(1) Definition of qualifying property. As used in this section, unless the context otherwise requires, "qualifying property" means a multifamily residential or mixed-use rental property consisting of not less than five units that is existing affordable housing, excluding a mobile home park as defined in section 38-12-201.5 (6). For the purpose of determining whether a property consists of at least the minimum number of units set forth in this subsection (1) for a qualifying property, an accessory dwelling unit does not count as a unit. (2) Local government's right of first refusal. (a) In accordance with this part 12, the local government for the jurisdiction in which a qualifying property is located has a right of first refusal to purchase the qualifying property with a matched offer. (b) (I) Any purchase and sale agreement for the conveyance of a qualifying property by a residential seller is contingent upon the right of first refusal set forth in this section. (II) If the local government provides notice pursuant to subsection (4)(a)(I) of this section to a residential seller that the local government may exercise its right of first refusal, the residential seller shall not proceed with the sale of the qualifying property to any other party and the local government shall have a right to make a matched offer. (III) For the purpose of determining whether an offer by the local government is a matched offer, it is immaterial how the offer would be financed if the local government has secured the financing or demonstrates approval of the financing in connection with making the offer, notwithstanding any requirement of appropriation by a governing body for the financing. For purposes of this section, a residential seller shall negotiate in good faith with the local government that makes a matched offer. This includes, but is not limited to, evaluating an offer from the local government or its assignee without consideration of: (A) The period for closing; (B) The type of financing or payment method; (C) Whether or not the offer is contingent on a particular financing or payment method; except that the local government must be able to demonstrate that its financing or payment method has been approved, notwithstanding any requirement of appropriation by a governing body for the financing or payment method; and (D) Whether or not the offer is contingent on an appraisal, inspection, review of title, obtaining title insurance, or other customary conditions for the sale of similar property. (IV) A residential seller shall not collude with a potential buyer for the primary purpose of inflating a sales price above the market price of a qualifying property. (c) The local government's right of first refusal concerning the qualifying property is limited to preserving or converting the qualifying property to long-term affordable housing directly or through another entity to which the local government assigns its rights pursuant subsection (2)(f) of this section or transfers the qualifying property. (d) If a qualifying property is classified as mixed-use, the local government's offer must include any commercial portion of the qualifying property, but only the residential portion of the qualifying property is subject to affordability requirements. (e) The local government, in exercising its right of first refusal, may partner with a nonprofit entity, a private entity, a quasi-governmental entity, or another governmental entity to co-finance, lease, or manage the qualifying property for the public purpose of maintaining the qualifying property as long-term affordable housing as long as the local government or its assignee maintains ownership of the qualifying property either directly or through a special purpose entity or affiliate. (f) At any time, the local government may assign the right of first refusal with respect to a specific qualifying property or with respect to all qualifying properties in the local government's jurisdiction to a housing authority that is within the local government's jurisdiction, a regional housing authority that serves the local government's jurisdiction, or the Colorado housing and finance authority, subject to the requirements that the qualifying property is used to preserve or be converted to long-term affordable housing and that all other provisions of this part 12 apply to the assignee. If the proposed assignee accepts the assignment of the right of first refusal in writing, upon assignment, the assignee assumes all liability of the local government regarding the exercise of the right of first refusal and is responsible for performing all requirements pursuant to this part 12 with respect to a qualifying property as if the assignee were the local government. The local government must provide notice of any assignment as follows: (I) If the local government has assigned its right of first refusal with respect to all properties within its jurisdiction, the local government must post a notice in a conspicuous location on its website indicating that the local government has assigned its right of first refusal and listing the assignee's name and contact information to receive notices required pursuant to this section. The notice posted in accordance with this subsection (2)(f)(I) must be effective for at least three months after it is posted and must explicitly state the date it expires, if any. Any notice posted by the local government in accordance with this subsection (2)(f)(I) is deemed constructive notice to the residential seller. (II) If the local government has not posted notice in accordance with subsection (2)(f)(I) of this section and assigns its right of first refusal with respect to all qualifying properties in its jurisdiction or with respect to a qualifying property that is the subject of the notice provided by a residential seller in accordance with subsection (3)(b) of this section after receipt of such notice, the local government shall immediately notify the