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Committee advances septic replacement loan program to finance after amendments, 9‑4
Summary
The committee moved House Bill 25‑1120, which would create a DOLA‑based septic system replacement enterprise funded by a tiered fee on septic permits and administered through CDFIs, to the finance committee on a 9‑4 vote. Sponsors said the program aims to help low‑income homeowners replace failing systems and protect water quality.
The House Energy & Environment Committee voted 9‑4 to advance House Bill 25‑1120, sending the measure to the Finance Committee with amendments.
The bill would create the Septic System Replacement Enterprise at the Department of Local Affairs (DOLA). The enterprise would impose a small, tiered fee on septic‑system permits; fee revenue would fund interest‑free or low‑interest loans to low‑income or low‑credit households to replace failing septic systems. Local governments collecting the permits could retain up to 5% of the fee to cover administrative costs, and the enterprise would contract with at least two community development financial institutions (CDFIs) to administer loans. The enterprise would be governed by a seven‑member board appointed by the governor.
Sponsor Representative Smith said the program is aimed at rural Colorado residents on fixed incomes who cannot afford septic replacements. Fiscal staff estimated the fee schedule would generate about $160,000 in the first half‑year and about $320,000 the following year under the bill's assumptions. Using an assumed average replacement cost of about $20,000, those revenues would fund roughly eight replacements in the first half‑year and about 16 in year two — a modest start intended to be augmented by other funding avenues. Smith also offered an amendment replacing one board seat for a rural homeowner with a representative of a statewide special‑district association; that amendment passed.
Opponents — including Colorado Counties, Inc., and several county commissioners — said they support the goal but worried that adding permit fees would increase housing costs and that the small loan pool would help very few homeowners. County witnesses also said administrative costs and coordination across 64 counties could reduce net funds available for loans.
Committee members debated the scope of the enterprise’s powers; Legislative Legal Services testified those powers (entering contracts, buying or selling property, suing or being sued) are commonly included in enterprise‑style government entities and are practical necessities for a government‑owned enterprise.
What the program would look like: Representative Smith described a tiered charge she designed so the loan fee would be less than or equal to 10% of the permit fee in most counties. She told the committee there were 5,761 septic permits statewide in 2023 and described example permit fees ranging from about $100 in some rural counties to $3,023 in Boulder County. The bill directs the enterprise to contract with CDFIs to administer loans and allows local governments to retain up to 5% for collection costs. The enterprise could issue bonds but the fiscal note did not assume bond issuance.
The committee approved amendment L002 (board composition) and then voted 9‑4 to send the amended bill to Finance.
