2024 Land Use and Housing Legislation Taking Shape

The Second Regular Session of the 74th General Assembly adjourned in May 2024 with six major land use bills passed, a significant success for Governor Polis after the SB23-213 Land Use omnibus bill addressing similar policy reforms failed in 2023.  We have discussed three of the six land use bills in previous Client Alerts, as noted below, and provide a summary and analysis of the remaining three below.

1. HB 24-1007 Prohibit Residential Occupancy Limit. The new law, which is currently in effect, prohibits counties, cities, and municipalities from limiting the number of people who may live together in a single unit based on familial relationships.  Additional details on this law are provided in our November 25, 2024 Alert.
2. HB 24-1175 Local Government Right to Property for Affordable Housing. The new law, which is currently in effect, provides local governments with expanded rights to purchase certain multifamily properties to preserve or convert them to long-term affordable housing or mixed-income developments.  Additional details on this law are provided in our September 30, 2024 Alert.
3. HB 24-1313 Housing in Transit-Oriented Communities. The new law aims to increase housing affordability by incentivizing qualifying local governments to increase residential zoning capacity within certain areas identified as Transit-Oriented Communities.  The law is currently in effect, but full implementation and compliance with the bill’s provisions extend into 2027.  Additional details on this law are provided in our July 29, 2024 Alert.
4. HB 24-1152 Accessory Dwelling Units. The new law aims to increase the availability of accessory dwelling units (“ADUs”) by establishing standards and incentives for local governments to encourage ADU construction and conversion.
   • Applicability. The law applies to certain local governments identified as “subject jurisdictions” which include (i) municipalities with more than 1,000 residents that are in a metropolitan planning organization; or (ii) portions of counties that are both within a Census Designated Place with more than 40,000 residents and within a metropolitan planning organization. Additionally, local governments that do not qualify as subject jurisdictions may voluntarily comply with the subject jurisdictions’ ADU requirements and be certified as an “ADU Supportive Jurisdiction” to become eligible for grant funding.
   • Practical Effects. On or after June 30, 2025, subject jurisdictions must permit one ADU for accessory use to single-unit detached dwellings where such dwellings are permitted, subject to an administrative approval process. Subject jurisdictions cannot impose certain ADU-related restrictions on parking, occupancy, and design standards, among others.  The requirements also apply to previously approved planned unit developments, and homeowners associations may not establish or enforce any provision of a declaration, bylaw, or rule that includes a restriction on ADUs.
   • Development Perspective. This law will spur increased development potential where single-family dwelling units are permitted, which may include areas where ADU restrictions are currently in place, either due to the applicable zone district or private covenants. The required administrative approval process further eliminates potential barriers to ADU development and only permits additional review and decision-making required due to a property’s historic designation.  Additionally, developers should be aware that subject jurisdictions generally cannot require an off-street parking space in connection with the construction of an ADU, unless there is an existing space available for designation or the property meets a set of unique conditions, including the prohibition of parking on the adjacent block.  Overall, this law provides opportunity for increased small-scale development free from unnecessary restrictions.
5. HB 24-1304 Minimum Parking Regulations. The new law aims to reduce reliance on personal vehicular transportation, thereby reducing greenhouse gases, impact on public infrastructure, and development costs.
   • Applicability. The law applies to developments within municipalities within a metropolitan planning organization (“MPO”) or counties that have unincorporated areas within an MPO that are at least partially within an applicable transit service area. MPOs in Colorado include Denver Regional Council of Governments, Grand Valley MPO, North Front Range MPO, Pikes Peak Area Council of Governments, and Pueblo Area Council of Governments.  The Colorado Department of Local Affairs (“DOLA”) published a map showing MPO boundaries, as well as applicable transit service areas.
