Navigating Colorado's Housing Future: The Impact of HB24-1434 and HB24-1316

Two bills recently signed into law aim to improve the state of affordable housing in Colorado. HB24-1316 and HB24-1434, signed into law on May 30 by Governor Jared Polis, focus on the multifamily housing sector and aim to supplement the State’s affordable housing programs and alleviate a stressed housing market.

Let’s get into the highlights of these bills and what they may mean for you.

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HB24-1434: Expanding and Strengthening Affordable Housing

HB24-1434 is designed to expand and enhance Colorado’s Affordable Housing Tax Credit (AHTC). Administered by the Colorado Housing and Finance Authority (CHFA), the AHTC is currently oversubscribed by a rate of 3 to 1 and in need of expansion.

Key components of HB24-1434 include increased annual AHTCs and a new Transit Oriented Communities tax credit.

Increased AHTC Funding

The bill increases CHFA’s AHTC allocation authority by the following amounts per year:

• 2024: $20 million
• 2025: $16 million
• 2026-2027: $12 million
• 2028: $16 million
• 2029-2031: $20 million

Similar to the existing AHTC, the allocated credit is claimed by a taxpayer over a six-year credit period. However, the bill accelerates this additional AHTC, requiring the qualified taxpayer to claim 70% of the total amount of the credit in the first year of the credit period and 6% of the credit amount in each of the second through sixth years of the credit period, rather than having the claiming the credit evenly over the six-year credit period.

The CHFA qualified allocation plan for 2023 to 2024 was recently amended to address the provisions on how the additional AHTC can be allocated.

Transit Oriented Communities (TOC) Tax Credit

This new, five-year credit is for eligible projects in TOC and promotes building affordable housing near transit hubs. It allocates $2 million annually from 2025 to 2027, $11 million in 2028, and $13 million in 2029.

This credit must also be claimed in an accelerated manner, with 70% of the tax credit claimed in the first year of the credit period, 8% in the second and third years of the credit period, and 7% in the fourth and final years of the credit period. Although the credit is claimed over a period of five years, the taxpayer is subject to a 15-year compliance period.

Like the AHTC, CHFA will be responsible for the allocation of the TOC tax credit. Though not required to be paired with Federal low-income housing tax credits, to be eligible for the TOC tax credit, a project must meet the definition of a “Qualified Low-Income Housing Project,” as defined in Section 42 of the Internal Revenue Code.

The Impact of HB24-1434

There are several positive impacts coming out of this bill:

• Increased Housing Supply: Providing more funding will lead to an increase in the number of affordable housing units available, alleviating the current housing shortage.
• Economic Growth: Building new housing units will create jobs and stimulate economic activity.
• Community Stability: Affordable housing is key to maintaining diverse and vibrant communities. This bill will provide more housing for low- and moderate-income families.

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HB24-1316: Supporting Middle-Income Housing

HB24-1316 creates a new middle-income housing tax credit, a pilot program for owners of qualified housing developments focused on rental housing for middle-income individuals and families. Middle-income individuals and families are defined as 80%-120% of the area median income.

This significant new credit has a period of five years and is allocated as follows:

• 2025: $5 million
• 2026: $5 million
• 2027: $10 million
• 2028: $10 million
• 2029: $10 million

While the credit is claimed over a 5-year credit period, the owner is required to provide middle-income housing in the qualified housing development for 15 years.

The Impact of HB24-1316

The effects of HB24-1316 are expected to be multifaceted:

Enhanced Housing Availability

With the creation of a new financial resource available to developers, the bill is likely to result in a greater number of multifamily housing projects being completed that serve “the missing middle.” This will help accommodate the influx of new residents and alleviate pressure on the housing market.

Sustainable Urban Development

Multifamily housing is a key component of sustainable urban planning. By promoting higher-density living, HB24-1316 supports more efficient land use and reduces the environmental footprint of new developments.

A Brighter Housing Future for Colorado

HB24-1434 and HB24-1316 represent comprehensive approaches to tackling Colorado's housing challenges. By increasing affordable housing availability and supporting multifamily developments, these bills aim to create a more inclusive and sustainable housing market.

As Colorado continues to grow, the implementation of these bills will help ensure that residents have access to safe, affordable, and high-quality housing. Stakeholders in the real estate industry, from developers to policymakers, must collaborate to maximize the impact of these legislative measures and build a brighter future for Colorado's communities.

If you need help understanding these credits or determining if your projects qualify, contact SVA today. Our knowledgeable real estate professionals are on top of these recent changes and can help you determine the best course of action.