residential seller of the assignment and of the assignee's address to receive any notices the residential seller is required to send in accordance with this section; except that, if the sale of the qualifying property that is the subject of the notice provided by the residential seller in accordance with subsection (3)(b) of this section has concluded, then no notice by the local government of the assignment is required. (g) (I) The governing body of a local government has the right to waive the right of first refusal provided in this section. (II) (A) If the governing body of a local government has waived its right of first refusal, it shall post a notice in a conspicuous location on its website indicating that there is a waiver and that residential sellers with qualifying properties within its jurisdiction do not have an obligation to comply with this section. The local government shall also provide written notice to the Colorado housing and finance authority of the waiver. (B) The notice posted or provided in accordance with subsection (2)(g)(II)(A) of this section must be effective for at least three months after it is posted or provided, as applicable, and must explicitly state the date it expires, if any. (C) Failure to post or provide notice pursuant to this subsection (2)(g)(II) does not otherwise affect the local government's right of first refusal. (3) Notices by residential seller. (a) (I) (A) Not less than two years before the final expiration of the last remaining affordability restriction incumbent to a qualifying property's funding sources, a residential seller shall provide notice to the Colorado housing and finance authority and the governing body of the local government in which the qualifying property is located of the expiration of such restriction. The notice must include the date of expiration of the last remaining affordability restriction and contact information for the residential seller. (B) Notwithstanding subsection (3)(a)(I)(A) of this section, whether notice is provided pursuant to subsection (3)(a)(I)(A) of this section is not relevant to determining a residential seller's or local government's compliance with the requirements of this part 12 and is not subject to any provisions set forth in section 29-4-1206. Provision of the notice required by subsection (3)(a)(I)(A) of this section is not a triggering event pursuant to subsection (3)(b)(I) of this section. (II) Not less than six months before the final expiration of the last remaining affordability restriction incumbent to a qualifying property's funding sources, a residential seller shall provide notice to the Colorado housing and finance authority and the governing body of the local government in which the qualifying property is located of the expiration of such restriction. The notice must indicate whether the residential seller anticipates that it will recapitalize and continue to operate the qualifying property at affordability levels at least on average equal to what has been provided at the qualifying property, retain ownership of the qualifying property and let affordability requirements expire, or sell the qualifying property upon expiration of the restrictions. (III) The notices provided to the Colorado housing and finance authority pursuant to this subsection (3)(a) do not create an obligation or requirement for the Colorado housing and finance authority to take action with respect to the qualifying property or to provide any enforcement or compliance monitoring of any requirements of this part 12. (b) (I) Within fourteen calendar days of a triggering event, a residential seller shall provide notice in accordance with this subsection (3)(b) and subsection (3)(d) of this section to the governing body of the local government in which the qualifying property is located and shall make a good faith effort to ensure the notice is received by the local government. A triggering event is the first to occur of any of the following events when the residential seller: (A) Materially departs from any representation made in the notices required pursuant to subsection (3)(a) of this section after affordability restrictions expire in a manner that indicates an intent to sell the qualifying property; (B) Signs a letter of intent, option to sell or buy, or other conditional written agreement with a potential buyer for the sale or transfer of the qualifying property, which includes the estimated price, terms, and conditions of the proposed sale or transfer, even if the price, terms, or conditions are subject to change; (C) Lists the qualifying property for sale; or (D) Makes a conditional acceptance of an offer for the sale or transfer of the qualifying property. (II) The notice required pursuant to this subsection (3)(b) must include: (A) A general description of the qualifying property to be sold, including the address and name of the property, if any, and any additional descriptions of the qualifying property on file with the office of the assessor in the county in which the qualifying property is located; (B) The residential seller's address and, if available, electronic mailing address to receive notices from the local government; (C) The price, terms, and conditions of an acceptable offer the residential seller has received to sell the qualifying property or the price, terms, and conditions for which the residential seller intends to sell the qualifying property; (D) Any terms or conditions that, if not met, would be sufficient grounds, in the residential seller's discretion and in compliance with this part 12 and any other applicable law, to reject an offer; and (E) If the residential seller has entered into a contingent purchase and sale agreement with a prospective buyer, a copy of the agreement. (III) The price, terms, and conditions required to be stated in the notice pursuant to subsection (3)(b)(II)(C) of this section must be universal and applicable to all potential buyers and must not be specific to or