The intent of the program is to carry out the purposes of HB21-1271, which seeks to fund communities that are working toward local affordable housing goals. It is called an “incentive” program because communities must have or put in place strategies from a list enumerated in the bill language (including an option for DOLA to approve locally proposed creative/innovative strategies not listed). This is a flexible program that can fund components of affordable housing development projects that other programs often cannot (e.g., predevelopment costs, as described below). HB21-1271 explicitly prioritizes geographic and housing type diversity and local action that is permanent, impactful, and exemplary of best practices in affordable housing development.
IHOI is the abbreviation of the Incentives Grant Program in DOLA’s online grant portal system. IHOI stands for Innovative Housing Incentives grant program.
Municipalities and counties, including regional or collaborative multi-jurisdictional projects. Other groups, such as housing authorities or councils of government, were not eligible to apply for program funds. However, a municipality or county could partner, and funds could be shared with partner agencies to cover eligible costs.
The jurisdiction whose regulations would apply to the property where the affordable housing project is located must have had 3 or more qualifying strategies in place. For example, if a county owned land within a municipality where the project will be built, the municipality must have adopted at least 3 qualifying strategies for the project to be eligible for funding.
A minimum of 20% local cash match of the total project cost is required. The exact amount of match is specified in the grant agreement. Local match is defined with flexibility and can include leveraged funds or financial commitment from partners (e.g., COGs, housing authorities). Land purchased or donated within the previous 12 months of the application also counts toward the requirement. In-kind match (e.g., staff time) does not count toward match requirements. Note that costs ineligible for reimbursement cannot be used to meet match requirements.
Yes, as long as the project’s federal funding sources allow federal-fund matching. You can match these funds with other state funds as well.
Note: Recipients should check U.S. Treasury guidance on the DOLA website and consult their own legal counsel. Guidance to date seems to show that ARP funds may leverage other federal funds but not all federal funds will allow leveraging ARP funds. Please contact DOLA staff with any questions about matching funds.
As part of the 20% match requirement, some portion must come from local funds. State and other grant funds can count toward a portion of that match.
It depends. Funds available under the “revenue loss” eligible use category generally may be used to meet the non-federal cost-share or matching requirements of other federal programs. However, note that SLFRF funds may not be used as the non-federal share for purposes of a state’s Medicaid and CHIP programs.
Funds beyond those that are available under the revenue loss eligible use category may not be used to meet the non-federal match or cost-share requirements of other federal programs, other than as specifically provided for by statute.
Yes. The dollar value of fee waivers provided by the local government to the project counts toward the local match requirement. However, due to HB21-1271’s focus on permanent solutions and fiscally sustainable development patterns, more competitive projects adopted policies that support fee waivers for affordable housing projects (and that have a sustainable revenue source to replace those waivers) rather than one-time fee waivers or exceptions.
Yes. 15% of the total award may be spent on administrative costs. Allowable costs include those related to project management by the applicant or the public/nonprofit agency partner but cannot include administrative costs of private, for-profit developers.
Yes. Site-specific predevelopment costs were allowable in the main funding round and include costs such as:
- Site development (i.e., activities related to land improvements, site preparation, and development of necessary infrastructure)
- Planning activities (e.g., architectural, engineering, feasibility planning, etc.)
- Note: This does not include local government legislative planning activities (e.g., zoning code updates that can be funded through the Planning Grant Program)
- Other predevelopment activities related to a specific project (Note: Developer predevelopment fees are ineligible)
Ideally the community would use a Planning Grant to fund the planning work (including extensive community and stakeholder engagement, data analysis, equity assessment analysis, and formal adoption of the program). Incentives Grant funds could be used to acquire the program’s first property.
Yes, as long as match funds are also spent by the deadline. A Certificate of Occupancy (CO) does not need to be issued for the project by this deadline.
The statutory language focuses on planning strategies (for the Planning Grant Program) and housing projects that have permanent or long-lasting affordability terms. The most competitive applications were from communities that adopted at least 3 qualifying strategies and continued efforts to promote affordable housing development.
By showing they have developed (or implemented) an inclusive and equitable stakeholder engagement strategy and robustly considered and addressed the potential impacts on marginalized and vulnerable populations. More thorough EDI guidance is available on the program webpage.
No. This program is dedicated to supporting local governments around the state that have affordable housing challenges and are willing to take local government land use actions to make affordable housing development easier. In fact, statutory language requires geographic diversity in awards made. 76% of IHOI grantees are located in rural or rural resort counties.
