New Law Targets Legal Hurdles in Colorado Land Use Approvals

On May 30, 2024, Governor Jared Polis signed House Bill 24-1107 (HB24-1107) into law.  This bill implements two significant reforms applicable to legal challenges to land use approvals brought pursuant to Colorado Rule of Civil Procedure 106(a)(4) (Rule 106(a)(4)).

Rule 106(a)(4) provides the exclusive remedy for reviewing quasi-judicial decisions.  It applies to a wide variety of local government land use actions that include public notice and a hearing, such as rezoning approvals, subdivision approvals, and approvals of special use permits, among others.  In recent years, it has become increasingly common for opponents of development projects to bring Rule 106(a)(4) actions to challenge development approvals.  This often has the effect of creating a cloud of uncertainty over the status of project approvals and can result in significant delays and costs for developers.  Rule 106(a)(4) challenges are subject to a standard of review that is very deferential to the local government’s decision.  Accordingly, the overwhelming majority of these cases result in upholding the local government development approval.  This has made the delays associated with a Rule 106(a)(4) case all the more frustrating for developers.

HB24-1107 is the Colorado General Assembly’s first effort to reform the process in years.  Its adoption reflects a recognition that Rule 106(a)(4) lawsuits have increased costs and delayed projects, particularly those involving medium to higher density residential development that are critical to providing affordable housing to Coloradoans.  In signing the bill, Governor Polis characterized it as part of an effort to help the government cut red tape, remove artificial barriers to housing, and reduce housing approval delays.

The bill does two things.  The first applies only to cases involving challenges to local land use decisions involving residential use with a net project density of five dwelling units per acre or more.  In those cases, where a local government grants an approval, and opponents of the project bring an unsuccessful Rule 106(a)(4) challenge, the opponents of the project will be obligated to pay the reasonable attorneys’ fees of the prevailing governmental entity.  Residential project opponents will now have to consider the risk that, if they bring a Rule 106(a)(4) challenge, they may be on the hook for the government’s attorneys’ fees in addition to their own.  This may dissuade some project opponents from bringing Rule 106(a)(4) lawsuits.

The second part of HB24-1107 is not limited to residential projects, but rather applies to all actions for judicial review of local land use decisions.  It provides that the filing of a Rule 106(a)(4) challenge to a local land use approval does not affect the validity of the approval, and it expressly states that the governmental entity and public may rely on the local land use decision in good faith for all purposes until the action for judicial review is resolved.  This should provide some comfort to local governments, developers, lenders and others that projects can continue to move forward, notwithstanding ongoing litigation.

It remains to be seen what impact HB24-1107 will have on the frequency of Rule 106(a)(4) filings, how the courts will interpret it, and how developers, lenders and others will react.  Regardless, the bill is a positive step toward reforming what many have come to see as a broken process.