SB22-232 MIDDLE INCOME HOUSING AUTHORITY

Colorado Office of Economic Development and International Trade

Quarter Ending December 31, 2023

This status report is published by the Office of Economic Development and International Trade (OEDIT) and approved by the Middle Income Housing Authority (MIHA) Board as part of the quarterly progress reports to members of the General Assembly. The Middle Income Housing Authority was established through Senate Bill 22-232 and Amended by Senate Bill 23-035. MIHA has an Administrative Contract renewed annually with OEDIT.

Per Statute, the Authority shall submit a quarterly report to the Governor, to the State Auditor, and to the Senate Committees on Finance and Health and Human Services and 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:

Xander Martin

Director of Legislative Affairs

Office of Economic Development and International Trade (OEDIT)

xander.martin@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

Enacted by Senate Bill 22-232, the Middle-Income Housing Authority will acquire, construct, rehabilitate, own, operate, and finance affordable rental housing projects for middle-incoming workforce housing. This mechanism was created in order to address the acute shortage of affordable middle-income housing, and is intended to increase the supply of housing by raising large amounts of private sector capital to finance projects that can be placed into service quickly and efficiently.

In September 2022, the Governor appointed the initial 12 members to the board and the Executive Director of OEDIT and the Director of the Division of Housing (DOH) each appointed one member. CO Senate Bill 23-035 amended the enacting legislation to expand the Authority’s Board from 14 to 16 by adding 2 non-voting members, each appointed by the legislature. The Board held its first meeting on October 21, 2022 and meets monthly. More information on Board members and meetings can be found at: https://oedit.colorado.gov/middle-income-housing-authority.  

The Authority will ensure that rental units in affordable rental housing projects will provide middle-income housing with stable rents. Middle-income is defined as 80 - 120% Area Median Income (AMI) or up to 140% AMI for jurisdictions in counties classified as Rural Resort. Projects may also include units lower than 80% AMI if required by local rules and regulations.

The primary funding/support options include but are not limited to issuing bonds, tax exemptions for affordable housing developments, entering into public-private partnerships, and providing financial assistance to tenants in order to develop housing projects and enable a transition to home ownership.

Successful projects will be issued bonds 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 

● Sept 1, 2022 - Initial Board Appointments

● Sept 1, 2022 - Initial Chairperson Appointed (OEDIT Executive Director Patrick Meyers)

● 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

● July 1 - Oct 1 - Local Government Notification Process

• Quarterly Reports:

• FY23 Q2 December ‘22 (submitted)
• FY23 Q3 March ‘23 (submitted)
• FY 23 Q4 June ‘23 (submitted)
• FY24 Q1 September ‘23 (submitted)
• FY24 Q2 December ‘23 (presented)

• FY23 Annual Report - December 31, 2023 (submitted)
• FY23 Annual Audit - Completed in February 2024
• Pilot Program Report - Due upon selection/construction of 3,500 units

Program Updates for Q2 (September 2023 - December 2023)

The Authority launched the initial project solicitation process in April 2023 and conditionally selected the following six awardees on June 30, 2023 in compliance with the July 1, 2023 deadline established by SB22-232. MIHA is working with the project teams to prepare final financial documents for underwriting.

Table of Conditionally Selected Projects

Since selecting the six projects above, the Board has been evaluating the current middle income market development conditions, project selection standards, policies and procedures for the underwriting process and developing communication and marketing plans. The 80 - 120 % AMI middle income affordable housing rental product is relatively new to Colorado. While a limited number of developers and investors are actively engaged, more education is needed for developers, investors and local jurisdictions. Current investor interest and funding resources for middle income projects is limited, but early discussions with private investors about MIHA are generating growing interest. Despite this growing interest, developers and investors are expected to remain cautious due to the factors discussed above as well as a significant new supply of housing units in the front range becoming available during the near to medium term.  Developers may wait to see how market conditions evolve over the next few months to year before becoming more active. Flexibility and innovation are needed in this market to pull deals together.

Organizational Updates

Board Updates: In November 2023, Brian Dale was appointed to the Board as the Executive Director of OEDIT’s designee. Mr. Dale has over 27 years of affordable housing finance experience having previously worked as an affordable housing banker. Mr. Dale is now retired and working as an affordable housing consultant.

Project Updates: In November 2023, MIHA hired Sierra Management Group (“Sierra”) as the Authority’s financial advisor. A resolution approving the Sierra contract was approved at the Board meeting on November 9, 2024. Sierra is one of the most experienced middle income advisors in the county, with more middle income housing project closings in multiple states than any other firm.

Sierra met with MIHA’s six projects who all indicated current funding gaps ranging from $3 million to $20 million. Projects teams were encouraged to explore funding gap opportunities and resubmit financial reports once funding was secure. Several project teams have requested MIHA assistance to secure additional funding sources. MIHA is limited in its powers to only offer market based revenue bonds, tax exemption and ownership and management services post construction. The Board is meeting monthly and currently preparing to reopen the application process in February 2024, while continuing to work with the selected projects.

MIHA is working with Sierra to simplify the application process to ensure efficient evaluations and recommendations to the board and quickly move into underwriting of selected, financially viable projects. MIHA will host several webinars for private and non-profit developers, investors and local governments in February 2024 before reopening the application process.

Table of 2nd Quarter Fiscal Year 2024 Budget and Expenditures

Audit: MIHA selected CliftonLarsonAllen LLP in May 2023 to conduct the initial annual Audit. Audit will be presented to the Board in early 2024.

Quarter 2, FY 2023 Meetings:

• September 22, 2023
• October 4, 2023
• November 9, 2023
• December 15, 2023
• December 22, 2023 (Subcommittee meeting)

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