MIDDLE-INCOME HOUSING AUTHORITY

Fiscal Year 2025 Second Quarter Ending December 31, 2024

This quarterly report is published by the Middle-Income Housing Authority as required by C.R.S Section 29-4-1104 (14)(a) with support from the Office of Economic Development and International Trade (OEDIT). The Middle-Income Housing Authority (hereafter referred to as “MIHA” or “Authority”) was established by Senate Bill 22-232, amended by Senate Bill 23-035 and codified as the Middle-Income Housing Authority Act, Sections 29-4-1101 et seq., C.R.S. (the “Act”). MIHA has an administrative contract with OEDIT through June 30, 2027 with an option to renew.

Per Statute, the Authority shall submit quarterly reports to the Governor, the State Auditor, the Senate Committees on Finance and Health and Human Services, the House of Representatives Committees on Finance, Health and Insurance, and Public and Behavioral Health and Human Services.

For questions or requests related to this report, please contact:

Hannah Gunter 

Legislative Liaison 

Office of Economic Development and International Trade (OEDIT)

Hannah.Gunter@state.co.us 

Hilary Cooper

Director of Innovative Funding for Housing

Office of Economic Development and International Trade (OEDIT)

hilary.cooper@state.co.us

Executive Summary

MIHA is a special purpose authority independent from the state whose purpose is to promote affordable rental housing projects for the middle-income workforce throughout Colorado. MIHA is a body corporate and political subdivision of the state, but not an agency of the state and is not subject to administrative direction by any department, commission, board, bureau, or agency of the state. Per the Act, MIHA’s Board of Directors may authorize tax exempt bonds to finance affordable workforce housing projects serving families and individuals at 80% - 120% AMI, or higher if there is a demonstrated need. If a tax exempt bond is issued for the project, MIHA will own and oversee operations of the units financed with the tax exempt bonds. MIHA is not subject to TABOR revenue and spending limits.

The Authority's income and property are exempt from state and local taxation and assessments and its purchase and use of property is exempt from state and local sales and use taxes subject to approval by the local taxing jurisdictions. MIHA has a local government notification process, during which local governments are allowed to comment, support, veto or request payment in lieu of taxes for the projects in their jurisdictions. MIHA is an instrumentality of the state for federal income tax purposes.

In September 2022, the Governor appointed the original 12 members to the board and the Executive Director of OEDIT and the Director of the Division of Housing (DOH) appointed one member each. The Board held its first meeting on October 21, 2022 and meets monthly. In June 2023, SB23-035 amended certain provisions of the Act and added two non-voting Board members appointed by the Senate Majority Leader and the House Majority Leader from the General Assembly. More information on Board members and meetings can be found at: https://oedit.colorado.gov/middle-income-housing-authority.

In accordance with the Act this report contains a quarterly financial statement of the Authority for the period of October 1, 2024 - December 31, 2024. MIHA operates on the fiscal year as opposed to the calendar year. In addition, this report includes a summary of operations, key highlights of actions taken and actions necessary to carry out the Authority’s purpose during this period.

The Authority’s primary funding/support options are limited to issuing revenue backed tax-exempt bonds, state and local tax exemptions for affordable housing developments, and entering into public-private partnerships.

MIHA was initially supported with $1 million for administrative and organization expenses, but no project funding.

Successful projects will be issued tax exempt bonds, based on the ability for the project revenue to service the debt and be funded with private sector capital. The projects will serve a diverse swath of developer entities, geography, and workforce income levels. The Authority is directed to select up to 3,500 units and report back to the General Assembly with a comprehensive evaluation report on the Authority’s impact on middle-income individuals and families and on housing of all types in the State. The report will include recommendations on the future of the program.

Key Statutory Dates & Reports

● Sept 1, 2022 - Initial Board Appointments 

● Oct, 21, 2022 - Initial Board Meeting Held

● April 1, 2023 - Solicitation of pilot project proposals launched

● July 1, 2023 - Complete review and conditional selection of pilot projects 

Quarterly Reports

• Fiscal Year (“FY”)23 Quarter (“Q”)2 December ‘22 (submitted)
• FY23 Q3 March ‘23 (submitted)
• FY 23 Q4 June ‘23 (submitted)
• FY24 Q1 September ‘23 (submitted)
• FY24 Q2 December ‘23 (submitted)
• FY24 Q3 March ‘24 (submitted)
• FY25 Q1 September ‘24 (submitted)
• FY25 Q2 December ‘24 (presented)

Annual Reports

• FY23 Annual Report - December 31, 2023 (submitted)
• FY24 Annual Report - December 31, 2024 (submitted)
• FY23 Annual Audit - Submitted to the Office of the State Auditor on February 26, 2024
• FY24 Annual Audit - To be presented to the Office of the State Auditor in February 2025
• Pilot Program Report - Due upon selection/construction of 3,500 units

Quarterly and Annual Reports can be found on coloradoMIHA.com.

