Restricted rents and the operating pro forma — Colorado

Section 4 sets the numbers; Section 2.B decides whether they're enough

CHFA's 2025-2026 QAP (Second Amendment) devotes an entire numbered section — Section 4, "Underwriting Criteria" — to the pro forma standards every federal 9 percent, federal 4 percent, and state Affordable Housing Tax Credit application must clear, separate from Section 3.B.4's eighteen numbered Threshold requirements this guide's earlier Colorado phases already cover. The QAP is direct about when it applies: "These standards must be met at the time of Preliminary Application, Carryover Application (for Competitive Housing Tax Credits), and Final Application." And it is direct about the consequence of missing them: "Projects that do not meet the following minimum standards will not be considered for a Reservation of Housing Tax Credits."

Section 2.B's discretionary "Overall Financial Feasibility and Viability" review sits alongside Section 4's numeric floors, not in place of them: "Throughout the 15-year pro forma period, CHFA will also consider such items as debt coverage ratios, the ability to pay deferred developer fees from cash flows, operating reserve amounts, and annual operating expenses. If any of the pro forma underwriting assumptions exceed threshold requirement, justification is required." That lowercase "threshold requirement" is easy to misread as a pointer to one of the QAP's eighteen capitalized, numbered Thresholds (#1 through #18) covered elsewhere in this guide — it isn't. It refers to Section 4's own standards, a separate set of requirements entirely.

A 1.15x floor, and a 1.30x line that reduces the credit rather than failing the deal

Unlike Nevada's QAP, which explicitly excludes soft debt service from its own 1.15x floor, Colorado's Section 4.C.5 test applies to "all amortized debt" with no carve-out language found anywhere in the current text — a soft second modeled with hard amortizing debt service counts toward the ratio unless CHFA determines otherwise case by case.

The more consequential number sits above the floor, not below it: "At the time of application, projects with debt coverage ratios that exceed 1.3 to 1.0 may be eligible for less Housing Tax Credit than the amount calculated as per Section 3.M of the QAP." That is not a compliance failure the way missing the 1.15x floor is — it is a credit-sizing mechanic. Section 3.M.1 has CHFA run three separate calculations (the Qualified Basis Calculation, the Gap Calculation, and the Cost Basis Limit Calculation) and award the smallest result; a pro forma that clears 1.30x DSCR is signaling, through Method Two's gap math, that the project needs less equity — and therefore less credit — than a tighter deal would. A developer who treats 1.30x as a target to beat rather than a line that starts working against the credit request is optimizing in the wrong direction.

Two reserves with real numbers, and a lease-up figure CHFA leaves to the Market Study

That is a materially different shape from Arizona's three explicit reserve lines (lease-up, operating, replacement, each with its own dollar minimum) or Nevada's silence on lease-up and operating alike. Colorado sets hard numbers for two of the three and folds the third into a discretionary adjustment on the first — a pro forma that budgets a separate, named lease-up reserve line the way an Arizona deal would is modeling a Colorado requirement that does not exist in the QAP; the actual lease-up cushion in Colorado shows up, if at all, as a larger operating reserve than the 4-month floor.

Neither the $300 nor the $350 figure carries a stated annual escalation in the current QAP text — a contrast with Arizona's explicit 3 percent per year growth on its own replacement-reserve minimums. For rehabilitation applications specifically, Appendix C requires a Property Condition Assessment no older than 12 months, following the ASTM E2018 Standard Guide, whose "long-term cost/replacement reserve tables... must cover a period of no fewer than 20 years" and are used "to determine the appropriate replacement reserve deposits on a per-unit, per-year basis" — meaning a rehab deal's actual replacement-reserve number can end up set by the PCA's own capital-needs schedule, not merely the QAP's flat $300/$350 floor.

The developer fee cap runs on unit count and identity of interest, not on credit type

California ties its developer fee ceiling to credit type — 9 percent versus 4 percent — computed as a percentage of eligible basis. Colorado does neither. Section 3.M.3 ties the contractor's builder-profit-and-overhead limit to project size and identity of interest, and the developer/consultant fee limit to project size alone; credit type never enters the calculation.

