Colorado lawmakers are again moving to tweak the requirements of , the state’s marquee affordable housing fund, as the vast majority of local governments enrolled in the program have not met the housing targets passed by voters in 2022.
Democratic lawmakers told their colleagues in March that “upwards of potentially 90%” of local governments that signed up to receive a share of the program’s roughly $300 million annual budget haven’t notched sufficient growth in their affordable housing stock to meet the program’s requirements.
Echoing concerns that local officials have raised for years, legislators argued that the growth requirements in the program were “inflexible” and “outdated.” Those requirements were based on census data and an assessment of existing housing.
The program requires 9% growth in affordable housing over a three-year period, the first of which winds down at the end of 2026. The program counts “affordable housing” as homes or apartments available to people making certain income levels that also don’t cost more than 30% of their renters’ or owners’ monthly wages. If local governments don’t meet that 9% growth target, then they will miss out on the next round of Prop 123 funding that starts next year.
The sheer number of local governments — cities, towns and counties — lagging behind didn’t suggest “that they weren’t working hard towards meeting those goals — they all were,” Rep. Rebekah Stewart, a Lakewood Democrat, said in March. It was that “the formula that created those (goals) was wrong, and it wasn’t working.”
Enter , which passed the Senate on Thursday and is a procedural vote away from Gov. Jared Polis’ desk.
The measure would remove the current growth requirement and, in its place, create a new, individualized goal based on a calculation of new housing permits and job growth in each local jurisdiction.
Among other changes, the bill would also allow qualifying local governments to file for a waiver if they’re about to miss the old target — and file another if they don’t think they’ll hit the new goal, either.
The goal, the bill’s supporters said, is to support local governments that are trying to build more housing and need the program’s funds to do it — without penalizing them for failing to hit targets that those governments have criticized since the program was created.
Prop 123 has already doled out $587.9 million dollars and has funded more than 11,000 apartments and other new homes, collected by the program’s supporters.
“The whole point of the bill is to discount what local governments are asked to do to have this funding available to them,” Sen. Matt Ball, a Denver Democrat sponsoring the measure, told a Senate committee in late April, “so that governments who are making good-faith efforts but have economic headwinds can still qualify.”
Local governments have long warned that Prop 123’s requirements were too strict. But they signed up for it anyway, officials told The Denver Post shortly after the program launched in 2023, because they needed its money to address their local housing crises.
State officials and lawmakers had already tweaked the program to make it easier for mountain communities to stay in compliance and to ensure that nonprofit groups, which wanted access to Prop 123’s homeless prevention funds, wouldn’t be boxed out if their local governments didn’t participate.
What’s more, to help balance a crater-sized hole in the next state budget, Polis and lawmakers swept $130 million from the program, a mechanism that was also part of the initial ballot measure. HB-1313 would spread that cut over the next three years, rather than absorbing it all at once, Ball said Thursday.
HB-1313’s changes had broad support from affordable housing groups and various local governments. It passed the Senate 33-2 and, once House lawmakers accept amendments made in the Senate, it will be a Polis signature away from passage into law.
