Innovative State Financing for Affordable Homeownership Development
Idea Category: 2025 Ideas Challenge, Building & Development
2025 Ideas Challenge Entry
This bill will establish the authority for the Colorado State Treasurer to invest state dollars in bonds that are issued by quasi-governmental agencies at below-market returns to finance the construction of affordable for-sale housing. This financing mechanism will facilitate increased development for first-time home purchase opportunities by reducing construction costs and making these projects financially viable.
Affordable housing, and affordable home ownership specifically, is a key driver of economic growth that benefits individuals, families, businesses, and communities alike. By providing low interest construction financing to developers with permanent or long-term resale restrictions, this tool will decrease total development costs. At the time of sale to a qualified buyer, the construction loan will convert to a 30-year conventional loan with a below market interest rate designed to serve low- and moderate-income homebuyers. Together, these two loans – made with the same capital – offer the buyer 33% more in purchasing power.
Impact or how it will be measured:
In Colorado, state policy makers directed an initial investment of $50 million to create a pilot program. This targeted and initial step will allow for the monitoring of progress, success, and needed improvements before it is expanded.
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