Additional Program Details

The following topics include details that address frequently asked questions about the Housing Recovery Program. For full program policies, refer to the grant and loan program policies document.

Eligibility
Application Process
Award Types and Amounts
Home Protection Mitigation Funding
Electrification Rebates
Smoke and Ash Damage
Other Program Details

Eligibility

Area Median Income and Household Income Level
Awards are based on the income level of the household that is calculated at the time of application. The Area Median Income (AMI) varies by County and is also dependent on household size. Find the area median income limits that apply to you.

Ownership Eligibility

The applicant must be the current subject property owner and the owner of record on the disaster date. Ownership will be verified through public record, warranty deed and real estate tax records.

Timeframe for Expenses

Expenses incurred after May 17, 2022 (the signing of SB 22-206), as the result of a state or federally-declared disaster in Colorado since January 1, 2018, are eligible for Program funds.

CDBG-DR funds in Boulder County are eligible to reimburse recovery expenses after the December 31, 2021 federal declaration for the Marshall Fire and Straight Line Winds.

Eligible Expenses

Any award will be based on mid-grade construction, rehabilitation, reconstruction, replacement, or new construction costs (see below) and any associated elevation changes and demolition. The eligible costs listed below are intended to be site and property specific except for #5, where a private road or bridge off-site may be necessary to access a primary residence. Work to clear the site, design and permit the replacement housing, build the housing, and implement building and site measures to reduce risk to natural hazards and the other costs listed above are eligible. Eligible expenses include:

• Direct costs of repairs or reconstruction of a damaged or destroyed primary residence or affordable housing, including costs to rebuild to an advanced fire or other natural hazard mitigation standard;
• Architectural, engineering, permitting, or other soft costs/fees associated with repairing or rebuilding a primary residence or affordable housing;
• Soil sampling and air quality monitoring;
• Clearance and demolition costs, including concrete and other foundation material removal and removal of hazardous materials, including asbestos;
• Private road or bridge repair if necessary to access a primary residence or affordable housing;
• Costs associated with using building and site design measures including retaining walls on an individual's private property, that reduce the risk to natural hazards, including fire-resistant building materials and landscape design;
• Costs to replant climate-ready trees and vegetation;
• Temporary rental assistance during relocation, rebuilding, or recovery work; and
• Other recovery costs not covered by other sources will increase resilience to future disasters.

Permitting Fees and Use Taxes are Eligible

The rebuilding cost calculation is inclusive of permitting fees and sales and use taxes; therefore, it is a reimbursable expense to the extent that it is included in the calculation of the underinsurance gap. These costs are still subject to the overall program's maximum grant and loan amounts.

Application Process and Awards

The Department of Local Affairs and Colorado Energy Office have partnered with Impact Development Fund (IDF) as the program administrator and application intake partner.

Applicants for the Housing Recovery Program and/or Colorado Energy Office Electrification Rebate* will apply through the Impact Development Fund (IDF) portal. IDF intake coordinators can answer questions and assist homeowners in identifying and uploading the required documentation.

Complete applications will move to underwriting, award/no award determination and loan processing if funds are awarded. Upon award, an IDF representative will finalize documentation and schedule a grant/forgivable loan and/or traditional loan closing directly with the applicant.

For inquiries regarding the application process, required documents, eligibility, or individuals seeking information about the State’s Housing Recovery Program, you can connect with an IDF representative by calling 970-744-4835 Monday through Friday 8:00 a.m. – 5:00 p.m. MST, or emailing hrphelp@impactdf.org. Se habla Español? Envíe un correo electrónico a la especialista en admisión Elizabeth Deleone a elizabeth@impactdf.org. Elizabeth le ayudará a llenar la solicitud.

*Applicants from Grand County (East Troublesome Fire) interested in the Electrification Rebate should direct Recovery Electrification Rebate questions to the Colorado Energy Office at 303.349.6122.

Review Process for Rebuild Grant/Forgivable Loans

The grant/forgivable loan is up to $100,000 based on your household AMI. There are no payments and no interest if you maintain residency in the home for 3 years after loan closing.

Process timeframes below assume that a complete application has been submitted.