prohibitive of the local government making a successful offer to purchase the qualifying property, must not be unlawful, and must not inhibit the exercise of the right of first refusal provided for in this section. (c) If the price required to be listed in the residential seller's notice pursuant to subsection (3)(b)(II)(C) of this section is reduced by five percent or more or the terms or conditions as required to be provided in the residential seller's notice pursuant to subsection (3)(b)(II)(D) of this section materially change, the residential seller shall, within seven days of the change, provide notice to the local government of the change, and the local government may exercise, or re-exercise, its right of first refusal in accordance with this section. (d) The notices given pursuant to this subsection (3) must be delivered to the applicable representative of the Colorado housing and finance authority and to the clerk of the governing body of the local government, as applicable, by electronic mail; except that, if there is not an electronic mailing address available for the applicable representative or the clerk, then by hand delivery, United States first class mail, or overnight delivery. (e) The local government, except as otherwise governed by law or court order, shall sign a nondisclosure agreement with the residential seller and, once the nondisclosure agreement is executed, may share the information contained in the notices required pursuant to subsections (3)(b) and (3)(c) of this section with its officers and employees. If the local government shares the notices required pursuant to subsections (3)(b) and (3)(c) of this section with prospective entities that the local government partners with pursuant to subsection (2)(e) of this section or prospective assignees pursuant to subsection (2)(f) of this section for the purposes of evaluating or obtaining financing for the prospective transaction, those entities that receive the notice must each sign a nondisclosure agreement for the respective entity with the residential seller. An entity that has executed a nondisclosure agreement pursuant to this subsection (3)(e) may share the information contained in the notices required pursuant to subsections (3)(b) and (3)(c) of this section with its officers, employees, and attorneys and with its advisors and prospective financing providers if the advisors and prospective financing providers are bound by the nondisclosure agreement or by a similar contractual, legal, or fiduciary obligation of confidentiality for the purposes of evaluating or obtaining financing for the prospective transaction. The information contained in the notices required under subsections (3)(b) and (3)(c) of this section, except for the property address and any information that is publicly recorded, is confidential information not subject to public disclosure. (4) (a) Notice by the local government to the residential seller. (I) The local government shall make a good faith effort to provide notice to the residential seller as soon as possible but not later than fourteen calendar days of receipt of the notice required pursuant to subsection (3)(b) or (3)(c) of this section of the local government's intent, with respect to the qualifying property that is the subject of the notice, to either preserve its right of first refusal provided in this section or waive its right of first refusal. The notice must be delivered by electronic mail; except that, if the residential seller has not provided an electronic mailing address, then by hand delivery, United States first class mail, or overnight delivery to the address provided by the residential seller pursuant to subsection (3)(b)(II)(B) of this section. (II) The notice given pursuant to subsection (4)(a)(I) of this section is nonbinding on the local government. (III) If no notice is given by the local government, if the local government fails to make an offer within the time period provided in subsection (5) of this section, or if the offer is otherwise not made in accordance with subsection (5) of this section, the residential seller may proceed with the sale of the qualifying property to any buyer. (IV) If the local government intends to assign its right of first refusal in accordance with subsection (2)(f) of this section, the local government must disclose the potential assignee in the notice required pursuant to subsection (4)(a)(I) of this section and provide a copy of the notice to the proposed assignee for the proposed assignee's consideration in determining whether to accept the assignment. (b) Notice by the local government to the Colorado housing and finance authority. In connection with the local government providing notice to the residential seller in accordance with subsection (4)(a)(I) of this section, the local government shall also provide the notice to the Colorado housing and finance authority indicating if the local government intends to either preserve or waive its right of first refusal with respect to the qualifying property that is the subject of the notice provided pursuant to subsection (3)(b) of this section and identifying any potential assignee that the local government intends to assign its right of first refusal to. The notice required by this subsection (4)(b) is nonbinding on the local government. (5) Process to exercise right of first refusal. (a) (I) Except as otherwise provided in subsection (6) of this section, the local government has thirty calendar days from providing notice pursuant to subsection (4)(a)(I) of this section to make an offer to purchase the qualifying property and shall agree to close on the qualifying property and execute the necessary agreements to finalize the sale of the qualifying property to the local government within sixty calendar days of the acceptance by a residential seller of the local government's offer to purchase the qualifying property and the execution of the necessary agreements in connection with accepting