Compliance, Year 15, and CHFA's 30-to-40-year tail — Colorado

CHFA's real extended-use math: 30 years on a bare 4 percent deal, 40 on a 9 percent or competitive-state-credit deal

The federal floor is the same everywhere: a 10-year Credit Period under IRC Section 42(f)(1), inside a 15-year Compliance Period under Section 42(i)(1), followed by an Extended Use Period of at least 15 more years under Section 42(h)(6)(D) — 30 years minimum, nationwide. Colorado's own program layers a materially longer commitment on top of that floor for its flagship products, and it is nowhere close to California's mandatory 55 years.

CHFA's own Land Use Restriction Agreement template bakes both numbers in as a bracketed election rather than a single fixed figure: it defines the Extended Use Period as "[30/40] consecutive taxable years beginning on the first day in the Compliance Period... and ending on the date that is [15/25 years] after the close of the Compliance Period." Whoever completes the recorded LURA for a given deal strikes one bracket and keeps the other — the 40-year figure is not a hypothetical scoring ceiling, it is the literal number typed into the recorded instrument on a competitive 9 percent or state-credit award.

CHFA's own Appendix E — "CHFA Policy Regarding the Release of the LURA" — describes the program in simpler terms than Section 5.A.2 does, stating flatly that "all projects must comply with the rent and income requirements through a 15-year compliance period and a 15-year extended-use period, for a total of 30 years." Read on its own, that line understates the real commitment on any 9 percent or state-credit deal by a full decade. Treat Appendix E's "30 years" as a simplified description of the federal floor, not as CHFA's operative rule — the actual, controlling number is whatever Section 5.A.2 requires for the credit type in question, and ultimately whatever the deal's own recorded LURA states.

One combination is worth spelling out precisely: Colorado's Round Two structure pairs a noncompetitive federal 4 percent credit with a competitively-awarded state Affordable Housing Tax Credit — the exact pairing described in Phase 2 of this guide. Read in isolation, Section 5.A.2's two buckets — "federal 4 percent... with or without state credit" at 15 years, versus "federal 9 percent... and competitive state credit" at 25 years — could look ambiguous for a 4 percent deal that also wins the competitive state credit. But the QAP resolves this elsewhere in identical language: Section 3.B.4's Threshold #14 ("Extended-Use Election") repeats the same two buckets verbatim, and its "federal 4 percent credit with or without state credit" bucket is explicit that a Round Two pairing — federal 4 percent plus state credit — still only requires a 15-year extended-use election, for 30 years total. The 25-year/40-year floor applies to federal 9 percent deals and to state-credit-only awards, not to a Round Two federal-4-percent-plus-state-credit deal. This reading rests on this session's own comparison of the two QAP sections rather than direct CHFA guidance, so it is still worth confirming with CHFA on a specific Round Two deal, but the QAP's own text points to 30 years, not the more conservative 40-year floor.

The Qualified Contract door closed in 2019 — Colorado didn't need a waiver clause to do it

Several states now force every applicant to sign away Qualified Contract rights at the door — New Jersey and Iowa both make the waiver a mandatory condition written into the application and the extended use agreement. Colorado's current QAP contains no equivalent waiver requirement anywhere in its threshold or Primary Selection Criteria sections. It doesn't need one: Section 10 of the QAP, "Qualified Contract Process," opens by scoping the entire mechanism out of existence for anything but old paper — "These provisions only apply to projects that received awards of Housing Tax Credits prior to 2019." Every award made under the current QAP, or any QAP cycle from 2019 forward, is categorically outside the process — there is no waiver to sign because the statute-driven mechanism itself doesn't reach a current-vintage Colorado deal.

Even among the pre-2019 population that remains theoretically eligible, CHFA's own text warns not to assume the right survived: "this process is available to very few projects in Colorado as most Owners waived their rights to pursue this option under their Land Use Restriction Agreement." Confirming eligibility on any older Colorado asset means reading that specific deal's recorded LURA, not inferring it from the award year alone.

CHFA's Appendix E frames the Qualified Contract as one of only three statutory ways an Owner can end the extended-use commitment early — alongside the Right of First Refusal method and foreclosure or deed-in-lieu of foreclosure. All three carry the same three-year post-termination tenant protection under Section 42(h)(6)(E)(ii): no eviction without cause, and no rent increase beyond what Section 42 would otherwise have allowed, running from the date the LURA actually terminates.

