Here’s what Polis’ affordable-housing package, now in law, does

A neighborhood sits just south of the Westminster Station public-transit area. Gov. Jared Polis wants more housing built around transit centers.

Gov. Jared Polis today signed the last two pieces of legislation in his four-bill affordable-housing package, finalizing an incentive-laden effort one year after a proposal that relied more on pre-emption of local land-use laws failed under pushback from municipal governments.

When combined with two other bills that are expected to be signed into law soon, the half-dozen measures create a roadmap for how state leaders believe they can exit the housing-affordability crisis by boosting construction and limiting land-use restrictions. Per the Democratic governor’s long-term growth vision, they particularly focus new building around transit lines, but most of the laws impact metropolitan areas and one requires all local governments to map out plans to meet their greatest housing needs.

Most bills still generated opposition, and a state senator who sponsored a bipartisan bill to help governments produce housing assessments warned that another measure limiting local governments’ ability to impose minimum parking standards will end up in court. And sponsors had to make big amendments to some proposals, such as the removal from a bill aimed at producing more transit-oriented communities of a hammer that would have let the state withhold transportation funding from noncompliant local governments.

But the package represents a major comeback for Polis, who has made the affordability crisis the central issue of his final four-year term and who suffered arguably his biggest political defeat when he couldn’t get last year’s land-use reform bill passed. And for employers who say the lack of attainable housing has hurt workforce recruitment efforts, the bills should provide hope that a combination of incentives and removal of market barriers will generate more competitively priced housing options in the coming years.

“Coloradans have demanded solutions that will reduce the cost of housing, and I am proud that we have worked together to deliver real results,” Polis said in a statement Monday.

Gov. Jared Polis signs the bill promoting transit-oriented communities Monday at Evans Light Rail Station in Denver.

Transit-oriented communities

The lynchpin of the package is House Bill 1313, which requires 31 cities and counties that are within metropolitan areas and feature frequent transit service to come up with plans of how to boost density near transit to an average of 40 acres per unit. It also creates a new income tax credit for developers building affordable housing in a transit-oriented community — though the actual funding of the tax credit occurred in another bill in order to avoid HB 1313 having to go to a committee that may have killed it.

Sponsoring Democratic Reps. Steven Woodrow of Denver and Iman Jodeh of Aurora went to work stakeholding the new bill almost as soon as the 2023 effort died, bringing together housing advocates, local governments and building-industry leaders for talks. But to get the bill through the more moderate Senate, they had to remove from it its biggest stick — a provision that would have allowed the state to withhold Highway Users Tax Fund money for governments that didn’t produce a state-accepted density-boosting plan.

“As far as removing HUTF, we’ve heard the concerns on that,” cosponsoring Sen. Faith Winter, D-Broomfield, told the Senate Local Government & Housing Committee on April 30 before making that change and several others requested by local governments. “This is a direct response.”

Supporters of the bill still believe, however, that communities will want to figure out how to build up housing within a half-mile of passenger-rail, bus rapid transit or frequently running bus service and take advantage of the carrots the bill offers to do so. This focus on transit-oriented development, Winter said, will increase housing units, allow for less expensive multifamily projects and help the environment by reducing traffic.

Colorado state Rep. Iman Jodeh, sponsor of the bill to increase transit-oriented communities, speaks at a March news conference as a train moves behind her.

Minimum parking requirements

Reducing traffic also is a goal of HB 1304, sponsored by Woodrow and Democratic Rep. Stephanie Vigil of Colorado Springs, which originally barred local minimum parking requirements for all projects but got modified to apply only under certain conditions. It now prohibits minimum-parking requirements in metropolitan planning organizations that are within a quarter mile of a transit stop but includes exemptions for multifamily development that either has at least 20 units or contains units classified as affordable housing.

Sponsors argued that requiring minimum parking raises the cost of housing developments, limits the number of units that can be built and spreads out such developments over larger geographic areas to accommodate parking, reducing community walkability. The hope is that by permitting parking-light developments near transit lines, Coloradans can have cheaper housing options that permit them to live without the added expense of a car, cosponsoring Sen. Nick Hinrichsen, D-Pueblo, said.

HB 1152, sponsored by Democratic Rep. Judy Amabile of Boulder and GOP Rep. Ron Weinberg of Loveland, gives single-family homeowners in areas within metropolitan planning organizations the right to build accessory dwelling units on their properties. There are five MPOs in Colorado, covering the Denver metro area, the Colorado Springs area, the Pueblo area, the Northern Front Range and the Grand Junction area.

ADUs and residential occupancy limits

While the bill’s stick is its requirement that local governments allow for the ADUs, it offers a lot of incentives, including $8 million to help homeowners with down-payment assistance, affordable loans and buydowns of home-loan interest rates when adding ADUs. Local governments are eligible also for financial assistance that would go to addition of ADUs by lower- and middle-income homeowners, construction of accessible ADUs and rental of ADUs as affordable units.