   • Practical Effects. Local governments are prohibited from enacting or imposing minimum parking requirements for all multifamily residential development, adaptive re-use for residential purposes, or adaptive re-use mixed-use purposes which include at least 50% of use for residential purposes. With respect to the new law, “adaptive reuse” is defined as the conversion of an existing structure from the use for which it was constructed to a new use by maintaining elements of the structure and adapting such elements to a new use.  The law does not prevent developers from providing off-street parking, which they may choose to provide as the market may demand.  Where residential parking is voluntarily provided by a developer the local government may impose maximum limits on the amount of off-street parking provided, require the developer charge a fee in connection with use of the parking space, require provided spaces include number and type of electric vehicle charging spaces in accordance with existing law, and require provided spaces include the same number of spaces dedicated to persons with disabilities pursuant to the Americans with Disabilities Act.  Further, if a developer or local government has obtained funding to support an affordable housing project and that funding requires that a minimum number of parking spaces be included in the development, minimum parking requirements may be imposed by the local government or parking may be voluntarily provided by the developer.  Finally, there is a limited exception to the law whereby local governments may require up to one parking space per unit for residential development projects containing twenty or more units or containing regulated affordable housing, following a published finding of substantial negative impacts without such parking requirement.  Use of this exception requires reporting in compliance with C.R.S. 29-36-104(3).
   • Development Perspective. Although this law removes minimum parking requirements in certain areas, there may be circumstances where providing parking is desirable. This law simply allows for more flexibility in determining the appropriate amount based on each project’s unique circumstances.  Thus, developers should always assess actual parking needs based on market demand and make an independent determination as to whether to provide off-street parking.  Where less or no off-street parking is best practice, developers may see reduced development costs and increased developable area for projects located in areas where the law applies (e.g. transit-rich areas).  Developers might consider the viability of contemplated transit-oriented and affordable housing developments due to higher-density opportunities in connection with this law.
6. SB 24-174 Sustainable Affordable Housing Assistance. The new law intends to address housing affordability and sustainability by mandating data-driven planning, offering technical assistance and funding, and prioritizing grants for compliant jurisdictions. DOLA and local governments are tasked with preparing needs assessments and housing action plans.
   • Applicability. All local governments in Colorado are subject to the new law, requiring them to conduct and publish a local housing needs assessment beginning December 31, 2026, and update such plans at least every six years thereafter. Local governments may be exempt from this requirement if (i) the local government participates in a regional housing needs assessment pursuant to C.R.S. 24-32-3704, or (ii) the local government has a population of less than 1,000 or has experienced negative population growth in the most recent decennial census.  Additionally, local governments with a population of either 5,000 or more or 1,000 or more if the local government either participated in a regional housing needs assessment or is a rural resort community are required to make a housing action plan no later than January 1, 2028, and every six years thereafter.
   • Practical Effects. The law focuses on required actions to be taken by DOLA and local governments. Local governments have two primary obligations – the local housing needs assessment and housing action plan.  DOLA published a Housing Needs Assessment Guide, which provides guidance for local governments to conduct their local housing needs assessments in compliance with SB24-174.  As for housing action plans, SB 24-174 identifies the specific elements that a housing action plan must include, explains updated procedures, and provides reporting requirements.  DOLA will provide technical assistance and supporting services to assist local governments in efforts to create local and regional housing needs assessments, conduct a displacement risk analysis, identify and implement affordability and displacement risk strategies, make and adopt housing action plans, and enact laws and policies that encourage the development of a range of housing types, amongst other initiatives.  Finally, SB24-174 modifies the requirements of both county and municipal master plans so that those master plans must include (i) the procedure used for the development and adoption of the master plan, (ii) a water supply element, and (iii) a strategic growth element.
   • Development Perspective. This law focuses on action by DOLA and local governments, and such strategic planning efforts should result in wide-ranging benefits for more efficient and thoughtful housing development across Colorado. For example, housing needs assessments may identify underutilized sites in strategic growth elements, while gaps in housing needs assessments could highlight potential development opportunities where development is encouraged.  The development community should look out for the future publishing of local housing needs assessments and housing action plans to identify strategic development opportunities that align with state and local government policy goals.

The six land use bills addressed herein have recently taken effect or, in some cases, are working towards full implementation. We will continue to monitor the associated local government obligations and development opportunities spurred by this package of land use bills.

Anna L. Lodge, a third-year law student at the University of Denver Sturm College of Law, also contributed to this Alert.