the offer. (II) Notwithstanding subsection (5)(a)(I) of this section and except as otherwise provided in subsection (6) of this section, if a residential seller has received an offer from a third-party buyer that is an entirely cash offer for the third-party buyer to purchase the qualifying property, the local government shall agree to close on the qualifying property and execute the necessary agreements to finalize the sale of the qualifying property to the local government within the same time period as is set forth in the third-party buyer's offer. (b) If a residential seller rejects an offer made by the local government exercising its right of first refusal, the residential seller shall provide a written explanation of the rejection and shall invite the local government to make one subsequent offer within fourteen days by identifying the material terms and conditions that must be included in the subsequent offer in order for the residential seller to potentially accept the subsequently made offer by the local government. The residential seller shall have fourteen days from the date of the local government's subsequent offer to either accept or reject the subsequent offer, and if the local government's subsequent offer is rejected by the residential seller, the residential seller shall provide a written explanation of the rejection and the residential seller's rejection of the subsequent offer constitutes termination of the local government's right of first refusal to purchase the qualifying property, subject to the local government's right to exercise, or re- exercise its right of first refusal pursuant to subsection (3)(c) of this section if the condition set forth in subsection (3)(c) of this section occurs. (c) Within seven calendar days of closing on the sale of the qualifying property to the local government, the residential seller shall mail notice to each resident of the qualifying property of the sale of the qualifying property to the local government. The residential seller shall also post a copy of the notice in a conspicuous place in the qualifying property. The mailed and posted notices must be provided in English, Spanish, and any other language known to be spoken by residents at the qualifying property and must include contact information for the local government, or its assignee, if applicable, for residents to direct questions and input to. (6) Extension of time. The time periods set forth in this section may be extended and any terms or conditions of sale may be modified by written agreement between the local government and the residential seller or, if the local government has assigned its right of first refusal, the local government's assignee and the residential seller. (7) Certificate of compliance. Within fourteen calendar days of receipt of notice required by either subsection (3)(b) or (3)(c) of this section or, if the local government intends to exercise its right of first refusal, within fourteen calendar days of either acceptance by a residential seller of the local government's offer or rejection by a residential seller of the local government's offer in accordance with subsection (5)(b) of this section, the local government or its assignee shall execute and record a certificate of compliance in the real property records of the county in which the qualifying property is situated. The certificate of compliance must include the name of the residential seller, a legal description of the qualifying property, and a statement that the residential seller has complied with all applicable provisions of this section. The recorded certificate of compliance is prima facie evidence of the residential seller's compliance with this section and may be relied upon by a residential seller, any person claiming an interest in the qualifying property through a residential seller, and a title insurance entity, as defined in section 10-11-102 (11). (8) Tenant qualifications. (a) The local government or its assignee shall maintain at the qualifying property affordability levels that are on average equal to or greater than the levels provided at the time it is acquired by the local government both with respect to the number of affordable units and the area median incomes used to determine rent and income limits. Tenant qualifications must comply with fair housing laws and affordability requirements of any new funding sources. (b) Notwithstanding the requirements around long-term affordable housing set forth in this section or the requirements in subsection (8)(a) of this section, residents at the qualifying property at the time it is acquired by the local government pursuant to this section may continue to reside at the qualifying property irrespective of their income level for at least the duration of their tenancy agreement pursuant to the tenancy agreement's terms in effect at the time the local government acquires the qualifying property. A local government or its assignee may only decline to renew a tenant's lease in order to comply with greater affordability restrictions at the qualifying property in accordance with subsection (8)(a) of this section or if the resident is demonstrably violating any terms of the lease. (9) Application of a local government's right of first refusal laws. Nothing in this part 12 restricts or supersedes the authority of a local government to enact laws for its jurisdiction providing for the local government's right of first refusal to purchase property for affordable housing that at a minimum comply with this part 12 and in the event of conflict between a provision in this part 12 and a local government's laws, the provision more favorable to the local government applies; except that the provisions of subsection (7) of this section and the provisions set forth in section 29-4-1206 apply notwithstanding any law enacted by a local government regarding the local government's right of first refusal.
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