• Phase I: Property Review & Eligibility for Grant/Forgivable Loan (5-10 business days)
  • Develop rebuilding/renovation estimate using e2Value industry software.
  • Review for gap between total insurance policy limits plus any funds the applicant received for rebuilding their home and subtract that from the e2Value, plus add back non-dwelling items not included in e2value’s estimate, plus a 15% tolerance.
  • If there is a gap, begin phase 2.
• Phase II: Income Review for Grant/Forgivable Loan (15-20 business days)
  • Calculate income to determine if the applicant's income is below 150% of the counties area median income (AMI).
  • Collect any additional documentation needed for qualification.
  • Double check there are no duplication of benefits that would prevent the applicant from receiving this grant.
  • Fund grant/forgivable loan proceeds to the builder.

Fund disbursement functions as a draw request upon receipt and approval of eligible vendor and/or subcontractor invoices. In the best interest and for the protection of the homeowner, a final disbursement will be held back for the Grant/Forgivable loans (the lesser of 20% or $10,000) and released upon certificate of occupancy and documentation of final insurance payouts. At the time of the certificate of occupancy (CO) the order of payouts will be: insurance first, then other funding sources and the remaining Grant/Forgivable loan funds last.

Review Process for Rebuild Traditional Loans

The traditional loan is up to $50,000, approx. 1.5% interest, up to 30 years. There is no household income maximum.

Process timeframes below assume that a complete application has been submitted.

• Phase I: Property Review & Eligibility for Traditional Loan (5-10 business days)
  • Review construction or renovation estimates from the general contractor. The higher of the e2Value or general contractor bid is used to calculate the gap.
  • Review for gap between total insurance policy limits plus any funds the applicant received for rebuilding their home and subtract that from the cost to rebuild their home per the higher of e2Value or general contractor bid.
  • If there is a gap, begin phase 2.
• Phase II: Income Review for Traditional Loan (15-20 business days)
  • Calculate income to determine the applicant's area median income (AMI).
  • Pull credit to determine debt to income ratio is within program guidelines (currently 50% DTI).
  • Collect any additional documentation needed for qualification.
  • Double check there are no duplication of benefits that would prevent the applicant from receiving this loan.
  • Fund traditional loan proceeds to the builder.

Repayment Terms: The loan will be repaid via principal and interest monthly payments fully amortized over a period not to exceed 30 years at 1.5% with a 30-year term (the actual annual percentage rate (APR) will vary depending on the final loan amount). The loan will become immediately due upon the sale, transfer, refinance, when the house is no longer the primary residence, or upon the death of the borrower. The intent of the traditional loan is to be comparable to the Small Business Administration (SBA) Home Disaster Loan for those that were not able to access an SBA loan. Households over 150% of the Area Median Income (AMI) that have received an SBA loan are not eligible for the state-funded traditional loan.

Estimating your Construction Costs

DOLA is estimating your rebuilding cost using e2value software and then adding in items not included in the software, any mitigation measures, and an additional 15% to the overall estimated cost. Our estimate may differ from your contractor/builder estimate as public funding places a “reasonable and necessary” requirement on all expenditures.

For the traditional loans, we will take the greater of the rebuild estimate or the general contractor construction bid. The rebuilding estimate process is identified below.

Step 1: The rebuilding software is used to estimate the following:

• General requirements
• Structure
• Exterior finishes
• Interior finishes
• Mechanical, electrical, plumbing
• Code upgrades
• Contingency
• Contractor overhead/profit
• Fees, taxes, permitting

Step 2: Items added to the rebuilding estimate may include:

• Concrete flatwork including driveway and sidewalks: up to $8,000
• Design, surveys, geotech reporting, other soft costs: up to $25,000
• Excavation: up to $10,000
• Landscape and irrigation: up to $20,000
• Utility connections: up to $5,000

Step 3: Site-specific items may be added to the rebuilding estimate per a contractor’s bid for the items below - as they are unique to each site or property:

• Backfill
• Foundation piers
• Retaining walls
• Septic system repairs
• Wells
• Radon mitigation
• Accessibility measures
• Spray foam (insulation) air sealing

Step 4: Additional wind and wildfire mitigation costs that are not included as part of building code requirements may be added to the rebuild estimate. In the absence of a construction bid that includes the actual additional costs related to wind and wildfire mitigation, the State will use these estimates:

• In-home sprinkler systems: $8,000
• Fire and ember resistant siding: $15,000
• Fire resistant windows, e.g., triple pane & metal-clad windows: $15,000
• Non-combustible fencing or treatment within 5 feet of structure: $2,000
• Ember and flame resistant venting: $1,000
• Gutter guard: $1,500

The full estimating process is summarized below:

1. Estimating software develops base estimates.
2. Site, design and utility work outside of home added to base estimate.
3. Unique site-specific costs added to base estimate.
4. Wind and wildfire mitigation costs added to base estimate.
5. Total the above to get rebuilding subtotal.
6. Multiply the rebuilding subtotal by 15%.
7. Add the rebuilding subtotal and the additional 15% to get the total estimate.

