By Sarah Mercer
Brownstein Hyatt Farber Schreck
About a month into its 120-day legislative session, the Colorado General Assembly is starting to heat up. With over 200 bills introduced and agency reporting hearings (known as “SMART Act” hearings) complete, the legislative calendar is beginning to populate with bill hearings on several issues the governor and legislative leadership signaled would be coming this year.
Here is a snapshot of the bills that have been introduced regarding two of those issues — housing affordability and property taxes — along with proposals that are yet to come and the increasing complexity added by citizen initiatives.
Housing affordability remains a top concern among most lawmakers, though there are differing opinions on how to best address the issue. Some place the focus on making housing less expensive with a policy goal of preventing displacement and keeping individuals in their homes. Others place the focus on removing barriers to development with a policy goal of creating more housing supply and choice in the market. For his part, Gov. Jared Polis has said that he will view all legislative proposals through a lens of whether the measure saves people money by lowering the cost of housing.
One bill attracting national attention is House Bill 1057, brought by plaintiff-side trial lawyer Democratic Rep. Steven Woodrow. The bill would prohibit landlords from using an “algorithmic device” to set rent amounts and makes it an unfair trade practice to do so. The introduced version of the bill defines “algorithmic device” broadly to mean “any device that uses one or more algorithms to perform calculations of data.”
A bill returning in a narrower form this session is House Bill 1098, which would specify the reasons landlords may evict tenants only on certain grounds and would require a 90-day notice for certain “no fault” evictions including the demolition of a building, substantial repairs or an anticipated sale of the building. The bill is sponsored in the House by eviction attorney Rep. Javier Mabrey and Majority Leader Monica Duran, both Democrats. Another bill returning in a narrower form, but not yet introduced, is from Democratic Rep. Andrew Boesenecker and would give local governments the right of first refusal to purchase multifamily residential “existing affordable housing” buildings and would require all other multifamily residential sales to be noticed to the local jurisdiction before being listed.
On the supply side of the market equation, Democratic Rep. William Lindstedt is sponsoring House Bill 1107 to disincentivize frivolous zoning and permit appeals (called “Rule 106 appeals”) that are filed against local governments as a tactic to prevent development projects, including projects to build housing. The bill would award attorney fees to prevailing defendants of such appeals. Similarly focused on addressing how the cost of litigation prevents housing development, Democrats Sen. Rachel Zenzinger and Rep. Shannon Bird are bringing a bill to enact reforms to Colorado’s construction defect statute in order to reinvigorate new condominium construction.
Closely connected with housing affordability is property taxes. Affecting both commercial and residential property owners, this year’s spike in property taxes has lawmakers and citizens looking for solutions.
One bill, Senate Bill 2, seeks to encourage property owners to create long-term rental, workforce and senior housing, as well as child care services and economic development through property tax credits or rebates. A bipartisan bill sponsored by Speaker Julie McCluskie, Sen. Dylan Roberts and former Douglas County assessor Rep. Lisa Frizell would give local governments the authority to identify so-called “areas of specific local concern” and to develop short-term incentive programs addressing those areas.
Other measures aim to make changes that would provide more direct and permanent relief to property owners amid criticism that local governments are receiving a windfall in property tax revenue. For example, House Bill 1026 would require a local government whose voters approved a ballot measure to allow the local government to retain excess TABOR revenue prior to November 2020 (known as a “debrucing election”) to resubmit the ballot measure to voters for reapproval no later than November 2029. If the resubmitted ballot measure is not reapproved by voters, or if the reapproval election is not held, the local government would no longer be allowed to retain such excess revenue and must return it to voters. However, given that the bill is sponsored by a single Republican member, Rep. Rod Bockenfeld, the bill may not make its way far in the legislative process.
What is most likely to pass this session is a broader property tax solution coming out of recommendations from the property tax commission created by legislation that passed during the special session and negotiations with the proponents of several property tax ballot measures that are either through the citizen initiative process or are making their way through that process.
The property tax commission is required to provide its recommendations by March 15 in order to give the legislature time to consider referring a ballot measure to voters for the November 2024 election. Several citizen initiatives being advanced by a variety of stakeholders complicate the commission’s recommendations and development of a comprehensive solution. One measure, Initiative 50, has already qualified for the November 2024 ballot and would limit property tax revenue to a 4% annual increase absent voter approval. Initiative 95, which has received a ballot title but has yet to go out for signatures to get on the ballot, takes the opposite approach and would require local voter approval to impose any limit on property tax revenue. Other measures approach lowering the tax burden on property owners by reducing a property’s assessment rate or by capping the amount by which a property’s valuation can increase.
Whether the legislature can mediate these varied interests and find a long-term solution that both shields property owners from increasing taxes and ensures local services, including schools and fire protection, remain fully funded is a question that will likely require direct involvement from Polis and that will likely go to the wire of sine die on May 8.
– Shareholder Sarah Mercer focuses her practice on consumer finance, government relations and political and regulatory law at Brownstein Hyatt Farber Schreck.