Local Goverments Rights to Property for Affordable Housing

The bill creates 2 property rights a right of first refusal and a right of first offer for local governments to certain types of multifamily rental properties. A right of first refusal and a right of first offer The right of first offer is temporary and terminates on December 31, 2029. For multifamily rental properties that are existing affordable housing consisting of not less than five units , a local government has a right of first refusal to match an acceptable offer for the purchase of such property, subject to the local government's commitment to using the property as long-term affordable housing. Existing affordable housing is housing that is currently receiving federal or local financial assistance subject to one or more restricted use covenants or similar recorded agreements to ensure affordability consistent with affordable housing financial assistance requirements .

The bill requires the seller of such property to give notice to the local government and to the Colorado housing and finance authority at least 2 years before the first final expiration of an the last remaining existing affordability restriction on the property of the date of such expiration , a second notice not less than 6 months before the final expiration of the last remaining existing affordability restriction, and additional notice again when the seller takes certain actions as a precursor to selling the property. Upon receiving the notice indicating intent to sell the property or of a potential sale of the property, the local government has 14 calendar days to preserve its right of first refusal and an additional 60 30 calendar days to make an offer and must agree to close on the property within 120 60 calendar days of the acceptance of the local government's offer; except that, if the seller has received an entirely cash offer from a third-party buyer, then the local government must agree to close within the same time period as is set forth in the third-party buyer's offer . If the price, terms, and conditions of an acceptable offer that has been communicated to the local government materially change, the seller must provide notice of the change within 7 days and the local government may exercise or re-exercise its right of first refusal. If the residential seller rejects an offer by the local government, the seller must provide a written explanation of the reasons and invite the local government to make a one subsequent offer within 14 days.

For all other multifamily rental properties that are 20 30 years or older and have not more than 100 units and not less than 5 15 units in urban counties and 3 units in rural and rural resort counties , a local government has a right of first offer. A seller of such property must provide notice of intent to sell the property to the local government before the seller lists the property for sale enters into an agreement with a licensed broker to solicit and procure purchasers or otherwise lists the property for sale on the multiple listing service . After receipt of the notice, the local government has 14 7 days to respond by either making an offer to purchase the property and stating an intent to perform due diligence and enter into a contract to purchase the property within 45 days of the date that the residential seller's notice was received or waiving its right to purchase the property indicating the local government is interested in receiving due diligence information on the property to evaluate whether it wants to make an offer, which response must include a nondisclosure agreement in a form acceptable to the seller, or waiving any right to purchase the property . If the local government does not respond within this time period, it is deemed to have waived its right of first offer with respect to the property.

The local government's offer is subject to the property being used or converted for the purpose of providing long-term affordable housing or mixed-income development. If the local government does not provide a response in the 14-day period, the right of first offer is waived and the residential seller can proceed with listing and selling the property to any third-party buyer. The residential seller has 14 days to accept or reject the local government's offer and, if the offer is accepted, the local government has 30 days to close the transaction. If the local government has requested due diligence information, the seller has 5 days to provide the information to the local government and the local government then has 14 days to make an offer or waive its right of first offer . If a response is not provided in this period, the right of first offer is deemed waived. The seller has 14 days to accept or reject the local government's offer, and, if the seller does not provide notice, the offer is deemed rejected. If the seller accepts the offer, the parties have 30 days to negotiate and execute a contract for the purchase of the property and then 60 days to close on the transaction, unless both parties agree to other terms.

In exercising its right of first refusal or first offer, the local government may partner with certain other entities for the financing of the transaction and may also assign either right with respect to all applicable properties in the local government's jurisdiction or with respect to a single property to certain other entities that are then subject to all the rights and requirements of the local government in exercising either right.

The bill allows certain sales of property to be exempt from either the right of first refusal, the right of first offer, or both. The bill also allows the local government to waive its right of first refusal to purchase property qualifying for the right if the local government elects to disclaim its rights to any proposed transaction or for any duration of time. Upon completion of the requirements of the seller for the right of first refusal and for the right of first offer, the local government, or its assignee if it has assigned either right, is required to execute and record a certificate of compliance stating that the seller has complied with all applicable provisions for the right of first refusal or right of first offer.

The bill also requires the attorney general's office to enforce its provisions and grants the attorney general's office, the local government, or a mission-driven organization local government's assignee standing to bring a civil action for violations of the right of first refusal or first offer established by the bill. If a court finds that a seller has materially violated the law with respect to the right of first refusal or first offer, respectively, the court must award a statutory penalty of not less than $10,000 for a first offense and not less than $30,000 for any subsequent offenses but the court cannot award a statutory penalty that is more than $100,000 .

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)