Reviewing Household Income and Size

Household income verification is based on the following:

• Most recent Federal Tax Return, W2’s, 1099’s and K1’s (Provide 2 years if self employed)
• Income Verification (e.g. 30 days of pay stubs, current SSI/disability/Pension award letter, 2022 P&L if self-employed, etc.)
• Adjusted gross incomes will be recorded for all household members over 18 years old and not full-time students and combined to calculate total household income.
• Source documentation will be obtained and third party verification will be used as needed to verify income.

If a Form 1040 from the prior year is unavailable then supporting documentation will be required, as applicable:

• Wages: 2 or 3 consecutive pay stubs.
• Retirement/Social Security benefits.
• Rental income.
• Unemployment benefits.
• Court ordered alimony/spousal maintenance.
• Taxable interest and dividends documentation for other less common types of income.

For your household income level, please use adjusted gross income from IRS form 1040. The 1040 form is used to identify the sources of an applicant’s income. Projected income will primarily be determined by the additional documentation. The definition of 1040 income can be found in the IRS definition. This will give you a ballpark estimate of your income but we will analyze your 1040 and additional income documents to calculate your actual income earned. Once you have your household income level, it will be compared with the area median income for your county.

The State will use HUD’s HOME Program guidelines in determining household size at 24 CFR 92. HUD guidelines state that, as a general rule, you must include “all persons living in the unit” when determining your household size.

Award Types and Amounts

Applicants may be eligible for a combination of rebuild loans (forgivable and traditional) and mitigation loans and grants. The type of award and maximum eligible amount is based on the household’s income level and rebuilding gap, with the exception of the $5,000 mitigation grant.

Award Calculation

Each award is based on a standard rebuilding cost for the home, less insurance received (plus the deductible), Federal Emergency Management Agency (FEMA) assistance for rebuilding, Small Business Administration (SBA) assistance (for loans), or any other grants or federally subsidized loans received.

The difference between the cost to rebuild and the other funding sources becomes the ‘gap.’ For state-funded traditional loans ($50,000 cap) the general contractor estimate (if available) will be used to calculate the “gap”.

The eligible award amount is the lesser of this gap and maximum award amounts (grant plus loan). The reason for the ‘gap’ determination is that federal law prohibits households from receiving more assistance than is needed for the intended purpose. The $50,000 cap on the traditional loan and the $100,000 cap on the grant/forgivable loan are due to the limited amount of funds available.

Delivery of Awards

Awards in the form of either a grant (forgivable loan) or traditional loan are made as part of a loan closing with the homeowner and IDF. At closing for the grant/forgivable loan, the lower of 20%, or a maximum of $10,000 of those funds, are retained by the Housing Recovery Program until final billing and issuance of a certificate of occupancy for the residence. Funds are disbursed in accordance with the standard construction loan process and may be drawn upon during the course of the construction or renovation.

For traditional loans, the program holds no retainage of the awarded amount.

Appeal Process for Award/No Award Decisions

If the household can document that there are additional costs not appropriately accounted for in the estimator, those can be included as add-ins. The more detailed the construction bid, the more likely it is that we will be able to find eligible inclusions. We will not be able to adjust the bid upward for luxury items or an increase in square footage.

If a homeowner disagrees with an award/no award determination, an appeal may be filed within 30 days of that notification. To file an appeal, please provide the determination letter, a narrative describing in detail the reason for requesting a review, and any new information or supporting documentation (e.g. cost escalations, additional eligible improvements, adjustments to insurance proceeds, etc.) that was not available at the time of the initial application. An appeal can be made to IDF by filling out the HRP Appeal Form.

Home Protection Mitigation Funds

If a rebuild or renovation estimate includes one of the eligible mitigation items listed below, the homeowner is eligible to receive up to the total line item amount listed (the actual cost up to the listed amount*) dependent on the measures completed. Funds are paid out to the vendor upon invoice or reimbursed to the applicant for costs incurred.

