Colorado Revised Statutes Title 39 — Taxation

C.R.S. § 39-22-2102

Credit against tax - affordable housing developments - legislative declaration

Official textolls.infolast amended 202218 subsections

# (1)

For income tax years during the credit period, there shall be allowed to any qualified taxpayer a credit with respect to the income taxes imposed by this article in the amount determined by the authority pursuant to this part 21.

# (2)

The authority may allocate a credit to an owner of a qualified development by issuing to the owner an allocation certificate. The authority may determine the time at which such allocation certificate is issued. The credit shall be in an amount determined by the authority, subject to the following guidelines:

# (a)

The credit shall be necessary for the financial feasibility of such development;

# (b)

Repealed.

# (c)

All allocations shall be made pursuant to the qualified allocation plan; and (d) The aggregate sum of credits allocated annually shall not exceed the limits set forth in subsection (7) of this section, except for credits allocated for qualified developments that are located in a county that is designated by the qualified allocation plan having been impacted by a federally declared disaster and solely for the purposes of leveraging state and federally natural disaster funds appropriated for such recovery efforts.

# (3)

If an owner of a qualified development receiving an allocation of a credit is a partnership, limited liability company, S corporation, or similar pass-through entity, the owner may allocate the credit among its partners, shareholders, members, or other qualified taxpayers in any manner agreed to by such persons regardless of whether any such persons are deemed a partner for federal income tax purposes. The owner shall certify to the department the amount of credit allocated to each partner, shareholder, member, or other qualified taxpayer. Each partner, shareholder, member, or other qualified taxpayer admitted as a partner, shareholder, member, or other qualified taxpayer of the owner prior to the filing of a tax credit claiming the credit is allowed to claim such amount subject to any restrictions set forth in this part 21.

# (4)

No credit shall be allocated pursuant to this part 21 unless the qualified development is the subject of a recorded restrictive covenant requiring the development to be maintained and operated as a qualified development, and is in accordance with the accessibility and adaptability requirements of the federal tax credits and Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988, for a period of fifteen taxable years, or such longer period as may be agreed to between the authority and the owner, beginning with the first taxable year of the credit period unless corrected within the time provided by sec. 42 (h)(6)(J) of the internal revenue code as applicable to the covenant described in this subsection (4).

# (5)

The authority shall not allocate a credit pursuant to this part 21 unless:

# (a)

The developer of the proposed qualified development has conducted a public hearing in the community in which the proposed qualified development is located concerning the project for which the allocation has been applied. At such hearing, the developer of the proposed qualified development shall specify the total cost of the project, the estimated present value of the allocation, and the estimated total amount of the allocation. Public comments and other information shall be solicited at the hearing. The hearing shall be recorded by the developer of the proposed qualified development and the developer shall make copies of the recording available to interested parties. The authority shall consider any comments or other information provided at the hearing when ranking an application for a credit pursuant to this section.

# (b)

The authority has obtained a written commitment approved by a public vote of the governing body of a local government to provide some monetary, in-kind, or other contribution benefitting the qualified development.

# (6)

The allocated credit amount may be taken against the taxes imposed by this article for each taxable year of the credit period. Any amount of credit that exceeds the tax due for a taxable year may be carried forward as a tax credit against subsequent years' income tax liability up to eleven tax years following the tax year in which the allocation was made and must be applied first to the earliest years possible. Any amount of the credit that is not used shall not be refunded to the taxpayer.

# (7)

During each calendar year of the period beginning January 1, 2015, and ending December 31, 2031, the authority may allocate a credit, the full amount of which may be claimed against the taxes imposed by this article 22 for each taxable year of the six-year credit period. The aggregate amount of all credits allocated by the authority in each calendar year of the period beginning January 1, 2015, and ending December 31, 2031, shall not exceed the amount of:

# (a)

Five million dollars for credits allocated annually beginning on January 1, 2015, and ending December 31, 2019, pursuant to subsection (1) of this section and section 39-22-2105 combined, except for credits allocated in 2015 and 2016 for qualified developments that are located in a county that is designated by the qualified allocation plan as having been impacted by a natural disaster; (a.5) Ten million dollars for credits allocated annually beginning on January 1, 2020, and ending on December 31, 2031, pursuant to subsection (1) of this section and section 39-22-2105 combined; (a.7) In addition to the amounts described in subsection (7)(a.5) of this section: (I) Twenty million dollars for credits allocated in calendar year 2024, pursuant to subsection (1) of this section and section 39-22-2105 combined; (II) Sixteen million dollars for credits allocated in calendar year 2025, pursuant to subsection (1) of this section and section 39-22-2105 combined; (III) Twelve million dollars for credits allocated in calendar year 2026, pursuant to subsection (1) of this section and section 39-22-2105 combined; (IV) Twelve million dollars for credits allocated in calendar year 2027, pursuant to subsection (1) of this section and section 39-22-2105 combined; (V) Sixteen million dollars for credits allocated in calendar year 2028, pursuant to subsection (1) of this section and section 39-22-2105 combined; (VI) Twenty million dollars for credits allocated in calendar year 2029, pursuant to subsection (1) of this section and section 39-22-2105 combined; (VII) Twenty million dollars for credits allocated in calendar year 2030, pursuant to subsection (1) of this section and section 39-22-2105 combined; and (VIII) Twenty million dollars for credits allocated in calendar year 2031, pursuant to subsection (1) of this section and section 39-22-2105 combined;

# (b)

Unallocated credits, if any, for the preceding calendar years; and (c) Any credit recaptured or otherwise returned to the authority in the calendar year. (7.5) A qualified taxpayer shall not claim a credit allocated as part of the credits available pursuant to subsection (7)(a.7) of this section ratably over the credit period. Instead, such a credit must be accelerated and the full amount must be claimed against the taxes imposed by this article 22 over the credit period according to the following schedule: (a) The amount of the credit allocated as part of the credits available pursuant to subsection (7)(a.7) of this section that a qualified taxpayer claims in the first year of the credit period must equal seventy percent of the total amount of that credit that the authority allocates to the qualified taxpayer; and (b) The amount of the credit allocated as part of the credits available pursuant to subsection (7)(a.7) of this section that a qualified taxpayer claims in the second year through sixth year of the credit period must each year equal six percent of the total amount of that credit that the authority allocates to the qualified taxpayer.

# (8)

Unless otherwise provided in this part 21 or the context clearly requires otherwise, the authority shall determine eligibility for a credit and allocate credits in accordance with the standards and requirements set forth in section 42 of the internal revenue code; however, any combination of federal and state credits allowed shall be the least amount necessary to ensure the financial feasibility of a qualified development.

# (9)

In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure or extends an expiring tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly hereby finds and declares that:

# (a)

The general legislative purposes of the income tax credit allowed by this section are: (I) To induce certain designated behavior by taxpayers; and (II) To provide tax relief for certain businesses or individuals;

# (b)

The specific legislative purpose of the income tax credit allowed by this section is to address the shortage of affordable housing in the state and increase access to affordable housing by encouraging developers to build units specifically restricted for residents with incomes below the area median income and also to encourage private sector investment into the development and preservation of affordable housing; and (c) In order to allow the general assembly and the state auditor to measure the effectiveness of achieving the purposes specified in subsections (9)(a) and (9)(b) of this section, the Colorado housing and finance authority is required to provide the annual report detailed in section 39-22-2108 to the general assembly and the Colorado state auditor. Source: L. 2000: Entire part added, p. 876, § 1, effective August 2. L. 2014: (2)(d), (4), (6), IP(7), and (7)(a) amended, (HB 14-1017), ch. 277, p. 1125, § 4, effective May 29. L. 2016: (2)(d), IP(7), and (7)(a) amended, (HB 16-1465), ch. 243, p. 990, § 1, effective June 6. L. 2018: (3), (4), and IP(7) amended, (SB 18-007), ch. 228, p. 1439, § 2, effective May 22. L. 2019: (7)(a) amended and (7)(a.5) added, (HB 19-1228), ch. 198, p. 2153, § 1, effective September 1. L. 2022: (2)(d), IP(7), and (7)(a.5) amended and (9) added, (HB 22-1051), ch. 231, p. 1707, § 1, effective May 26. L. 2024: (2)(b) repealed and (7)(a.7) and (7.5) added, (HB 24-1434), ch. 291, p. 1976, § 1, effective May 30.

Amendment history

L. 2000: Entire part added, p. 876, § 1, effective August 2. L. 2014: (2)(d), (4), (6), IP(7), and (7)(a) amended, (HB 14-1017), ch. 277, p. 1125, § 4, effective May 29. L. 2016: (2)(d), IP(7), and (7)(a) amended, (HB 16-1465), ch. 243, p. 990, § 1, effective June 6. L. 2018: (3), (4), and IP(7) amended, (SB 18-007), ch. 228, p. 1439, § 2, effective May 22. L. 2019: (7)(a) amended and (7)(a.5) added, (HB 19-1228), ch. 198, p. 2153, § 1, effective September 1. L. 2022: (2)(d), IP(7), and (7)(a.5)

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