Colorado Passes Six Land Use Bills Designed to Spur Development and Affordable Housing
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Colorado Passes Six Land Use Bills Designed to Spur Development and Affordable Housing

Brownstein Client Alert, May 30, 2024

Six land use bills passed the Colorado legislature before it adjourned, five of which Gov. Jared Polis has signed into law as of the date of publication. These bills will bring changes to housing development in Colorado with the intent of increasing density and eliminating roadblocks, all with an emphasis on affordable housing. Colorado is significantly short on its supply of housing units compared to demand and is now one of the most expensive states to buy or rent a home. Additionally, housing development in Colorado tends to face significant local opposition during the land use review and approval process, which frustrates new development, and in turn, contributes to the low supply of available housing units and subsequent increase in housing costs.

Gov. Jared Polis and the Colorado General Assembly have prioritized new housing development for the last few years, attempting to address the issue with an omnibus 100-plus-page bill last year, known as SB 23-213, which failed to pass late in the 2023 legislative session. In the 2024 session, the General Assembly approached the issue by introducing several smaller bills, each designed to address a single facet of the issue. This year’s effort was more successful, as proponents took a more incentive-based approach, leading to the passage of six bills from the package this year. However, in order to get them passed in both houses, certain bills were amended to remove potential penalties for failure to comply. At their core, they attempt to reform certain facets of local governance of new housing development by requiring changes to local zoning regulations. Below is a summary of each.

1. HB 24-1313 – Housing in Transit-Oriented Communities

House Bill 1313 (“HB 1313”) requires local governments to set housing density goals near transit-rich areas and demonstrate that they are reaching those targets with housing development. HB 1313 applies to 31 municipalities located within five metropolitan planning organizations; essentially, the Front Range I-25 corridor and Grand Junction area. These local governments are required to change their current zoning laws to allow for higher-density residential development in these areas (at least 40 units per acre within a quarter mile of bus stops and a half mile of rail stations); and the bill provides $35 million in incentives to encourage local governments to comply with these requirements. The most controversial aspect of this bill—allowing the state to withhold funds from the Highway Users Tax Fund from communities that did not comply—was eliminated, allowing the bill to pass. It should be noted that authorization for higher densities near transit is not automatic; rather, local governments are required to take various actions before additional densities are allowed. HB 24-1313 was signed into law by the governor on May 13.

2. HB 24-1152 – Accessory Dwelling Units

House Bill 1152 (“HB 1152”) permits the building of Accessory Dwelling Units (“ADUs”) or “granny flats,” such as converted garage apartments, in areas that are within metropolitan planning organization boundaries (see description of these areas above under HB 1313). HB 1152 also creates $8 million in state grant and loan programs to help finance the construction and conversion of ADUs for eligible low-to-moderate income borrowers, nonprofits and public housing authorities. One of the concessions made in the bill is that each ADU must have an identified parking space. HB 1152 was signed into law by the governor, also on May 13, and takes effect June 30, 2025, giving local governments some time to make zoning changes to comply.

3. HB 24-1304 – Minimum Parking Requirements

House Bill 1304 (“HB 1304”) prevents local governments, on or after June 30, 2025, from establishing or enforcing minimum parking requirements for residential buildings within the boundaries of metropolitan planning organizations in areas near certain bus or train stops or routes. Local governments must also submit a report to the Department of Local Affairs (“DOLA”) to demonstrate compliance with the bill. While it is fairly universally accepted that large parking lots are not the highest and best use of land, and parking requirements can be an obstacle to the construction of housing—whether affordable or marketrate—other market factors such as lender requirements and tenant preferences may still result in the construction of parking spaces for new housing. HB 1304 was signed into law by the governor on May 10.

4. HB 24-1175 – Local Government Rights to Property for Affordable Housing

House Bill 1175 (“HB 1175”) would grant local governments a right of first refusal to purchase publicly subsidized affordable housing properties of five or more units to continue to preserve long-term affordable housing. HB 1175 also imposes a right of first offer, requiring landlords to notify the government if they have plans to sell a 30-year or older market-rate apartment of 15–100 units that is not subject to rental restrictions, allowing local governments to purchase the property. Local governments would be permitted to partner with certain entities for financing the transaction and may assign the rights under the bill to certain entities. These rights of first refusal and offer sunset on Dec. 31, 2029. The bill would require the state’s attorney general office to enforce its provisions. It also would grant the attorney general’s office and the local government or its assignee standing to bring a civil action for violations of the right of first refusal offer established by the bill. HB 1175 passed the legislature and is currently on the governor’s desk for signature. A number of real estate organizations are requesting that he veto the bill. Read Brownstein’s analysis of HB 1175 here.

5. HB 24-1007 – Prohibit Residential Occupancy Limits

House Bill 1007 (“HB 1007”) bans local residential occupancy limits—which restrict the number of unrelated people that can live together—that are not safety-related. HB 1007 was signed into law by the governor last month and goes into effect July 1, 2024.

6. SB 24-174 – Sustainable Affordable Housing Assistance

Senate Bill 174 (“SB 174”) requires DOLA to establish a statewide report analyzing existing and future housing needs, population growth projections, areas where there is an elevated risk of displacement and other land-use analysis. It also requires local governments to conduct and publish a local housing needs assessment. Certain local governments are now required to establish, and submit to DOLA, a housing action plan that demonstrates efforts to address housing needs. DOLA is also required to provide technical assistance though a grant program to help local governments comply with the bill’s requirements. The bill appropriates $14 million dollars to the Planning Technical Assistance Fund, established by the bill, to administer the grant program. The governor signed SB 174 yesterday.

We will be monitoring as these bills are implemented. Please reach out to one of the authors or your regular Brownstein attorney for questions about these bills and their impact.

This document is intended to provide you with general information regarding land use bills passed during the most recent Colorado legislative session. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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