This bill will clarify fiscal rules, legislative authority, and allowable uses for money allocated under Proposition 123 (2022), which supports affordable housing programs in Colorado.
Oversight of Administrative Spending (Starting FY 2026–27)
Under Proposition 123:
A maximum of 5% of each program's funding can be used for administrative costs (e.g., staff, operations) by the Division of Housing or Division of Local Government.
This bill changes that starting in FY 2026–27:
The use of that 5% administrative funding is now subject to annual approval by the Colorado General Assembly (not automatic).
It also clarifies how the 5% is calculated—based on the total allocation to each specific program.
Expanded Use of Homelessness Program Funds
The Division of Housing is authorized to use funding from the homelessness program (if the legislature approves) to:
Pay for capital improvements at two state-owned supportive residential communities.
Cover operational costs (both direct and indirect) for these communities that serve people experiencing homelessness.
Clarification on Anti-Supplanting Rule
Proposition 123 prohibits the state from using these new funds to replace existing state housing funding.
This bill clarifies when and how that rule applies, ensuring:
Proposition 123 funds must supplement, not supplant, current state affordable housing investments.
The legislature cannot divert regular housing funds and backfill them with Prop 123 dollars.
Overall Effect
Increases legislative control over how administrative costs are funded.
Expands flexibility to support state-owned housing facilities for the homeless.
Strengthens compliance with voter intent by clarifying how Proposition 123 funds must be used in addition to—not instead of—existing housing support.
Summary
Joint Budget Committee. Among other things related to
affordable housing, Proposition 123, which was approved by the voters at the 2022 statewide election, created the affordable housing support fund (fund) and continuously appropriated money from the fund to the division of housing within the department of local affairs (department) for enumerated uses relating to an affordable home ownership program and a program serving persons experiencing homelessness and to the division of local government, also within the department, for enumerated uses relating to a local planning capacity development program. A specified percentage of money from the fund is allocated for the implementation of each program, and from each allocated percentage the division of housing or the division of local government, as applicable, is permitted to use up to 5% to pay for the direct and indirect costs of administering each program.
Beginning in state fiscal year 2026-27, the bill makes the
expenditure of up to 5% of the money from each program's allocation of funding for administration of each program subject to annual appropriation by the general assembly and clarifies how that 5% amount is calculated.
The bill also allows the division of housing, subject to annual
appropriation by the general assembly, to expend money under the program serving persons experiencing homelessness for:
•
Capital needs at 2 state-owned supportive residential communities for persons experiencing homelessness (supportive residential communities); and
•
Direct and indirect costs of operating the 2 supportive residential communities.
Proposition 123 also included a prohibition on the general
assembly appropriating funds from the fund and the affordable housing financing fund to supplant other state support for affordable housing projects. The bill clarifies when appropriations from the fund and the affordable housing financing fund would violate this prohibition.
