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February 25, 2022 HB 22-1242
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-0415
Rep. Kipp; Exum
Sen. Ginal; Hisey
Date:
Bill Status:
Fiscal Analyst:
February 27, 2022
House Trans. & Local Govt.
Clare Pramuk | 303-866-2677
clare.pramuk@state.co.us
Bill Topic: REGULATE TINY HOMES MANUFACTURE SALE & INSTALL
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
This bill expands the authority of the State Board of Housing in the Department of
Local Affairs to set standards for tiny homes. It increases state expenditures in
FY 2022-23 and state revenue beginning in FY 2023-24.
Appropriation
Summary:
For FY 2022-23, the bill requires an appropriation of $308,885 to multiple state
agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 22-1242
Budget Year
FY 2022-23
Out Year
FY 2023-24
Revenue Cash Funds - $924,464
Total Revenue - $924,464
Expenditures General Fund $221,939 -
Cash Funds $86,946 $660,227
Centrally Appropriated $79,574 $205,993
Total Expenditures $388,459 $866,220
Total FTE 1.7 FTE 4.1 FTE
Transfers - -
Other Budget Impacts TABOR Refund - $924,464
General Fund Reserve $33,291 -
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February 25, 2022 HB 22-1242
Summary of Legislation
This bill expands the authority of the State Board of Housing (board) in the Department of Local
Affairs (DOLA) to promulgate rules establishing standards for tiny homes that cover the manufacture,
assembly, and installation of tiny homes; and uniform foundation construction standards for
factory-built structures or tiny homes in areas of the state where no standards exist. The bill exempts
tiny homes from sales and use tax to conform to the exemption of manufactured homes.
Certification. Sellers and installers of tiny homes are required to be certified by the Division of
Housing and pay fees to cover the direct and indirect costs of the division for regulating the industry.
Fees for sellers are subject to a maximum of $200 per year and installers to a maximum of $250 per
year, paid to the Building Regulation Fund.
Inspectors. The division is required establish the qualifications for an inspector to inspect tiny homes
and to provide training for independent contractors to perform installation inspections so they can be
certified by the division. The division may accept gifts, grants, or donations for this training.
Advisory Committee. The Advisory Committee on Residential and Nonresidential Structures that
advises the board is renamed the Advisory Committee on Factory-built Structures and Tiny Homes
and expanded in size to include two members from the tiny home industry.
Local governments. A local government may require the inspection of a tiny home manufactured
before July 1, 2023, if the tiny home is not manufactured in accordance with the standards set by the
board. A state electrical or plumbing inspector or a local government may approve the connection of
a tiny home for utility services, if the tiny home is in compliance with applicable codes and standards.
Violations. Selling or installing a tiny home without complying with the provisions of the bill is a
deceptive trade practice, with civil penalties up to $10,000 per violation credited to the Building
Regulation Fund.
Assumptions
The regulation of tiny homes is expected to begin July 1, 2023. The fiscal note assumes that 1,300 tiny
homes will be constructed and installed in FY 2023-24, and that the industry will grow 7.0 percent per
year.
State Revenue
This bill increases state cash fund revenue by $924,464 in FY 2023-24 and ongoing to multiple cash
funds. This revenue is subject to TABOR. The bill will also decrease state sales and use tax and may
increase civil penalties collected, but those amounts have not been estimated. Finally, the bill allows
DOLA to accept gifts, grants, and donations; however, none have been identified as of writing.
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February 25, 2022 HB 22-1242
Fee impact on tiny home manufacturers, buyers, sellers, inspectors and installers. Colorado law
requires legislative service agency review of measures which create or increase any fee collected by a
state agency. Fees will be collected by the Department of Regulatory Agencies (DORA) and the
Department of Local Affairs to cover the expenditures in the bill beginning in FY 2023-24.
DORA fees. The current fee for electrical permits for structures of less than 1,000 square feet is $96.00.
This is expected to increase to $100.55 to cover the expenditures in the bill. With the addition of
1,300 tiny homes to an average of 42,000 permits annually, the revenue increase is expected to be
$321,815. The current fee for plumbing inspections is $26.00. This is expected to increase to $27.23.
With the addition of 1,300 tiny homes to an average of 18,000 permits annually, the revenue increase
is expected to be $57,539. These fee amounts are estimates only, actual fees will be set administratively
by DORA. Fees collected will be deposited into the Professions and Occupations Cash Fund.
DOLA fees. The division will conduct a survey to estimate the volume of tiny home construction,
shipments, and installations prior to the implementation of the program to determine what fees will
be assessed. To cover the cost of the program and establish a fund balance, the division is expected to
collect $545,110 that will be deposited into the Building Regulation Fund.
Table 2 below identifies the fee impact of this bill.