The Right of First Refusal method covers more ground than a same-for-same sale to a nonprofit, government agency, or qualifying tenant organization at the Code-mandated minimum price. CHFA will also use it to let an Owner convert low-income rental units to affordable for-sale units after Year 15 — but only for "projects that were awarded with the intent to convert to homeownership after the 15-year compliance period has been satisfied." A request to convert that wasn't part of the original award is reviewed case-by-case against four factors CHFA names directly: reasons for conversion, impact on existing rental inventory, long-term affordability (enforced by a deed restriction running for the balance of the Extended Use Period), and compliance with Section 42(i)(7)'s own minimum-price and right-of-first-refusal mechanics. CHFA is explicit that conversion isn't a way to escape the low-income restrictions — "rather... a way to comply with those restrictions in a modified form."

Monitoring stays in-house at CHFA, and the inspection cadence halves the day Year 15 ends

Unlike states that contract physical inspections out to a named third-party compliance firm, Colorado's reviews are run by CHFA's own staff. The Compliance Manual splits the work between two roles on every review: Program Compliance Officers (PCOs), who audit tenant files — "typically performed remotely but may also be performed in person" — and Physical Inspection Officers (PIOs), who conduct the on-site inspection independently of the file review. No contracted inspection vendor is named anywhere in the manual or the QAP.

The paperwork underneath the inspection changes at the same Year 16 boundary, not just its frequency. A full move-in certification with third-party income and asset verification is still required before a tenant moves in during the Post Year 15 Period, but the annual recertification afterward becomes a "basic annual recertification" that drops third-party verification of income and assets entirely — a Basic Annual Recertification form, a Student Status Certification only if CHFA-issued tax-exempt bonds remain outstanding, a lease addendum, and current-rent documentation are all that's required. CHFA also stops monitoring the IRS Student Rule outright once Year 16 begins (again, except for developments still carrying outstanding CHFA tax-exempt bonds), stops monitoring the Next Available Unit Rule, and — as of a 2024 policy change — allows any unit transfer during the Post Year 15 Period without triggering noncompliance, regardless of the transferring household's current income.

Record retention runs the opposite direction: longer, not shorter. Records for the first year of the Credit Period must be kept a minimum of 21 years (six years past the filing deadline, with extensions, for the last year of the Compliance Period), and every other year's resident file must be kept at least six years past its own filing deadline, tracked from the year the resident actually moved out.

The money changes shape too. The initial 15 years of compliance monitoring are paid as a single present-valued lump sum before CHFA will issue the 8609s — not billed annually. Starting in Year 16, CHFA switches to an annual charge instead: $25 per tax-credit unit (including any employee units), capped at $2,500 total per property, effective November 1, 2015, due every February 15. Noncompliance itself carries a flat per-occurrence fee regardless of severity — $250 per occurrence for a late annual submission, $500 per occurrence for any other uncured finding.

One thing worth flagging rather than asserting as settled: every other noncompliance category in the Compliance Manual ties directly to a specific IRS Form 8823 line item — physical condition, vacant-unit handling, utility allowance errors, overcharged rent, and more all cite a line number. Section 14.12, "Post Year 15 LIHTC Noncompliance," is the only noncompliance section in the entire manual that doesn't — it describes only a "Not in Good Standing" consequence for an uncorrected finding. Combined with Section 10.7's own note that physical-condition noncompliance is reported on Form 8823 specifically "for LIHTC properties within the 15-year Compliance Period," the manual strongly implies that Post-Year-15 findings stop generating federal 8823 filings, the way Iowa's compliance manual states outright. CHFA's own text doesn't say this in as many words, though, so treat it as a well-supported inference rather than a confirmed rule.

Property tax relief has nothing to do with CHFA — it runs through a housing authority's ownership stake

Search CHFA's QAP or its Compliance Manual for anything resembling a property tax provision and there isn't one — neither document mentions property taxes, exemptions, or assessments anywhere. That silence is a real finding, not a gap in this research: Colorado's property tax relief for an affordable housing deal runs entirely outside the tax-credit allocating agency, through a completely different statute and a completely different local government actor.

