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OEDIT and CHFA detail Prop 1-23 awards, warn of investor and market risks as $110M diversion is proposed
Summary
OEDIT and CHFA reported heavy demand for Prop 123 funding (FY25: 108 applications requesting $643.3M; about $190.9M available; 50 awards supporting ~4,548 units) and described a proposed $110M diversion (S02) to the general fund, while warning that market uncertainty and investor pullbacks are straining projects.
OEDIT and the Colorado Housing and Finance Authority told the Joint Budget Committee they manage the majority (60%) of the Prop 1-2-3 Affordable Housing Finance Fund and have seen far more demand than available resources.
Presenters said FY25 received 108 applications requesting about $643.3 million while only ~$190.9 million was available for awards; 50 projects were selected, supporting an estimated 4,548 units (about 4,186 rental and 362 ownership units). The programs include land banking (for property acquisition and some ownership), concessionary debt (gap financing and support for off-site factory production), and a below-market equity program for non-profit and for-profit developers serving low- and middle-income AMIs.
Steve Johnson (CHFA) and OEDIT staff emphasized the programs are heavily oversubscribed. “We funded just a little under one-third of the demand,” an OEDIT presenter said while reviewing application and award counts. Presenters highlighted efforts to reduce transaction friction — common pro forma templates, a Housing Hub posture to coordinate multiple funding sources, and underwriting streamlining — and said factory-produced housing and modular construction are key parts of the strategy to scale units quickly.
The agencies warned of market headwinds. OEDIT and CHFA said private investors and tax-credit buyers have begun to withdraw or reprice deals, increasing funding gaps at closing. Presenters described a limited program flexibility to top up awards (up to 10% without a deep review) but said some projects will request additional support as costs rise.
Complicating future capacity, OEDIT outlined a legislative/JBC request (S02) to divert $110,000,000 from the AHFF to the state general fund for FY 2026–27. Jeff Craft (OEDIT) described the request and a companion RO2 package that would temporarily suspend statutory percentage ranges across sub-programs, clarify interest spending authority, and change administrative calculations so the agencies could direct reduced dollars to prioritize low-income unit production and draw federal funds. Craft stressed that awards already issued will not be clawed back.
Committee members asked about investor pullouts and whether private-activity bonds or other financing tools were implicated; presenters replied that investor pricing and familiarity with state equity investments are key hurdles and that CHFA and partners are doing outreach to reduce uncertainty.
The offices said they are coordinating weekly to manage implementation, will continue streamlining underwriting and closing processes, and are exploring ways to increase rural access to awards. The committee asked for continued reporting on award status and any material risks to projects already committed.
