Prop 123 Frequently Asked Questions

The State has developed the Baseline Assistance Tool as an option for localities to develop a baseline that complies with statutorily required definitions and data sources so that they do not have to find, process, and analyze data on their own. Before the Baseline Assistance Tool was developed, the State released its Local Government Affordable Housing Baseline Reference Data Table with its own tabulations of the potential baselines of local governments and tribes. Both of these resources are optional. Local governments and tribes may determine their baseline independently if they use the definitions and data sources required by statute. Learn more about setting a baseline.

No, all commitments to increase affordable housing and the baseline amount of affordable housing must be determined by referencing:

• American Community Survey 5-Year Estimates for 2017-2021
• Comprehensive Housing Affordability Strategy Estimates for 2015-2019
• State of Colorado provided resources (Baseline Assistance Tool or Baseline Reference Data Table)

These are the only data sources that a baseline can reference for commitments filed in 2023, though successor surveys with updated data can be used in future years. Commitment filings containing a baseline that references a data source other than the two above will not be accepted.

The factors a locality should consider include the for-sale and rental unit availability, household size, inflation rate, median income, and mortgage interest rate. In selecting an income limit, local governments should select a limit that most appropriately reflects their economic condition and housing needs. Be sure to document these factors, their data sources, and explain how you used them in the narrative explanation section.

For example, useful publicly-available data that may be relevant to local communities can be found at some of the following locations (this list is not exhaustive and data from these sources can often be filtered for your specific jurisdiction or region):

• Median Income: Table S1901 “Income in the past 12-months”, ACS Estimates, US Census Bureau.
• Household Size: Table S1101 “Households and Families”, ACS Estimates, US Census Bureau.
• Housing - Rentals: Table B25056 “Contract Rent”, ACS Estimates, US Census Bureau.
• Housing - Ownership: 
  • Table S2506 “Financial Characteristics for Housing Units With a Mortgage”, ACS Estimates, US Census Bureau.
  • Table S2507 “Financial Characteristics for Housing Units With a Mortgage”, ACS Estimates, US Census Bureau.
  • Table B25075 “Value”, ACS Estimates, US Census Bureau.
• Housing Prices: All-Transactions House Price Index for Colorado (COSTHPI), Federal Reserve Bank of Saint Louis.
• 30-yr Mortgage Rates: Primary Mortgage Market Survey, FreddieMac.

If you need assistance with the baseline tool, please contact the Proposition 123 Team.
 

DOH must be able to recreate a jurisdiction’s baseline amount of affordable housing based upon the information provided in the submission. Jurisdictions should provide as much information as possible in its justification narrative, including:

• All data sources used to calculate the baseline
• The method used to calculate the baseline amount of affordable housing units
• If the Baseline Assistance Tool was used, provide information on what values you used and their relevance to your jurisdiction

Jurisdictions may use an alternative income limit such as the area median income (AMI) of a Neighboring Jurisdiction or the State Household Median Income. If using an alternative income limit, jurisdictions must describe and provide supporting data for:

• How the alternative income limit reflects local housing and workforce needs better than the Area Median Income
• Why the Area Median Income is inconsistent with the housing and workforce needs of your jurisdiction

If your jurisdiction does not agree with the baseline amount from the State provided resources, they are highly encouraged to reach out to the Proposition 123 Team for further guidance. 
 

If a local or tribal government does not meet its commitment to increase affordable housing and/or Fast Track requirements by the end of the 3-year funding cycle, they will be ineligible to receive Proposition 123 funding during the first year of the next 3-year cycle. There is no clawback of funding already received.

If a local government has not implemented an effective system to “fast track” or expedite the development review process by the December 31, 2026 deadline, the jurisdiction will be ineligible for Proposition 123 funding indefinitely, or until the jurisdiction can demonstrate compliance with this requirement. There is no clawback of funding already received, as long as the jurisdiction has made a good faith effort to implement this requirement, or is actively working to implement this requirement. 