The mechanism most LIHTC rental deals in Colorado actually use is a partnership with a local city, county, or multijurisdictional housing authority under the state's Housing Authorities Law (C.R.S. Sections 29-4-201 through -232). A housing authority — or its wholly-owned nonprofit subsidiary — takes a nominal ownership interest in the deal's ownership entity, often as low as 0.01 percent, as a special limited partner or non-managing member alongside the tax credit investor's roughly 99.99 percent stake. That ownership interest is enough under the statute to exempt the portion of a project occupied by persons of low income from all property taxes (C.R.S. Section 29-4-227(1)(b)), from special assessments (Section 29-4-226(1)), and from sales and use taxes on construction materials (Section 29-4-227(1)(b); Section 39-26-704(1.5)). On a mixed-income or mixed-use project, the exemption is prorated by square footage or construction cost to the portion actually serving low-income households, and it doesn't require the housing authority to take meaningful control of the deal — typically just ongoing compliance reporting and payment of the authority's own participation fees.

A separate, narrower set of exemptions exists under Title 39 for affordable rental projects sponsored directly by a nonprofit developer with no housing authority involvement at all — administered by the Division of Property Taxation inside the Department of Local Affairs (DOLA), not CHFA. These reach only three categories of rental project: housing for senior (62-plus) or disabled households at or below 150 percent of the area's low-rent public-housing income limits (administratively read as roughly 80 percent AMI); housing serving households below 30 percent AMI, where rents must run below a comparable market unit's Fair Market Rent by at least the value of the exemption; and family-service facilities serving single-parent families that also provide on-site licensed childcare and counseling (C.R.S. Section 39-3-112). Each requires its own general exemption application plus an exemption-specific supplement, an ongoing "efficiently operated" showing, and an annual occupancy report — none of it processed through CHFA.

A typical for-profit-LP-with-nonprofit-GP LIHTC ownership structure — the standard tax-credit structure — does not, on its own, make a project eligible for either avenue. The housing authority route depends on an actual housing authority holding an ownership stake in the deal (a partnership that has to be negotiated and priced, not something CHFA grants), and the Title 39 nonprofit exemptions require the qualifying nonprofit itself to be the sponsor of a project serving one of the three named populations, not just a passive general partner of a family-housing deal outside those categories. A typical family LIHTC project that doesn't fit either mold may have no state or local property tax relief available to it at all beyond whatever a specific city or county negotiates independently. Separate Title 39 exemptions exist for nonprofit and community-land-trust for-sale (homeownership) affordable housing under C.R.S. Sections 39-3-113.5 and 39-3-127.7, but those apply to for-sale product, not LIHTC rental deals, and shouldn't be confused with the rental exemptions above.

What the sources don't settle

Three things below should be confirmed directly with CHFA, DOLA, or a specific deal's own recorded documents rather than treated as settled by this guide.

Which extended-use bucket a Round Two deal falls into — noncompetitive federal 4 percent credit paired with the competitively-awarded state Affordable Housing Tax Credit — is addressed by Threshold #14's identical "with or without state credit" language, pointing to the 30-year figure rather than 40, as explained above. That reading is this guide's own comparison of two QAP sections rather than direct CHFA guidance, so still confirm the actual recorded Extended Use Period on a specific Round Two deal rather than relying on it alone.

Whether Post-Year-15 findings genuinely stop generating IRS Form 8823 filings in Colorado, the way Iowa's compliance manual states outright, is a strong inference from the structure of CHFA's own manual (see above) but not a sentence CHFA has actually written. Treat it as likely, not confirmed.

Whether Chapter 14's Post-Year-15 simplifications — the basic annual recertification, the halted Student Rule and Next Available Unit Rule monitoring — apply identically to a unit that also carries a separate state Affordable Housing Tax Credit set-aside commitment isn't addressed explicitly anywhere in the sources reviewed this session; Chapter 14 is titled generically ("Post Year 15 Housing Tax Credit Compliance") without distinguishing federal from state credit. Confirm with a Program Compliance Officer before assuming the same simplified paperwork applies to a state-credit set-aside unit.

No CHFA-published document located in this research mentions the housing-authority property tax mechanism at all; everything in this phase's property-tax section is sourced to a Colorado Bar Association journal article analyzing the underlying statutes and to DOLA's own Division of Property Taxation site, not to chfainfo.com. Direct attempts to fetch the raw C.R.S. Section 29-4-226/227 and Section 39-3-112/113.5 statute text were blocked by anti-bot challenges on both Justia and FindLaw this session; the underlying statute text should be independently verified before being relied on for a specific deal's underwriting.