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February 12, 2024 HB 24-1175
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0096
Rep. Boesenecker; Sirota
Sen. Winter F.;
Jaquez Lewis
Date:
Bill Status:
Fiscal Analyst:
February 12, 2024
House Trans., Hous. & Local Govt
.Josh Abram | 303-866-3561
josh.abram@coleg.gov
Bill Topic: LOCAL GOVERNMENT RIGHTS TO PROPERTY FOR AFFORDABLE HOUSING
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill creates a right of first offer and a right of first refusal for local governments to
purchase multi-unit residential properties for long-term affordable housing. The bill
increases state and local expenditures beginning FY 2024-25.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Summary of Legislation
The bill gives a local government a right of first offer and a right of first refusal to obtain
residential properties for long-term affordable housing. Long-term affordable housing means
that the annual rent for any unit will not exceed the rent for households of a given size at the
applicable area median income for a minimum of 100 years, and the local government agrees
not to raise rent for any unit by more than the bill’s specified rent increase cap.
Right of first refusal. Under the bill, the right of first refusal exists for multifamily residential or
mixed-use rental property that is existing affordable housing, excluding mobile home parks.
Local governments are given the right to purchase a qualifying property for an economically or
substantially identical offer to another offer that a seller receives. Any purchase or sale
agreement for a qualifying property by a seller is contingent on the first refusal of the local
government where the property is located.
Right of first offer. Under the bill, the right of first offer exists for multifamily residential or
mixed-use rental property consisting of not more than 100 units and not less than five units in
urban counties, and not less than three units in rural or rural resort counties, as those
classifications are determined by the Division of Housing in the Department of Local Affairs. For
qualifying properties, the bill gives a local government the right to make an offer to purchase
the property before it is listed for sale to third parties. The right of first offer repeals on
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February 12, 2024 HB 24-1175
Common provisions. For either of these new rights, a local government may partner with a
nonprofit entity to co-finance, lease, or manage qualifying property as long-term affordable
housing. At any time, the local government may assign its rights to the state, another political
subdivision, or a housing authority so long as the property is used to preserve or be converted
for long-term affordable housing.
The bill details the obligations of residential sellers of qualifying properties to provide notice to
local governments when an owner intends to sell the property, or when a property’s existing
affordability restrictions will expire, and the obligations of local governments to notify residential
sellers of any intent to exercise the right of first offer or first refusal on qualifying properties.
The Department of Law is authorized to enforce the bill and intervene in any action brought
pursuant to disputes of a local government’s rights. If a court finds a residential seller is in
material violation the court must award a statutory penalty of not less than $30,000. Courts may
also grant injunctive relief for violations, as well as award damages, attorney fees, and costs to a
prevailing party.
State Revenue and Expenditures
The bill minimally increases workload, and potentially costs, for several state agencies, as
described below.
Department of Law. The bill may increase workload for the Department of Law to enforce the
provisions of the bill and intervene in actions brought when disputes are raised against a local
government’s right of first offer or first refusal. The department may also have increased
workload to provide legal services if a local government partners with the state to take
possession of long-term affordable housing properties. If there are additional funding
requirements for these efforts, the department will seek resources during the annual budget
process.
Judicial Department. The bill may also increase revenue from filing fees and workload in the
trial courts to consider civil actions brought by local governments, residential sellers, or the
Department of Law. However, this fiscal note assumes sellers of housing properties will follow
requirements and that any increase in civil cases will create minimal revenue and not require
new appropriations.
Department of Local Affairs. Workload may increase in the Department of Local Affairs (DOLA)
to provide technical assistance and information to local governments about the new rights
created by the measure. Similarly, the Division of Housing in DOLA may have additional
workload related to affordable housing projects if the state funds or partners with a local
government. It is assumed that this work can be accomplished within existing resources.
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February 12, 2024 HB 24-1175
Local Government
Local governments that exercise the rights of first offer or of first refusal will have increased
expenditures for property purchase and management, and for costs associated with required
notifications and public meetings. These costs are not estimated and will depend on future local
decisions and actions. If there are civil actions to enforce violations, a fine of at least $30,000
may be awarded to a prevailing local government.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed, and applies to qualifying properties that are listed for sale on or
after that date.
State and Local Government Contacts
Counties Judicial Law
Local Affairs Municipalities Regulatory Agencies
Secretary of State
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 the General Assembly website.