Colorado Boosts Affordable Housing Tax Credits to $20M Annually

The Colorado General Assembly passed HB24-1434, signed into law by the governor on May 30, 2024, dramatically expanding the Affordable Housing Tax Credit administered by the Colorado Housing and Finance Authority (CHFA). The bill increases annual allocations starting with $20 million in 2024, peaking at $20 million through 2031, and introduces an accelerated claiming schedule: 70% in the first year and 6% annually over the next five years. It also creates a new refundable tax credit for low-income housing in certified transit-oriented communities, offering $2 million annually from 2025 to 2027, then jumping to $11 million in 2028 and $13 million in 2029.

This builds on prior expansions like HB22-1051, which extended the original $10 million annual cap through 2031, addressing Colorado's acute shortage where credits have leveraged federal 4% tax credits to produce about $146,000 per affordable unit from 2015-2020. CHFA caps awards at $1 million per taxpayer per year over six years, totaling $6 million per project, and evaluations confirm the program subsidizes developments in high-demand metro areas like Denver, Aurora, and Colorado Springs. The expansion reduces transfers to the housing development grant fund by $35 million annually from fiscal year 2024-25 through 2031-32 to fund these incentives.

Local leaders hailed the measure amid Colorado's housing crunch, where median rents in Denver exceed $2,000 monthly. Speaker Pro Tempore Andy Boesenecker, D-Fort Collins, called it a 'breakthrough' alongside related bills like SB26-001, which empowers counties and cities to sell or lease public land for workforce housing. The credits target projects making units feasible for low- and middle-income families, leveraging Proposition 123 funds approved by voters in 2022.