarded a loan, the amount of loan money distributed to each loan recipient, a description of each loan recipient's use of the loan money, the use of loan money along the housing and income spectrums, the amount of time from completion of a loan application through the funding of a loan, recommendations concerning future administration of the loan program, and how the use of the loan furthered the vision of transformational affordable housing described in the final report of the task force established in section 24-75-229 (6)(a). The division shall also include in the report its recommendations concerning future administration of the loan program.
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