• Wind and Wildfire Mitigation Measures
  • Fire-resistant or ember resistant siding - e.g., fiber cement siding: $15,000
  • Fire-resistant windows - triple-pane windows with metal-clad or fiberglass frames: $15,000
  • Fire-resistant windows - dual-pane glass windows with metal-clad or fiberglass frames: $10,000
  • In-home sprinkler systems: $8,000
  • Non-combustible Class A decking attached to a residential structure - for example PVC, composite, concrete, fire retardant treated wood: $3,000
  • Non-combustible fencing materials that are within 5 feet of a residential structure - for example metal, fire-retardant treated materials: $3,000
  • Gutter guards: $1,500
  • Ember and flame-resistant venting: $1,000
• Additional Manufactured (Mobile) Housing Mitigation Measures
  • Insulation (pipe insulation and cold weather protection): $5,000
  • Tie downs/anchoring: $5,000
  • Fire-resistant skirting: $5,000

For example: Expense of $2,500 on fire-resistant decking is eligible for $2,500 (not $3,000); Expense of $30,000 on dual-pane tempered glass windows is eligible for $10,000.

Electrification Rebates

The rebate is available upon issuance of a certificate of occupancy by the local jurisdiction or other certification method that confirms the installation of the high-efficiency equipment. The amount of the rebate may vary based on local codes and it may also be increased for areas that are outside of the Marshall Fire area as a complementary rebate from Xcel Energy is not available outside of Boulder County.

Electrification Rebate: East Troublesome Fire - Grand County

Applicants impacted by the East Troublesome Fire interested in the Electrification Rebate should direct questions to the Colorado Energy Office at 303.349.6122.

Electrification Rebate: Other State or Federally-declared Disasters since 2018

For homeowners impacted by other declared disasters in Colorado, the three options are the same:

• A cold climate heat pump, electric or induction stove, and a heat pump water heater
• A ground source (geothermal) heat pump, electric or induction stove, and a heat pump water heater
• Installation of a ground source (geothermal) heat pump only

However, the requirement to meet the 2021 International Energy Conservation Code (IECC) will be adjusted to be in line with locally adopted codes or an earlier version of the IECC.

Smoke and Ash Damage

Eligibility

In addition to being located within the state or federally-declared disaster area, an eligible homeowner must have documented smoke and ash damage by third parties including: industrial hygienists, window and roofing companies, engineering firms, HVAC companies, restoration companies with IICRC certified technicians, and other related contractors.

Eligible Expenses

• Remediation costs already incurred following the effective date of disaster or legislation
• Remediation costs per a General Contractor bid or proposal
• Industrial hygienist costs
• Permit, engineering and architectural fees.

Expenses may be reviewed by the State or their agent for cost reasonableness.

Documentation Requirements

Third party verification of eligible expense costs to include:

• Invoice and/or receipt to verify costs
• Proof of payment for reimbursement
• Verification of insurance claim and final payment or denial (if applicable)

Other Program Details

Duplication of Benefits (DOB)

Duplication of benefits is a review to determine if more funding was provided through various sources than was needed to complete the work of renovation or rebuilding after a disaster. Those receiving disaster assistance funding are asked during the process to list the resources they have available for the project and to sign an affidavit stating that the list is accurate. 

Federal regulations prohibit the State from providing assistance that duplicates any other benefits received and exceeds the total rebuilding or renovation need of the recipient. When determining the rebuilding gap to calculate an award, the State Housing Recovery Program (HRP) is required to consider all funding sources that applicants have available to them to help rebuild or repair. 

See a detailed explanation of duplication of benefits.

Mid-Range vs. Custom Construction

As HRP funds are public funds, they are intended to support the broadest range of the public good. Building back a level of quality in reconstruction helps to ensure that HRP funds can assist more homeowners. Homeowners may install higher quality or luxury items. However, the HRP gap analysis will use more mid-range costs to develop rebuilding estimates. Costs above that level for higher quality/luxury items are the responsibility of the homeowner.

Our estimates are based on the size of the home that was lost. We use the square footage of your home as provided by the County Assessor’s data provided to the State. Any unpermitted improvements will not show up on those records.

