Colorado Lawmakers Push Forward Bill To Expand Affordable and Middle-Income Housing

Colorado lawmakers are pushing forward a bill aimed at expanding local government ability to develop affordable and middle-income housing.

The state House of Representatives passed Senate Bill 26-001, which has several different provisions that are aimed at supporting workforce housing. The 53-10 vote follows the Colorado Senate, which passed the measure last month.

"This bipartisan effort would unlock more resources to build housing that Coloradans can actually afford," said Rep. Andy Boesenecker, a Democrat and primary sponsor. "We’re creating more flexibility for local governments to use existing tools to be responsive to the housing needs of their communities."

Rep. Chris Richardson, the Republican primary sponsor, said the bill took aim at outdated laws. Communities could use existing resources based on local determinations of need, he said after passage.

Workforce housing is designed for those who earn between 80% and 120% of the area median income. Most often, it's targeted to teachers, law enforcement, and other kinds of workers who serve a community. In rural areas, workforce housing serves 80% to 140% of area median income.

The Realtor.com® state-by-state housing affordability report card graded Colorado a C.

In a statement, the Colorado Association of Realtors® said it "strongly" supports the bill.

"The bill is simple: It authorizes the use of property tax revenue in the general fund to help its local housing authority, sell real property for affordable housing development, and broadens the ownership of the middle-income housing tax credit.

"It stands in stark contrast to the slew of legislation that would increase taxes in a time when the statewide median sales price is $535,000."

What Colorado's new housing bill does

Senate Bill 26-001, also known as SB26-001, expands how local governments can use property tax revenue in their general fund.

If Gov. Jared Polis signs it, local governments could earmark funds for housing authorities and workforce housing. State law now prohibits counties from using property tax in the general fund for many housing purposes.

The bill allows local governments to sell public buildings or property for more housing development. Counties would need to determine a need for that development in a housing needs assessment.

The bill also creates a tax exemption for construction materials used for workforce housing projects. Housing authorities would also get the power to place ballot questions about taxes, impact fees, or debt before voters.

Finally, it allows middle-income housing tax credits of the Colorado Housing and Finance Authority to be transferred to individuals, firms, or corporations that don't own an interest. Those credits can only be allocated to governments under current law. That move helps those projects secure financing.

Colorado created the middle-income tax credit program in 2024. It's funded with $40 million through 2029.

Colorado said it has made gains on its state housing shortage in recent years, thanks to slower population growth and increased production. The state estimated last fall it needs 106,000 new units to keep up with demand. That's down from the 140,000 units it said it needed in 2019.

Still, the state said it needs to build 34,100 new homes a year to keep the deficit from growing.