Table 2
Fee Impact on Tiny Home
Manufacturers, Buyers, Sellers, Inspectors and Installers
Fiscal Year Type of Fee Total Fee Impact
FY 2023-24
DORA - Electrical permit $321,815
DORA - Plumbing inspection $57,539
DOLA - Certifications for tiny home sellers, installers,
and independent inspectors
$545,110
Total $924,464
State Expenditures
The bill increases state expenditures in by $388,459 in FY 2022-23 and $866,220 in FY 2023-24 from the
General Fund, the Division of Professions and Occupations Cash Fund, and the Building Regulation
Fund. Expenditures are shown in Table 3 and detailed below.
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February 25, 2022 HB 22-1242
Table 3
Expenditures Under HB 22-1242
FY 2022-23 FY 2023-24
Department of Local Affairs
Personal Services $96,682 $309,682
Operating Expenses $2,295 $5,400
Capital Outlay Costs $24,800 -
Legal Services $51,256 $20,503
Computer Programming $46,906 -
Vehicle Mileage - $14,825
Centrally Appropriated Costs
1
$57,772 $123,249
FTE – Personal Services 1.4 FTE 4.0 FTE
FTE – Legal Services 0.3 FTE 0.1 FTE
DOLA Subtotal $279,711 $473,658
Department of Regulatory Agencies
Personal Services $50,440 $214,465
Operating Expenses $1,215 $4,590
Capital Outlay Costs $12,600 -
Vehicle Lease $9,517 $38,068
Vehicle Operating $13,174 $52,694
Centrally Appropriated Costs
1
$21,802 $82,744
FTE – Personal Services 0.9 FTE 3.4 FTE
DORA Subtotal $108,748 $392,561
Total $388,459 $866,220
Total FTE 2.6 FTE 7.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Local Affairs. Expenditures for DOLA will be paid from the General Fund in
FY 2022-23 and cash funds thereafter.
Staffing. The Division of Housing will have an administrator begin September 1, 2022, to oversee
the program implementation, including working with the advisory committee and the board to
develop tiny home standards, support rulemaking, work with the Office of Information
Technology (OIT) on database development, conduct stakeholder outreach and fee setting. This
staff person will be responsible for ongoing program management and enforcement.
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February 25, 2022 HB 22-1242
Additional staff will begin April 1, 2023, including an engineer for plan review, an inspector for
construction and installation inspections, and a program assistant to process certification
applications, data entry and fee collection.
Computer programming. In FY 2022-23, the division will have a one-time expenditure for
software development costs to expand its existing Salesforce system which will act as the business
software application for this program. Services will be provided by the OIT at a rate of $94 per
hour.
Legal services. Based on experience implementing the Mobile Home Park Oversight Program,
the fiscal note includes 520 hours of legal services hours from the Department of Law in FY 2022-23
and 208 hours in FY 2023-24 and thereafter. The legal services are required for rulemaking and
the development of standards, and are provided at a rate of $98.57 per hour.
Department of Regulatory Agencies. The Division of Professions and Occupations requires
additional inspectors for plumbing and electrical inspections and a program assistant to process
permits. The division will add 1.5 FTE each of an electrical inspector and plumbing inspector to
conduct inspections of the increased number of homes requiring inspection prior to being hooked up
to utilities. Each inspector requires a rugged laptop for fieldwork and a vehicle but no office furniture.
Vehicle costs are reappropriated to the Department of Personnel and Administration. Standard
operating costs are included.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 3.
Other Budget Impacts
TABOR refunds. The bill is expected to increase the amount of state revenue required to be refunded
to taxpayers by the amount shown in the State Revenue section above for FY 2023-24. This estimate
assumes the December 2021 LCS revenue forecast. A forecast of state revenue subject to TABOR is
not available beyond FY 2023-24. Because TABOR refunds are paid from the General Fund, increased
cash fund revenue will reduce the amount of General Fund available to spend or save.
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve beginning in FY 2022-23. Based
on this fiscal note, the bill is expected to increase the amount of General Fund held in reserve by the
amount shown in Table 1 for FY 2022-23, which will decrease the amount of General Fund available
for other purposes.
Local Government
Local governments that conduct plumbing and electrical inspections will have an increase in revenue
and expenditures to issue permits and conduct inspections. This will vary by jurisdiction. Page 6
February 25, 2022 HB 22-1242
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
State Appropriations
For FY 2022-23, the bill requires the following appropriations:
$221,939 to the Department of Local Affairs from the General Fund with 1.4 FTE, of which $46,906
is reappropriated to the Office of Information Technology and $51,256 is reappropriated to the
Department of Law with 0.3 FTE; and
$86,946 to the Department of Regulatory Agencies from the Division of Professions and
Occupations Cash Fund and 0.9 FTE, of which $22,691 is reappropriated to the Department of
Personnel and Administration for fleet vehicle services.
State and Local Government Contacts
Counties Information Technology Law
Local Affairs Municipalities Regulatory Agencies
_____________________________________________________________________________________________
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.