A homeowner is allowed to rebuild their house using the materials they prefer and that meet the local code. The Housing Recovery Program will not pay for luxury items which are defined as anything other than mid-range construction materials. However, if a homeowner chooses to use (for example) quartz for countertops instead of Formica, the cost of Formica would be covered by the program funds, and the difference between that mid-range material cost and the cost of the upgraded material must be paid for by the homeowner. Vinyl planks or tiles and hardwood are considered custom or premium.

Reconstruction of homes can be completed either larger or smaller than the original structure without affecting eligibility. However, the Housing Recovery Program is basing its award on the cost to reconstruct a home based on the original square footage of the residence that was lost. Costs associated with increasing the size of the home will be at the homeowner’s expense. If the household is downsizing, the award will be based on the lesser of estimate based on the original square footage and the actual construction cost. Exceptions may be made on a case-by-case basis if the size increase is required to meet current code or to provide accessibility accommodations for elderly or disabled residents.

Rebuilding in a Floodplain

If you rebuild in a floodplain, it is mandatory to elevate the structure or flood proof all work within the 500-year floodplain (or 0.2% annual chance) to the higher of the 500-year floodplain elevation or 3 feet above the 100-year floodplain elevation (as per FEMA flood proofing standards at 44 CFR 60.3(c)(2)–(3) or a successor standard). Flood insurance would also be required.

Changing a Home’s Footprint

The footprint, or outer edge of your home measured at the foundation, can change quite a bit. For example: if a 2-story 2,000 square foot home (no basement) was lost in the disaster - the home had a footprint at its foundation of 1,000 square feet. The homeowner now wants to reconstruct it as a single-story home of 2,000 square feet (still no basement) and local regulations allow it. In this example, the footprint expands by 100% but the square footage of the new home does not change at all and is eligible for Housing Recovery Program funds.

Changing a Home’s Total Square Footage

Square footage calculations use County Assessor’s data that was provided to the State to get the size of the home that was lost. The living areas, unfinished areas and the garage are included in that information. It also identifies any walk-out basements or below grade/garden level areas. Items like patios and decks are not included in the estimate.

Tax Implications of Grants and Loans

Tax implications vary by household. Please refer to information provided by the IRS regarding disaster assistance or consult a tax advisor.

Major Income Changes Due to the Fire

Household income is based on the date at the time of application and not at the time of the disaster. This will allow for major income changes to be accounted for.

IRS 1099 Form

Consult a tax professional for your individual situation. This form should not be needed. A Form 1099-MISC reporting the payment would be required if the payment constituted income to the recipient. In this case, because the payment is not income, no Form 1099-MISC or other information return must be filed with the IRS or furnished to the recipient. However, if reporting a loss to the IRS, these funds would reduce that loss.

Small Business Administration (SBA) Loans

If your household income is greater than 150% of the Area Median Income (AMI) and you have already been granted an SBA loan, then you are not eligible for the grant (based on your income) or the traditional loan (because you have already received SBA assistance).

If your household is less than 150% of the AMI, you are eligible for grant funds regardless of whether or not you have an SBA loan. The SBA loan will not count against your “gap” for the purposes of calculating the grant portion. For those rare cases where households make less than 150% of AMI, they have an SBA loan, and they are already eligible for the grant, they may also receive assistance through the traditional loan provided they still have a gap. In this case, the SBA loan will be included in the gap calculation for the traditional loan portion only.

If you are under 80% AMI, you are eligible for the grant (forgivable loan) regardless of your SBA loan status. SBA may reduce your loan amount if they conclude that your gap has been reduced to less than your full SBA loan amount.

For grant funds (forgivable loans), DOLA funds will typically be paid out before SBA (there may be exceptions if you have already drawn SBA funds). For the traditional loan funds, those can be drawn before or after SBA funds. Total funds drawn cannot exceed the rebuilding gap.

Other common questions about SBA:

• If you are approved for an SBA loan but are unable to actually access the funds due to the complexities of the SBA process, will you be able to access a traditional DOLA loan?
  Please continue to work with SBA to access the loan that you were approved for.
• How do I know if my SBA loan is canceled?
  Contact your SBA loan specialist and they can verify this for you. Due to the amount and the interest rate, it is in your best interest to try to get the loan reinstated, especially if your remaining need is greater than the $50,000 (or $80,000 with mitigation) that the State can offer.
• Can a household with an SBA loan still qualify for the Wildfire and Wind Mitigation Traditional Loan?
  Yes.