Tax Exempt Partnerships
A property used for a charitable purpose, like housing for low-income residents, is eligible for exemption from property taxes in the state of Colorado. However, owners of such projects must apply for tax exempt status for each of their properties each year, a costly and time consuming process.
According to State statute (CRS 29-4-226), BHP's presence as a special limited partner in an affordable housing project makes a project tax-exempt whether the housing is already in operation, will be acquired, or is newly built. Any portion of a housing project occupied by low-income residents is exempt from property taxes if it is owned or leased to an entity: 1) wholly owned by a housing authority; 2) in which a housing authority has ownership interest; or 3) which is wholly owned by a housing authority and has ownership interest.
BHP provides tax exemption to individual affordable housing properties. With the tax exemption, an otherwise struggling or infeasible affordable housing project might be able to provide significant benefits to the residents and employees of the City of Boulder.
Proposals for tax exempt partnership reviewed by BHP staff and Board of Commissioners based on the following approved criteria:
The project in question must:
- Be consistent with BHP's mission; and
- Meet the housing needs of low and moderate income households.
The introduction of tax-exemption into the partnership should directly:
- Deepen the affordability level of the units, or provide a greater number of affordable units within the project than would be possible without tax exemption; and
- Preserve or sustain affordable housing at risk of being lost or adversely impacted without the financial benefit of property tax exemption.
- The project should be located in Boulder County;
- Partnerships with non-profits or service agencies are preferred but not required;
- Both the organization involved in development/management plus the project to which property tax exemption would be applied must, upon analysis, meet a minimum level of technical and financial feasibility;
- The organization must demonstrate that it has the capacity and experience to successfully manage the project in the future, or to both construct the project and place it in service;
- Property tax exemption may not be used solely to increase a project developer's profit margin;
- BHP must be able to gain some type of ownership interest in the project;
- The project addresses the needs of special needs populations, the elderly or persons with disabilities;
- BHP is appropriately indemnified and held harmless from actions by the other partners and there shall be no recourse to BHP for the repayment of the debts of the partnership;
- BHP will receive a fee(s) for the duration of the partnership which may include an initial non-refundable application fee, a closing fee, a percentage of the developer fee, an annual fee based on the performance of the project, or future rights to purchase the project or a combination of the above. The Board of Commissioners shall revie staff's recommendation and may accept or waive any or all of the above; and
- The Developer of the project shall pay BHP's out of pocket expenses including but not limited to consultants, legal counsel, and other miscellaneous costs regardless of whether the partnership closes.