[Co-Author: James Snow1]
The Colorado Legislature recently addressed that Colorado is experiencing a lack of affordable housing at critical levels. On May 20, 2022, Colorado governor Jared Polis signed into law House Bill 22-1282. The act, called “Concerning the Creation of the Innovative Housing Incentive Program,” added significant financial incentives to support innovative housing construction businesses in Colorado. The new bill provides $40 million in grants and loans from the state’s general fund.
Manufactured vs. Modular or Factory-Built
Citing a need for housing in the short term, HB22-1282 provides incentives for businesses creating “manufactured” housing. While the bill calls the housing at issue “manufactured,” industry professionals should note that the term “manufactured” is not defined as homes built pursuant to requirements set forth by U.S. Department of Housing and Urban Development (HUD Code). Instead, the bill defines “innovative housing” to include prefabricated panelized construction, 3D-printed housing, kit homes installed on a permanent foundation, or tiny homes installed on a permanent foundation.
Newly Available Grants
HB22-1282 creates the Innovative Housing Incentive Program (IHIP) within the Colorado Office of Economic Development. This program will provide funds in two ways. It will provide grants for operating expenses of qualifying businesses, up to twenty percent of the “demonstrated” operating expenditures of the business. Innovative housing in areas with inadequate and/or poor-quality housing and/or areas experiencing closures of coal mines and power plants are eligible for additional incentives, and additional grants may be available later if authorities determine a higher need exists in such areas.
In addition to the grants, IHIP also provides loans to fund new modular housing factories or for expansions to current housing factories, as long as these factories are located in Colorado and “produce a percentage of affordable housing units that are installed in the state.” These loans, called factory development loans, will also be administered by the Colorado Office of Economic Development. The procedures and specific requirements for both the grants and loans are still being finalized by the Office of Economic Development in collaboration with industry leaders.
Takeaways
This new legislation can provide valuable funding and resources for businesses looking to expand or break in to the modular, factory-built, 3-D printed, and/or tiny home construction markets in Colorado. The bill also indicates local governments may follow suit in encouraging investment in modular housing and factory-built housing in the future.
[1] James Snow is a 2022 graduate from University of Colorado Law School. He is not admitted to practice law.