Affordable housing is defined in Proposition 123 as follows:

• Rental housing at or below 60% Area Median Income (AMI), or
• For-sale housing at or below 100% AMI, and
• Which costs the household less than 30% of its monthly income.

Note: Proposition 123 allows housing units at higher AMIs to be counted as affordable housing in the following instances:

• Rural Resort jurisdictions that have successfully petitioned the Division of Housing to use alternate AMI levels, and
• Housing projects funded by OEDIT’s Affordable Housing Financing Fund (Land Banking, Equity, and Concessionary Debt), where AMI averaging is allowed and complies with the terms of the program.
   

New Construction - Count when a building permit is issued for vertical construction and an affordability mechanism is in place.

Preservation of an Expiring Affordable Unit - Count when a new or extended affordability restriction is executed.

Preservation Through Acquisition - Count when the financial closing is complete and an affordability mechanism is in place.

Preservation Through Rehabilitation - Count when funding is fully secured and an affordability mechanism is in place.

Conversion of Market-Rate to Affordable - Count when a new affordability restriction is executed and recorded.

Conversion of a Non-Residential Property (Adaptive Reuse) - Count when a building permit for conversion is issued (if required) or when a new affordability restriction is executed (if no permit is required).

Naturally Occurring Affordable Housing - Must be a new (or newly converted/preserved) housing unit, added to a local jurisdiction's housing stock after the date of a local government's Prop 123 commitment filing, and must remain affordable by the end of the commitment cycle.

The jurisdiction that filed a commitment for Proposition 123 is responsible for tracking compliance and submitting required documentation to the Division of Housing (DOH) by the end of the three year commitment cycle. DOH recommends setting up a process within the development/planning process to request these documents.

If funded through Proposition 123 programs, it is possible for DOH to access those documents, however it is preferred that the jurisdiction supplies them when possible.

No. However, we recommend that you verify what is considered the housing or mortgage payment for the calculation. For Proposition 123, the mortgage payment includes the mortgage, mortgage principal, interest, homeowners insurance, and property taxes. Utility payments of any kind, HOA fees, and lot rents for mobile homes are excluded from the mortgage payment.

Similarly for rental projects, the housing payment includes the rental payment and excludes utility payments of any kind.

Housing needs often extend across jurisdictional boundaries. Proposition 123 allows local and tribal governments to work together and share unit credit for affordable housing produced through joint efforts. Jurisdictions will need to establish a formal written agreement. Learn more on the Regional Collaboration page.

Regional collaboration and partnership is encouraged. Local governments and tribal governments may enter into written agreements with other local governments and tribal governments that allow each jurisdiction to receive partial credit towards the local government's or tribal government's growth requirement. The sum of the total units credited to the local governments and tribal governments shall not exceed the total number of units produced through the collaboration.

Yes, certain housing types are not eligible under Proposition 123, including:

• Census-defined group quarters, such as correctional institutions, dormitories, and military barracks, which lack private unit access and do not meet the definition of a housing unit.
• Temporary or seasonal worker housing that does not provide permanent residency options.
• Emergency shelters or transitional housing that do not offer formal lease agreements or do not meet the Census definition of a housing unit.

For Proposition 123 unit counting purposes, if the intended counted units fell through within the first 3-year commitment window, the units shouldn't be counted as they are not viable affordable units. However, if they received the permit in 2026 and construction happens in 2027 and falls through/converts back to market rate in 2027, they may be included within the 2026 unit count.

If something isn’t explicitly addressed in the guidelines or FAQ, we encourage you to:

• Reach out to the Proposition 123 Community Support Team early for guidance and technical assistance.
• Document your reasoning and decision-making process to maintain transparency.
• Consider how your approach aligns with the intent of Proposition 123.
• Keep detailed records of your methodology for future reference.

Local governments, tribes, non-profit organizations, and private entities may be eligible to apply for Proposition 123 funds if their project is located in a jurisdiction with an approved commitment.

It is important to note that individuals do not apply directly for Proposition 123 funds. Instead, they apply for specific programs that are supported by these funds.

