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July 12, 2022 HB 22-1242
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Final Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-0415
Rep. Kipp; Exum
Sen. Ginal; Hisey
Date:
Bill Status:
Fiscal Analyst:
July 12, 2022
Signed into Law
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 beginning
in FY 2022-23 and state revenue beginning in FY 2023-24.
Appropriation
Summary:
For FY 2022-23, the bill requires and includes an appropriation of $314,558 to multiple
state agencies.
Fiscal Note
Status:
The fiscal note reflects the enacted 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 $227,612 -
Cash Funds $86,946 $668,092
Centrally Appropriated $80,471 $207,235
Total Expenditures $395,029 $875,327
Total FTE 1.7 FTE 4.1 FTE
Transfers - -
Other Budget Impacts TABOR Refund - $924,464
General Fund Reserve $34,142 -
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July 12, 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 rules must
be promulgated by July 1, 2023. The bill exempts tiny homes from sales and use tax to conform to the
exemption of manufactured homes and defines tiny homes certified by the Division of Housing in
DOLA as residential improvements for assessing property taxes.
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.
Manufacturers. Manufacturers of factory-built structures are required to comply with escrow
requirements for down payments set by the board in rule and provide a form of security to the division
in case the manufacturer fails to deliver the structure, fails to refund a down payment, or ceases
business operations or files for bankruptcy.
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 and one from energy
conservation.
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 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.
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July 12, 2022 HB 22-1242
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.
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. Table 2
below identifies the fee impact of this bill.
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
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 $395,029 in FY 2022-23 and $875,327 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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July 12, 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 Lease $2,379 $9,517
Vehicle Operating $3,293 $13,174
Centrally Appropriated Costs
1
$58,669 $124,491
FTE – Personal Services 1.4 FTE 4.0 FTE
FTE – Legal Services 0.3 FTE 0.1 FTE
DOLA Subtotal $286,281 $482,766
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 $395,029 $875,327
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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July 12, 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. Standard operating costs and one vehicle are included.
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 March 2022 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.
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July 12, 2022 HB 22-1242
Local Government
Local governments that conduct plumbing and electrical inspections will have an increase in revenue
and expenditures to issue permits and conduct inspections. The bill may also affect future property
tax collections because the addition of a tiny home to a land parcel may change its current classification
to a residential classification. This amount has not been estimated. These impacts will vary by
jurisdiction.
Effective Date
The bill was signed into law by the Governor on May 17, 2022, and takes effect August 9, 2022,
assuming no referendum petition is filed. It applies to acts committed on or after that date.
State Appropriations
For FY 2022-23, the bill requires the following appropriations:
$227,612 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, $51,256 is reappropriated to the
Department of Law with 0.3 FTE, and $2,379 is reappropriated to the Department of Personnel
and Administration for fleet vehicle services; and
$86,946 to the Department of Regulatory Agencies from the Division of Professions and
Occupations Cash Fund and 0.9 FTE, of which $9,517 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 Property Tax Division
Regulatory Agencies Revenue
_____________________________________________________________________________________________
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.