We continue to review federal guidance. However, we can confirm that National Environmental Policy Act (NEPA) review and Davis Bacon wage rates will not apply, so long as any leveraged funding does not carry that requirement. However, please be aware that projects may trigger a federal single audit.
Colorado Revised Statute (C.R.S. 24-30-1305.5) requires all new facilities, additions, and renovation projects that meet the following criteria to
conform to the HPCP policy adopted by the Office of the State Architect (OSA):
- The project receives 25% or more of state funds; and
- The new facility, addition, or renovation project contains 5,000 or more gross square feet; and
- The building includes an HVAC system; and
- In the case of a renovation project, the cost of the renovation exceeds 25% of the current property value.
The applicability of and compliance approaches for HPCP becomes complicated for affordable housing development projects such as those
contemplated by this IHOI program. For example, there are several common instances where HPCP would not be triggered, such as manufactured/modular housing or covering costs for fees or infrastructure. HPCP may apply to ownership units above 80% AMI where funds are for vertical construction. Note: If the local government requests only funds for infrastructure costs, HPCP does not apply.
This funding program allows for off-site expenditures. This means that a portion of the funds can be spent in the neighborhood in which the project is located. DOLA suggests a maximum of 50% of the total award be set aside for off-site improvements (a percentage that high might be appropriate in cases where projects address concerns of equity and/or where the amount for off-site improvements is proportional to the impact on the needed affordable housing stock). The use of program funds to pay for these neighborhood improvements must first be approved by DOLA. Refer to the program guidelines for examples of potentially qualifying off-site improvements.
The statute requires units up to 80% of the area median income (AMI) for rental units and up to 140% AMI for ownership units. However, with pre-approval from DOLA, it is possible to provide a range of units that, when averaged, meet the income requirements (e.g., a mixture of 60% AMI and 100% AMI to meet the 80% average target for rental units). The local approach to protect this averaged range over time will be an important topic of discussion during the pre-application meeting.
A Use Covenant, Regulatory Agreement, or other deed restriction must be recorded to ensure long-term affordability of projects and units assisted with Incentives Grant Program funds. Several local governments partnered with their housing authority to ensure compliance.
The bill language describes affordability as a function of household income. Therefore, income qualification steps will be required. However, the bill language does allow for mixed-income projects, so restrictions will not be required on any units considered “market rate.”
A local government that had not adopted a sufficient number of strategies on DOLA’s qualifying strategies list (see program guidelines) was able to apply by proposing novel, innovative strategies not currently on the menu of strategies. DOLA determined whether strategies qualified the local government to apply for the Incentive Grant funds. Examples of potentially qualifying strategies not listed in the statute or program guidelines include:
- In communities with demonstrated negative impacts from short term rentals (STRs), an ordinance or program that incentivizes long term rentals.
- A dedicated funding source (e.g., an affordable housing trust fund, TOD fund, etc.) to support affordable housing development with flexibility to cover but also go beyond infrastructure costs or fees (e.g., funding to support land acquisition near transit, predevelopment costs, construction/building rehabilitation funds, appraisal gap financing, etc.). This would be particularly sustainable if funded by maintainable sources rather than one-time donations.
- A permanent partnership with an anchor institution(s) to provide or subsidize affordable housing.
- A dedicated program to support development or expansion of a community land trust(s).
- Special bond measure passed to support affordable housing development (paired with other policies to maximize the investment in supporting long-term affordable housing).
- Zoning standards that allow affordable housing as a use by right on appropriately located commercial properties that have been vacant for a set number of years as identified by the local government.
- Market-based incentive programs, such as an affordable housing credit program which encourages the private sector to develop affordable housing and mitigate the impacts of development.
- Development standards that require a high degree of energy efficiency for development of affordable units, thus reducing long-term utility costs for owners/renters.
- Naturally occurring affordable housing protection programs (e.g., purchase of modest rental developments in rapidly changing markets to preserve affordability long term).
- Public programs that utilize abandoned or tax-defaulted properties within existing neighborhoods suitable for affordable housing to be redeveloped/rehabilitated and deed restricted for affordable rental or ownership.
- A tiered development fee structure that is prorated according to affordability levels.
- For communities with a gap in housing suitable for older adults, a program to require, subsidize, or otherwise incentivize universal design for affordable housing for older adults.
- Preservation of existing affordable housing through purchase of expiring deed restrictions on affordable properties, purchasing naturally occurring affordable housing (NOAH) including mobile/manufactured home parks, and adding affordability commitments.