C.R.S. § 39-3-113.5 — Property acquired by nonprofit housing provider for low-income housing - use for charitable purposes - exemption - limitations - definitions

(1) As used in this section, unless the context otherwise requires: (a) Area median income means the median income of any county in which property is located in relation to family size, as published annually by the United States department of housing and urban development. (a.5) Community land trust means a nonprofit organization that is exempt from taxation under section 501 (c)(3) of the federal Internal Revenue Code of 1986, as amended, and is designed to ensure long-term housing affordability through a shared-equity model by acquiring and maintaining ownership of real property, while selling the improvements to low-to-middle income households for use as a primary residence. (b) Indicators of intent means off-site activities of a nonprofit housing provider that establish the provider's specific intent to: (I) Use property for the purpose of constructing or rehabilitating housing to be sold to low-income applicants; or (II) Sell the property to low-income applicants for the purpose of constructing or rehabilitating housing for the low-income applicants. (b.5) Land lease means a long-term lease used in affordable homeownership properties to lease the real property that is owned by a community land trust or nonprofit affordable homeownership developer to the owner of the improvements on the real property and preserve the improvements as an affordable homeownership property. (c) Low-income applicant means: (I) For property tax years commencing before January 1, 2024, an individual or family whose total income is no greater than eighty percent of the area median income and who applies to a nonprofit housing provider to assist in the construction and purchase of housing to be constructed by the provider; and (II) For property tax years commencing on or after January 1, 2024, an individual or family who both apply to a nonprofit housing provider to purchase an affordable for-sale unit and whose total income is at or below either: (A) One hundred percent of the area median income of households of the same size in the county in which the housing is located; or (B) One hundred twenty percent of the area median income of households of the same size in the county in which the housing is located, if the individual or family resides in a county classified as a rural resort community by the division of housing pursuant to section 29-4-1107 (1)(d). (d) Nonprofit housing provider means an organization that is exempt from federal income tax pursuant to section 501 (c)(3) of the federal Internal Revenue Code of 1986, as amended, and that has a primary organizational mission of: (I) Working with low-income applicants to construct or rehabilitate housing that the organization then sells to the low-income applicants for their residential use; or (II) Selling property or improvements to low-income applicants for the low-income applicants' residential use. (2) (a) Subject to the limitations specified in subsection (3) of this section, for property tax years commencing on or after January 1, 2011, real property acquired by a nonprofit housing provider upon which the provider intends to construct or rehabilitate housing to be sold to low-income applicants or which the provider intends to sell to low-income applicants for their residential use is deemed to be being used for strictly charitable purposes, regardless of whether or not there is actual physical use of the property, and shall be exempt from property taxation in accordance with section 5 of article X of the state constitution. (b) (I) For property tax years commencing on or after January 1, 2024, the property tax exemption described in this section applies from when the nonprofit housing provider claims the exemption, through construction, rehabilitation, or improvement of the property, until the provider sells, transfers, donates, or leases the property. (II) If property is sold by a nonprofit housing provider to a low-income applicant, the property may qualify for the property tax exemption described in this section until a certificate of occupancy is issued for the property; except that property may not qualify for the property tax exemption described in this section more than one year after the provider sells the property to the low-income applicant. (c) (I) For property tax years commencing on or after January 1, 2011, but before January 1, 2024, in determining whether a nonprofit housing provider satisfies the intent requirement of subsection (2)(a) of this section with respect to particular property, the administrator may consider indicators of intent, including but not limited to: (A) The establishment by the nonprofit housing provider of a committee or other structure for the purpose of planning the construction or rehabilitation of housing on the property; (B) Steps taken by the nonprofit housing provider to obtain any required local government approvals for the construction or rehabilitation of housing on the property; (C) Steps taken by the nonprofit housing provider to develop and implement a financing plan for the construction or rehabilitation of housing on the property; (D) The hiring of architects, contractors, or other professionals by the nonprofit housing provider in preparation for the actual construction or rehabilitation of housing on the property; and (E) The solicitation or acceptance by the nonprofit housing provider of applications from low-income applicants for housing to be constructed or rehabilitated on the property. (II) For property tax years commencing on or after January 1, 2024, in determining whether a nonprofit housing provider satisfies the intent requirement of subsection (2)(a) of this section with respect to particular property, the administrator may consider indicators of intent, including but not limited to: (A) A land donation agreement between the landowner and the nonprofit housing provider that outlines the purpose of the property donation; (B) A resolution by the nonprofit housing provider's board that designates the property for construction or rehabilitation of for-sale affordable housing; or (C) A resolution by the nonprofit housing provider's board that approves the purchase of the property for land banking with the purpose of constructing or rehabilitating for-sale affordable housing. (3) (a) For property tax years commencing on or after January 1, 2011, but before January 1, 2024, the property tax exemption described in this section is subject to the following limitations: (I) The exemption may be allowed for a maximum of five consecutive property tax years, beginning with the property tax year in which the nonprofit housing provider obtained title to the property; and (II) If the nonprofit housing provider is allowed an exemption for any property tax year and subsequently sells, donates, or leases the property to any person other than a low-income applicant who assisted or will assist in the construction of housing for the applicant's residential use on the property, the provider shall be liable for all property taxes that the provider did not previously pay due to the exemption. (b) For property tax years commencing on or after January 1, 2024, the property tax exemption described in this section is subject to the following limitations: (I) For nonprofit housing providers who have not previously claimed the property tax exemption, the exemption may be allowed for a maximum of ten consecutive property tax years, beginning with the property tax year in which the nonprofit housing provider claimed the exemption; (II) For nonprofit housing providers who have previously claimed the property tax exemption, the exemption may be allowed for a maximum of five consecutive property tax years, in addition to the five-year period described in subsection (3)(a)(I) of this section; and (III) The nonprofit housing provider is liable for all property taxes that the provider did not previously pay due to the exemption if the provider sells, donates, or leases the property to anyone other than: (A) A low-income applicant who purchased the property; or (B) A community land trust or nonprofit housing provider intending to sell the improvements on the property to a low-income applicant and lease the underlying land to the low-income applicant through a land lease. Source: L. 2011: Entire section added, (HB 11-1241), ch. 248, p. 1082, § 1, effective August 10. L. 2013: (1)(b), (1)(c), (1)(d), IP(2), and (3)(b) amended, (HB 13-1246), ch. 203, p. 845, § 1, effective August 7. L. 2023: (1)(a.5) and (1)(b.5) added and (1)(c), (1)(d)(II), (2), and (3) amended (HB 23-1184), ch. 260, p. 1502, § 2, effective August 7.