Gov. Jared Polis signs a ban on local residential occupancy limits in April.

Polis signed HB 1304 on Friday and HBs 1152 and 1313 on Monday — nearly a month after he signed the first bill in his package, HB 1007, which bans local governments from limiting the number of non-related individuals sharing a residence except for public-safety reasons. Polis and sponsors — Democratic Reps. Javier Mabrey of Denver and Manny Rutinel of Commerce City — said it will will ensure more residents can live in one place, cutting rent costs and bringing what in essence will be more bedrooms into the marketplace quickly.

But with all four of those bills, critics charged that Polis, once again, was trying to pre-empt local governments’ ability to decide how they want their communities to look and put into place a one-size-fits all rule for all similarly situated cities in Colorado.

Criticisms of affordable-housing package

HB 1313 makes uniform the density of zoning that all cities must allow in the areas around transit lines, whether or not they have the roadway, sewage, educational-system and other kinds of infrastructure to accommodate that growth, opponents said. Sen. JoAnn Ginal of Fort Collins, one of four Democrats in her chamber who voted against the bill, called it legislation “written by and for developers, not Colorado.”

The ban on residential occupancy limits doesn’t allow city and county leaders to determine whether growth in the number of occupants per house or apartment would impact the quality of life in an area, charged Senate Minority Leader Paul Lundeen, R-Monument. And putting statewide rules on parking requirements into place doesn’t allow local leaders who know their constituents to determine if those people need vehicles to get to work or if the city needs parking for the public good, said Sen. Kyle Mullica, D-Federal Heights.

“If you don’t have adequate parking, this could be, I don’t know, a safety hazard. Local governments know this because they’ve been doing this since the existence of time. You know who hasn’t been doing this ever? The state government,” Sen. Rachel Zenzinger, D-Arvada, said during debate on HB 1304. “You know what happens when we pass this bill? You will now be in conflict with no less than eight areas of state statute. And that means you are begging — begging — for a lawsuit.”

Colorado state Sen. Rachel Zenzinger speaks against a bill to ban minimum-parking requirements by local governments.

Other affordable-housing efforts

Zenzinger, meanwhile, cosponsored two other bills that Polis has yet to sign but that are expected to become law and have a significant impact on housing supply. While both drew opposition, they also had bipartisan sponsorship, showing that the goal to boost affordable housing this session was one that was shared across the ideological spectrum, even if legislators didn’t agree with the details of each proposal.

HB 1434, sponsored by Weinberg and Democratic Rep. Shannon Bird of Westminster, would triple to $30 million the current $10 million in tax credits that the state can offer to affordable-housing developers in 2024 and from 2029-31, and it would add between $12 million and $16 million extra each year between 2025 and 2028. The program, administered by the Colorado Housing and Finance Authority, currently gets applications for three times the amount of credits it can issue, and investors told a House committee in April how it allows them to generate guaranteed returns on investment even at below-market rates.

Colorado state Rep. Shannon Bird speaks about a bill to boost affordable-housing tax credits while cosponsoring Rep. Ron Weinberg listens on the House floor.

Senate Bill 174 requires most local governments with a population of at least 1,000 residents to conduct and publish a local housing needs assessment by the end of 2026 and to follow that by the beginning of 2028 with a plan to address identified housing needs. But it also requires the Colorado Department of Local Affairs to use those reports to put together a first statewide housing needs assessment and to provide grants and technical assistance to local governments to help them tabulate and follow through on goals.

A good number of legislative Republicans complained about the amount of tax credits that HB 1434 would dole out, saying the money would be better going back to Colorado residents as Taxpayer’s Bill of Rights refunds. But only seven of the 100 legislators opposed SB 174, and leaders from both parties and the Colorado Municipal League, which fought many of the already signed housing bills by arguing they infringe on local control, used words like “collaboration” and “partnership” to laud it.

Will affordable-housing measures pay off?

It will take several years to determine fully whether the sextet of bills have the intended effect of spurring construction of more housing at a time when groups have estimated Colorado is some 120,000 units short of its existing needs. Even then, critics and reluctant supporters of the bills said, it remains to be seen how much a boost in smaller, transit-adjacent units really will slow the growth of housing prices and how popular developments like ADUs and low-parking apartments may be.

It shouldn’t be forgotten either that many of the same proponents of the slate of housing bills — such as housing-advocacy groups and homebuilding leaders — said the state also must reform construction-defects laws to get more affordable condominiums built. Yet the primary bill that sought to make it harder to file such lawsuits, which many builders say has pushed them out of the market, died during the final week of the session.

For now, though, officials who wanted change to the state’s laws to remove barriers to more construction of affordable housing have gotten what they wanted.

“Colorado’s housing crisis is making it nearly impossible for Coloradans to buy their first home, which is why we have to prioritize building denser housing near transit and job centers so we can reduce the cost of housing,” Woodrow said in a news release after the signing of HB 1313 on Monday.