Program Updates for FY25 Q2 (October 2024 - December 2024)

The Authority launched the initial project solicitation process in April 2023 and conditionally selected six projects on June 30, 2023 in compliance with the July 1, 2023 deadline established by SB22-232 (see project updates below). Project teams are working on securing additional gap funding for projects or rethinking projects to reduce development costs.

After building and implementing the initial project application process using a consulting firm, the MIHA Board decided to simplify the application process and move from a defined application period to a rolling process. In addition, the Board decided to contract with a Municipal Bond Advisor and a Financial Advisor. Sierra Management Group (SMG) was selected as the Municipal Bond Advisor. SGM has extensive national experience closing middle income deals and assisted the Board with establishing Bond Issuance Policies and Post-Issuance Compliance Requirements. SMG will review the Initial Application and Final Proposals, make the final recommendations to the Board on project selection and advise the board through the bond underwriting, marketing and closing process as well as post-issuance compliance. Castlewood Partners was hired in July 2024 as a short-term Financial Advisor to engage with potential project teams to assist with development of the capital stack and project pro-formas. Castlewood researched different gap funding options and public private partnership models to fill the gaps between the revenue backed MIHA bond capacity and the development costs.

In 2022, when SB22-232 passed, MIHA bond capacity could have covered almost 100% of the development costs for middle income projects. Since then project gaps grew significantly due to rising interest rates and the cost of construction leaving funding gaps with very few funding sources. The MIHA Board, OEDIT staff and the financial advisors have been actively engaged with public and private partners to identify compatible funding sources.

Organizational Updates

Board Updates: At the October 2024 Board meeting the board adopted amendments to the Bylaws and adopted a comprehensive Policies and Procedures document which include recommendations from the Fiscal Year 2023 Audit as well as policies and procedures in practice but not formalized to date. The Communications & Outreach Subcommittee met to develop Fiscal Year 2025 legislative ideas, including gap funding options from funds managed by the Treasurer’s Office, potential sources to serve as a back stop or credit enhancement for MIHA bonds to bring the interest rates down and make the bond more attractive to the market, authorize MIHA to issue general bonds to fund a revolving loan fund to support MIHA projects, opportunities to partner with CHFA to provide project funding support, administrative funding options for MIHA and reducing MIHA’s statutory reporting requirements to reduce administrative expenses. In November, the board discussed the legislative ideas and next steps and reviewed a memo prepared by legal counsel to clarify public public and public private ownership options to share with potential project teams. The board also entered into an executive session to discuss a potential project. In December the board approved Inducement Resolution 2024-13 to initiate the bond underwriting process for Nuche Village, a conditionally selected MIHA project that secured Proposition 123 Concessionary Debt funds to fill the gap between the estimated MIHA bond capacity and the total development costs. The board agreed to move to meetings every other month in 2025, unless more meetings are needed.

Financial Updates

As of December 31, 2024 MIHA had $247,381 in the Treasury account, which is a balance from the initial $1 million for administrative expenses funds allocated in SB22-232. In addition, MIHA had $38,635 in its operating account. MIHA's sole source of revenue will be project fees and project revenues.

Table of 1st Quarter Fiscal Year 2025 Budget and Expenditures

Budget Update
OEDIT staff informed the board that due to the uncertainty of MIHA’s ability to secure additional administrative funding from the state legislature, OEDIT would reduce administrative expenses and end the contract with Castlewood in December 2024. The board decided not to formally amend the budget, but the expected reduction in budgeted Fiscal Year 2025 expenses is approximately $130,000 from Professional Fees, leaving a year end balance of approximately $148,000.

Project Updates
MIHA’s bond underwriter Sierra Management Group will proceed with underwriting for Nuche Village. The project was awarded $7.2 million in Proposition 123 Concessionary Debt to fill the funding gap between the estimated MIHA bond coverage and the total development costs.  The remaining conditionally approved projects continue to finalize their development and financing plans. Discussions continue with potential project teams and MIHA’s Financial Advisor and OEDIT staff.

Table of MIHA Conditionally Selected Projects

Quarter 2, FY 2025 Meetings

• October 18, 2024 (Board Meeting)
• October 28, 2024 (Communications & Outreach Subcommittee Meeting)
• November 15, 2024 (Board Meeting)
• December 20, 2024 (Board Meeting)

For more information on the Middle-Income Housing Authority, including upcoming Board meetings and agendas, visit oedit.colorado.gov/middle-income-housing-authority and coloradomiha.com.