The act creates a right of first refusal of a local government to match an acceptable offer for the sale of a multifamily residential or mixed-use rental property consisting of 15 or more units in an urban county or 5 or more units in a rural or rural resort county (property). The right to the purchase of the property by the local government is effective on and after August 7, 2023 until August 1, 2028, is subject to the local government's commitment to using the property as long-term affordable housing, and, if the property is mixed-use, applies only to the residential portion of the property. The local government may assign its right of first refusal to a housing authority that is within the local government's jurisdiction, to a regional housing authority, or to the Colorado housing and finance authority subject to the limitation that the assignee make the same commitment to using the property as long-term affordable housing.
The act requires notices to be given by the seller to the local government and by the local government to the seller and to residents of the property. Upon receiving notice of intent to sell or of a potential sale of property, the local government has 7 calendar days to preserve its right of first refusal and an additional 30 calendar days to make an offer and must agree to close on the property within 60 calendar days if practicable but within not more than 90 calendar days of the execution of an agreement for the sale and purchase of the qualifying property; except that there are certain circumstances that may allow these periods to be tolled. Prior to the sale of a property, the seller is required to execute and record an affidavit in the real property records of the county in which the property is located certifying that either the rights and property interests of the local government have expired or been released or waived or that the local government or its assignee is the purchaser of the property.
The act allows certain sales of property to be exempt from the right of first refusal and the requirements established by the act for the right of first refusal. The act also allows the local government to waive its right of first refusal to purchase a property if the local government elects to disclaim its rights to any proposed transaction or for any duration of time or if there is a third-party buyer interested in purchasing the property with the same commitment to preserving or converting the property for long-term affordable housing that enters into an agreement with the local government concerning the third-party buyer's commitment to long-term affordable housing.
If the local government, its assignee, or a third-party buyer who has committed to preserving or converting the property for long-term affordable housing has acquired the property and maintained the property for long-term affordable housing for 50 years, the property may be converted to another use if the following conditions are met:
- Notice is given to residents prior to the conversion;
- Any displaced residents are provided with compensation for relocation; and
- The local government, its assignee, or a third-party buyer who has committed to preserving or converting the property for long-term affordable housing guarantees the development or conversion of an equal or greater amount of units within the boundaries of the local government for long-term affordable housing and offers the units first to any residents displaced by the conversion of the property.
The act also provides that the attorney general's office has responsibility to enforce the provisions of the act and that the attorney general's office, the local government, or a mission-driven organization has standing to bring a civil action for violations of the right of first refusal established by the act. If a court finds that a seller or a third-party buyer that has entered into an agreement with the local government for the waiver of the local government's right of first refusal has materially violated the law with respect to the provisions of the right of first refusal, the court must award a statutory penalty of not less than $50,000 or an amount equal to 30% of the purchase or listing price of the property, whichever amount is greater.
VETOED by Governor June 6, 2023
(Note: This summary applies to this bill as enacted.)