A Colorado bill aimed at promoting affordable housing through a legal clarification, an effort that’s been in the making for years, earned initial approval from House lawmakers March 18.
House Bill 21-1117, sponsored by Denver Democratic Reps. Susan Lontine and Serena Gonzales-Gutierrez, would let cities and counties require new rental developments to include some affordable housing units, a policy known as inclusionary zoning.
“What we attempted to do … is to strike a balance that allows an opportunity for our local governments to take advantage of a tool that will help them increase the affordable housing stock for their communities,” Lontine said on the House floor. “And when I mean affordable housing stock, we’re talking about workforce. We’re talking about people who can’t afford to live where they work. People who keep us healthy, people who keep us educated.”
Colorado law currently prohibits any local jurisdiction from enacting policies that limit how much landlords can increase rental prices. The statewide ban on rent control policies was established in 1981. Other cities across the country with tight rental markets, such as New York City, Los Angeles, and Washington, D.C., have used these policies to try to safeguard affordable housing units as the population swells.
A 2000 Colorado Supreme Court decision found the city of Telluride broke state law by trying to impose an inclusionary zoning policy, which it said constituted rent control. Since then, the Telluride decision has largely prevented cities and counties from requiring new rental developments to include affordable housing.
The prohibition does not apply to owner-occupied housing, such as condos, which some Colorado cities do regulate using inclusionary zoning. And cities including Boulder and Denver have found ways to work around the Telluride decision.
Those include voluntary agreements with developers to get them to incorporate lower-cost rentals in exchange for incentives, like being able to build taller apartment buildings with more units. In other cases, cities charge so-called linkage fees that are then used to fund affordable housing.
HB-1117 would clarify state law to say that Colorado’s ban on rental control policies does not apply to local inclusionary zoning policies, as long as those policies offer a developer more than one option for adding affordable housing besides just building lower-priced units. Those options could include land donations or cash for lower-cost housing, Gonzales-Gutierrez said.
The National Low Income Housing Coalition estimates that Colorado faces a statewide shortage of more than 113,000 affordable rentals for extremely low-income households, defined as those earning up to $28,790 per year for a family of four.
Arapahoe, Adams and Boulder counties are among those supporting the bill. The Colorado Municipal League, which represents cities and towns across the state, backed the legislation.
“For years, municipalities have sought to enhance the relationship with those proposing new development by ensuring that residents needing affordable housing can find a place they can call home,” Kevin Bommer, the league’s executive director, said in a February statement following HB-1117’s introduction. “This legislation provides that tool for municipalities, and the League is thankful to the sponsors for addressing this critical need.”
Last year, Democratic state lawmakers put forth a similar bill, but the legislation was postponed indefinitely in May 2020 after lawmakers returned to the Capitol following a pandemic-triggered recess. It wasn’t the first time — Democrats have been trying for years to pass legislation allowing inclusionary zoning.
The bill is opposed by the Colorado Competitive Council, an affiliate of the Denver Metro Chamber of Commerce; and the Colorado Association of Home Builders. Other opponents include groups representing landlords, mortgage lenders, and businesses in El Paso and Douglas counties.
“Rent control only helps the few who receive controlled rental units,” the Colorado Landlord Legislative Coalition and Apartment Association of Metro Denver said in a joint statement March 8. “The remaining population is negatively affected because rent control creates scarcity. The goals of rent control will be undermined by the needs of the builder and the investor to be able to afford to provide housing.”
Rep. Kevin Van Winkle, a Highlands Ranch Republican, proposed an amendment on the House floor that would have restricted local governments from imposing policies that would require more than 20% of units in new developments to be rented for less than 80% of the average rent for the rest of the building.
Lontine said that would go against the spirit of the bill.
“The whole point of this bill is to allow for local control,” she said. “Local governments are not forced to adopt this policy. They can adopt it if they believe it will help them, and they need the flexibility to set the different parameters that are best suited for their specific needs.”
The amendment failed, and HB-1117 passed on second reading over Van Winkle’s objections.
“This is a gut punch to the middle class of renters in the state of Colorado,” he said before the vote, arguing that in cities that passed inclusionary zoning policies, landlords would subsidize affordable units by increasing costs for the renters who earned too much to qualify for them.
The bill is set for a third-reading vote in the House on March 22 before it moves to the Senate, where Democratic Sens. Julie Gonzales and Robert Rodriguez of Denver are sponsors.
Moe Clark contributed to this report.