Pueblo staff: Proposition 123 funding opens opportunities but baseline makes three‑year goal unattainable

Melissa Cook, the city—s housing administrator, told the Pueblo City Council on May 5 that Proposition 123 gives Pueblo access to new state housing funds but imposes a prescriptive unit-count baseline that the city cannot meet under the law as written.

Cook said Proposition 123, a statewide ballot measure approved in November 2022, sets aside one‑tenth of 1% of excess TABOR revenue for housing and divides that money between the Colorado Housing and Finance Authority (CHFA/OEDIT) and the Department of Local Affairs (DOLA). She said those pots fund programs including land banking (grants/forgivable loans up to $5 million), CHFA equity awards (up to $15 million), concessionary debt for rental projects, homelessness response, and gap funding for homeownership developments (up to $70,000 per door).

The nut graff: Cook said Pueblo—s legislatively required baseline is 13,403 existing affordable units under the measure—s counting rules, which requires the city to add 3% per year for three years—1,206 new deed‑restricted affordable units by Jan. 1, 2027—to remain eligible. "We know that's not going to happen," Cook said, and city staff are pursuing a legislative fix with other similarly affected communities.

Cook explained how the baseline was calculated: it uses American Community Survey data and building permits per the statute; the municipality must opt in to allow local governments and nonprofits to apply for the new funds. She said opting in does not guarantee an allocation to the city: applicants compete statewide, and if a jurisdiction has no applications that meet program criteria, it may receive no awards.

Councilors pressed for details on how the funding stacks work and how "affordable" is defined under the programs. Cook said rental units are generally targeted at 60% of area median income (AMI) or below; homeownership programs commonly target up to 80% AMI, and program rules determine the dollar caps and utility‑adjusted rent calculations. She used a Pueblo example: a three‑person household at 60% AMI would have a two‑bedroom rent cap of about $1,377 including utilities, and at 80% AMI a homeownership household would be capped at roughly $73,000 annual income with a maximum purchase price in the mid‑$200,000s under program rules.

Cook said the city has already applied for and received a local planning capacity grant ($96,000) and a $100,000 minor repair program; homelessness providers received about $289,000 from Proposition 123 funds. She added that the city is actively pursuing CHFA land‑banking applications and supporting large equity applications statewide, and has written letters of support for two local Equity program applicants.

Councilors raised implementation questions and next steps. Councilor Gil Maestri cited concerns about apparent tension between state land‑use bills and local control; Cook said a separate set of land‑use proposals did not become law and that DOLA has acknowledged the baseline problem. Councilor Martinez proposed working with other affected municipalities, such as Greeley, and with the city—s lobbyists to seek a legislative amendment. Cook said DOLA is engaged in early conversations and that one approach could mirror the rural/resort petition mechanism enacted in 2023 but applied to lower‑income communities to recalibrate baselines.

Ending: Cook warned that if Pueblo cannot meet the three‑year numerical target, the municipality will simply be ineligible to apply for some Proposition 123 competitive awards for a one‑year period; homelessness response activities remain eligible. She said there are no clawbacks of funds already awarded. Council members asked staff to pursue a legislative fix and to convene partners and developers to advance competitive applications.