A pro-rated boost of up to 5 percentage points is available for projects serving Persons experiencing Homelessness or Special Populations at or below 30 percent AMI: "if a project is targeting 25 percent, then the project is eligible for up to 1.25 percent boost of the Developer Fee." The boost is not free money — it must be committed to supportive services or a rental subsidy for those tenants, documented in the Application and reflected in the LURA, and it requires at least 15 percent of the project's total units at or below 30 percent AMI to unlock at all. Projects subject to HUD's subsidy layering review need HUD's separate sign-off on the increase.

The fee is locked early and does not move afterward except in one narrow case: "Developer fees may not increase after Preliminary award" for competitive credits, and "Developer fees may not be increased after Initial Determination" for federal 4 percent deals — with a single carve-out allowing a CHFA-approved, fully deferred fee increase for federal-4-percent-only projects (no state credit) if needed for financial feasibility and approved before partnership closing.

Income limits name MTSP explicitly; utility allowance runs on a policy that disagrees with the QAP's own text

CHFA's QAP itself does not spell out which income table governs — Section 3.P's gross rent floor language runs through Section 42(g)(2)(A) and Revenue Procedure 94-57 without naming a specific dataset — but CHFA's own annual memo does, plainly: "On 05.01.2026, HUD released the FY2026 Multifamily Tax Subsidy Program income limits, effective 05.01.2026... the 2026 income and rent limits must be implemented no later than June 15, 2026." That is a more explicit sourcing statement than this guide found in Arizona's or Nevada's own QAP text — in both of those states, this guide's own analysis concluded MTSP applies by default because the regulatory document is silent, not because either state's QAP names it. Colorado's memo does the naming itself, even though the QAP proper does not.

"The IRS allows two types of protection from rent decreases: HERA Special limits and the hold harmless rule. While only some Housing Tax Credit projects may use HERA Special limits, all Housing Tax Credit projects are 'held harmless' from decreases in limits." In 2026, HERA Special limits — available only to a project placed in service by December 31, 2008 — applied in 37 of Colorado's 64 counties, alongside the standard hold-harmless protection every Housing Tax Credit and CHFA-loan project gets regardless of placed-in-service date.

Proposition 123 programs add a Colorado-specific wrinkle on top of the standard 20-to-80-percent AMI table: rent and income limits at 130, 140, 150, and 160 percent AMI apply in twelve named "rural resort community" counties — Archuleta, Chaffee, Eagle, Grand, Gunnison, La Plata, Ouray, Pitkin, Routt, San Juan, San Miguel, and Summit — a set of columns a rent engine built only against the standard federal bands will not have.

Utility allowance methodology is federal-plus-CHFA-policy rather than a state override of the federal number itself. For USDA Rural Development and HUD-regulated properties, the project uses that agency's own utility allowance; for everything else, CHFA's Section 11.J and its standalone Utility Allowance Policy (effective October 20, 2025) both list the same four options — Applicable Public Housing Authority Schedule, Actual Usage and Rate Estimate, HUD Utility Schedule Model, and Energy Consumption Model — with new developments limited to the first, third, and fourth until 12 months of actual usage data exist to support a change to the second.

The two documents disagree on timing, though. Section 11.J of the QAP itself requires preliminary approval to use the HUD Utility Schedule Model or Energy Consumption Model "at least 45 days prior to the Housing Tax Credit Application submission date," with final approval "between 30 and 60 days before the property begins leasing." CHFA's standalone Utility Allowance Policy — effective October 20, 2025, roughly three weeks before the Second Amendment QAP's own November 13, 2025 Governor's approval — instead requires both requests "60 to 90 days prior to" the same two milestones. The QAP's own text was finalized after the Policy took effect but still carries the older, narrower windows. Treat the Policy's 60-to-90-day figure as the one CHFA actually enforces, but flag the unreconciled QAP language to CHFA directly rather than assuming either document alone settles it — and note that both sit on top of the federal 90-day gross-rent implementation rule at 26 CFR Section 1.42-10(c), which governs when a changed allowance actually has to hit tenant rent.