Invest State Funds to Benefit Communities

Section 1 of the bill requires at least one member of the public school fund investment board (board) to have expertise in community investments, requires the board to direct the state treasurer to securely invest money deposited in the public school fund in a manner that prioritizes new investment objectives, and authorizes the board to enter into contracts with investment advisors or other investment professionals to provide advice on community investments. Section 2 makes conforming changes in order to expand the types of investments the state treasurer can make using public school fund money and extends the amount of time the treasurer has to offset an aggregate loss of principal to the public school fund from 18 to 24 months. Section 3 creates the new community investment portfolio within the permanent school fund, and requires the state treasurer to invest at least 6% of the money in the permanent school fund into the community investment portfolio by July 1, 2027. The state treasurer is required to invest at least 20% of the money in the permanent school fund into the community investment portfolio by July 1, 2032.

Money in the portfolio must be invested in community investments, and allowable community investments include:

• Bonds issued by Colorado school districts and charter schools;
• Certificates of participation issued by Colorado school districts and charter schools;
• Mortgage pass-through securities and collateralized mortgage obligations secured by residential real estate, the majority of which is owned by public school employees;
• Loans to the Colorado middle income housing authority for a revolving loan fund that funds rental housing developments that include preferences for public school employees;
• Bonds issued by the middle income housing authority that fund rental housing developments which include preferences for public school employees;
• Bonds issued by the Colorado housing and finance authority that fund rental housing developments that include preferences for public school employees;
• Mortgage revenue bonds that support public school employee mortgages with interest rates of 3% or less;
• Loans to community development financial institutions that fund:
• The construction of housing developments that include preferences for public school employees; or
• Low-interest mortgages secured by residential real estate that is owned by public school employees; and
• Other venture capital, private equity, or public equity funds that support education in Colorado.

The educator first home ownership program (program) is created within the community investment portfolio. The treasurer shall invest the following amounts in the program by the following dates:

• By July 1, 2027, the greater of 6% of the fund's value or $100 million; and
• By July 1, 2028, the greater of 12% of the fund's value or $200 million.

The treasurer shall invest the money in the program as follows:

• 75% of the money in the program shall be administered by the program administrator and used for a shared equity down payment assistance program that:
• Provides at least 15% of the total cost of a home to public school employees; and
• Allows appreciation-sharing between the program and the homeowner, with the program's share of appreciation capped at 10%.
• 25% of the money in the program must be invested in allowable community investments with the purpose of increasing the supply of houses for sale and access to home ownership in rural and other underserved communities.

The program administrator shall ensure that mortgages in the shared equity down payment assistance program bear interest rates that are at least as low as prevailing mortgage rates at the time the mortgages in the shared equity down payment assistance program are entered into. The program administrator shall present an annual report to the public school fund investment board on program outcomes.

Sections 4 and 5 clarify that the state treasurer may invest state money in direct and indirect equity investments and other asset classes including mutual funds, exchange-traded funds, direct and indirect real estate investments, and education-related community investments. Section 6 requires the state treasurer to invest at least 20% of the money in the unclaimed property trust fund in direct and indirect equity investments, mutual funds, exchange-traded funds, direct and indirect real estate investments, and other asset classes by July 1, 2032. The state treasurer is also required to make 2 loans of money from the unclaimed property trust fund to the department of local affairs, both of which must be paid back in full by July 1, 2045, including:

• $100 million on July 1, 2025, that the department of local affairs shall use to create a new zero-interest revolving loan program for affordable housing developers; and
• $50 million that the department of local affairs shall use to create a new zero-interest revolving loan program to benefit fire protection districts and ambulance districts experiencing cash flow issues.

Section 7 creates the new Colorado investment portfolio (Colorado portfolio) within the unclaimed property trust fund. The treasurer is required to invest at least 5% of the money in the unclaimed property trust fund into the Colorado portfolio by July 1, 2027, and at least 20% of the money in the unclaimed property trust fund into the Colorado portfolio by July 1, 2032.

Money in the Colorado portfolio must be invested in:

• The community investment portfolio;
• Bonds issued by Colorado school districts, charter schools, local governments, special districts, state enterprises, Indian tribes, or special purpose authorities;
• Certificates of participation issued by Colorado school districts, charter schools, local governments, special districts, state enterprises, Indian tribes, or special purpose authorities;
• Mortgage pass-through securities and collateralized mortgage obligations secured by Colorado residential real estate that is owned by Coloradans;
• Bonds issued by the middle income housing authority;
• Bonds issued by the Colorado housing and finance authority;
• Loans to community development financial institutions that fund:
• The construction of housing developments in Colorado; or
• Mortgages secured by Colorado residential real estate that is owned by Coloradans;
• Bonds issued by businesses headquartered in Colorado;
• Asset-backed securities supported by loans to small businesses in Colorado;
• The venture capital authority within the office of economic development and international trade; or
• Other venture capital, private equity, or public equity funds that support communities in Colorado.

Section 8 reduces the amount credited to the housing development grant fund from the general fund by $15 million for state fiscal year 2026-27.
(Note: This summary applies to this bill as introduced.)