Programs from the Office of Homeless Initiatives are exempt from filing a commitment through Proposition 123. This means if your jurisdiction applies for funding for Homeless Initiatives, it is not required to have a commitment on file.

Local governments may apply for other funding opportunities that are not from Proposition 123 funding sources.

None, filing a commitment will not immediately make funding available to a local government or tribe. However, filing a commitment will make a local government or tribe, along with entities operating within their jurisdiction, eligible for funding originating from the State Affordable Housing Fund.

The list of funding opportunities can be found on the Proposition 123 Funding Opportunities page.

A commitment outlines a jurisdiction’s intent to increase affordable housing stock above an established baseline, which equates to 3% annually until December 31, 2026. Filing a commitment makes a local or tribal government, along with entities operating within their jurisdiction, eligible to apply for funding through programs implemented by the Colorado Department of Local Affairs (DOLA) and the Office of Economic Development & International Trade (OEDIT), in partnership with the Colorado Housing and Finance Authority (CHFA). Additionally, committed local governments (tribal governments exempt) will be expected to implement an expedited review process for affordable housing development.

Learn more about filing a commitment.

No, a Resolution, Ordinance, or other Council approved items are not required by DOH in order for a local government or tribe to file a commitment.

Only authorized officials of county and municipal governments and tribes, or officially designated persons acting on their behalf, may submit a filing.

No, each municipality, county, and tribe must determine its own baseline amount of affordable housing and file its own commitment to annual increases in affordable housing. Counties cannot make a filing for municipalities within their jurisdiction.

View the list of Commitment Filings for 2023 and 2024.

A Rural Resort Income Limit petition only applies to the following Proposition 123 funded programs administered by the Office of Economic Development and International Trade (OEDIT) in partnership with the Colorado Housing and Finance Authority (CHFA):

• Land Banking: 60% AMI for rental; 100% for for-sale
• Equity: 90% AMI (per-project average)
• Concessionary Debt: 60% AMI (per-project average, unless debt is subordinate)

Statute requires DOH to establish the percentages of AMI based on the demonstrated average needs identified in an Housing Needs Assessment. DOH does this by calculating the weighted average AMI of demonstrated housing need.

An increase in income limits is only allowable if the average AMI of need is above the current income eligibility limit, which a rural resort community must demonstrate. Additional common issues DOH has seen from past petitions include:

• The housing needs for commuters, future workers, and residents are not assessed by Area Median Income (AMI)
• Distribution of current resident income is assumed to be the same as the distribution of need

The Housing Needs Assessment:

• Must have been completed within the last three years.
• Must be based upon State Demographer data or other reliable and verifiable data sources.
• Must include an assessment of the demonstrated housing needs within the community by AMI bracket AND the overall average housing need AMI.

View the Proposition 123 Specific Housing Needs Assessment Checklist for more information.

Yes, a rural resort community may petition for multiple or all programs at once. A project must be planned for at least one of the programs.

Yes, a rural resort community will need to re-petition for each three year funding cycle.

No, because this process is closely tied to the committed baseline and unit increases, a county’s petition will only cover the unincorporated county, not the municipalities within it. Municipalities must file a petition separately to change their income limits.

Visit the Colorado Community Classification page to determine a jurisdiction’s classification.

A "Rural Resort" community, as per the law, refers to counties designated by the Division of Housing under C.R.S. 29-4-1107 (1)(d), along with municipalities and housing authorities within these counties. A classification of a Rural Resort community makes a difference in four laws.

If the petition for re-designation as Rural Resort is approved, then a rural resort community may file a separate petition for approval to apply different percentages of area median income (AMI) towards applications submitted for Proposition 123 funding with OEDIT’s Affordable Housing Financing Fund (Land Banking, Equity, and Concessionary Debt).

Learn more about the reclassification petition process.

A municipality or a county may petition to be reclassified as Rural Resort.

Yes, if a county is classified or reclassified as Rural Resort then that includes the municipalities and housing authorities within these counties.