Colorado’s historic “More Housing Now” bill, explained

March 27, 2023 | Matt Frommer & Grace Hood

Updated to incorporate amendments passed by the legislature on April 18, 2023.

A bill introduced last week at the Colorado General Assembly is aimed at solving the state’s escalating housing affordability and climate crises by allowing more housing options like accessory dwelling units, duplexes, triplexes, and multifamily homes near jobs, transit, and other services. By combining zoning reforms that enable compact development in urban centers with policies that prevent exurban sprawl, Senate Bill 23-213 will lower housing costs while reducing traffic and pollution, and protecting our precious natural resources.

The policy package, dubbed “More Housing Now,” is a “greatest hits” of state housing and land use policies. Here’s a high-level breakdown of what’s in the bill and how these policies will deliver a more affordable, sustainable, and equitable future for Colorado.

Housing needs planning: Setting our “North Star” for housing

What’s the problem we’re trying to solve?

Colorado is experiencing a severe housing crisis, in part because we have not built enough homes to keep pace with population and job growth. In the decade before the 2007 financial crisis, Colorado was producing 48,000 new homes per year, but since 2007, that number has dropped to 26,500 despite even faster population growth. As a result, we’re 175,000 homes short of a stable housing market. 

This underproduction creates scarcity, which has made Colorado one of the most expensive housing markets in the nation. Rising housing costs force low-income renters out of their homes and make it difficult for businesses to find workers. To stabilize the market and avoid going the way of California, where the average home costs $200,000 more than in Colorado, we need to double annual housing production in the coming years.

Source: Common Sense Institute

It’s not just about how many homes we build; it’s also about where we build them and who can afford to live in them. 

The housing crisis hits low-income families the hardest, the majority of which are now “housing-cost burdened,” meaning they spend over one-third of their income on housing and, therefore, have less to spend on other life necessities like food, medicine, and transportation. The market will not deliver new housing at prices that are affordable to low-income residents on its own, so we need to couple supply-side policies like zoning reform with strategies that preserve and produce more affordable housing.

On top of the affordability challenges, the current mix of housing types doesn’t reflect Colorado’s changing demographics. In the Denver region, the average number of people per household is steadily declining as the population ages and fewer families have children. By 2050, only 25 percent of households in the Denver region are expected to have children, down from 50 percent in 1970. At the same time, the number of households with older adults aged 65 and over is expected to double in the next 30 years. And yet, the majority of our residential land is restricted to single-family homes, many of which have 4 or 5 bedrooms and sit on large lots. We need to diversify our housing stock with a wider range of housing types, sizes, and price points to meet our changing demographics.

➤   SB23-213 requires state and local governments to quantify their current and future housing needs by income level and take steps to meet housing targets over time.

We cannot address the housing crisis without understanding the scale of the challenge. It’d be like trying to solve climate change without knowing how much greenhouse gas pollution we’re producing and from where. Or trying to solve the water crisis without knowing how much water we’re using and how much we have left. Without it, we’re flying blind. The basic elements of Housing Needs Planning are:

  1. Housing Needs Assessments: The bill directs state agencies to determine how many homes are needed in each community for a range of income levels, household sizes, and household types based on a standard set of population and job growth data. Once a city knows its housing shortage — say 20,000 additional units for low-income families making 50-80 percent of the average median income by 2030 — it can adjust its land use regulations and affordable housing policies to meet that target. 
  2. Local housing plans: Communities in urban areas and the most expensive rural resort areas must develop Housing Plans to demonstrate progress toward meeting their housing targets with a combination of zoning reform, affordable housing programs, infrastructure investments, economic and financial tools, anti-displacement provisions, and other strategies. The bill sets aside $15 million for state and local planning assistance to complete this work.  
  3. Data reporting: Local governments will submit housing production data to the state alongside a list of local affordable housing and anti-displacement policies, and the state will upload this information to a publicly available dashboard. This transparency allows the public to hold cities accountable to their housing targets.

Plenty of other states have Housing Needs Assessments and Plans, from Oregon to Utah to New Hampshire. Currently, many Colorado communities are independently conducting Housing Needs Assessments, but they’re not required to, and there are no standards to ensure each city is using the same data set and methodology to calculate how many homes are needed at different income levels. Without consistency in methodology, timelines, implementation, and reporting, the potential is limited. Statewide housing needs planning will bring state agencies into the conversation and support regional collaboration to grow more strategically.

In response to feedback from local governments and other stakeholders, the amended bill expands the number of voting members on the multi-agency advisory committee, the group responsible for providing recommendations to the Department of Local Affairs (DOLA) on Housing Needs Planning, model codes, Strategic Growth Objectives, the displacement mitigation menu, and other elements of the bill. The committee will now include two representatives from Metropolitan Planning Organizations, four from local governments, and one housing expert representing community interests. (Amendment L.012).

How will this bill support more Affordable Housing?

Allowing more housing options will increase the overall housing supply and take some pressure off the low-income housing market, but reducing housing costs for low-income families requires more public and private investment in Affordable Housing. The bill takes several concrete steps to encourage the creation of Affordable Housing – units that are subsidized at below-market-rate to low- and middle-income Coloradans. (Notice the capital A to avoid confusion with broader, lower-case housing affordability.) 

However, this bill won’t fix everything on its own, and we should consider both the specific provisions in the bill and how they will interact with the broader policy landscape. Colorado has taken historic action on Affordable Housing in the last couple of years. SB23-213 comes on the heels of several major Affordable Housing policies and investments, including $550 million from the 2022 legislative session and up to $300 million per year from the voter-approved, Proposition 123. In addition, House Bill 21-1117 allows local governments to require developers to set aside a percentage of multifamily units for Affordable Housing — a policy known as “inclusionary zoning” that roughly 25 cities and counties have now adopted. 

10 ways that SB23-213 supports Affordable Housing:

  1. The bill creates a “Housing Needs” framework to quantify the gap in housing for low-income residents and requires cities to develop Housing Plans to close those gaps. 
  2. The bill creates a menu of affordable housing strategies from which cities have to choose between two and five strategies to support the production and preservation of affordable housing (See the description of Amendments L.013 and L.018 below.)
  3. The bill complements and augments local Inclusionary Zoning Ordinances (IZOs). By allowing more multifamily housing opportunities, SB23-213 will increase “inclusionary” affordable housing opportunities by 30% compared to the baseline and up to 62% if more cities choose to select IZOs off the bill’s affordability menu according to a recent study commissioned by the Colorado Energy Office. Consistent with HB21-1117, the bill encourages cities to develop their own inclusionary zoning ordinances based on the local market dynamics. For example, “hotter” housing markets like Boulder have set their inclusionary zoning threshold at 25 percent of new units, while less expensive markets like Littleton chose 5 percent. The Denver policy gets even more granular with different requirements for “typical” and “high-cost” markets. The amended bill removes ambiguous language and clarifies that local IZOs take precedence (Amendment L.014).
  4. The bill sets a floor of affordability in the Transit-Oriented Areas model codes at 10 percent of units for families making 80 percent of Area Median Income (AMI) or less. We expect most cities to opt for the “local flexible option” instead of the state model code and set their own affordability requirements based on the findings from the Housing Needs Assessments (more on that below). 
  5. The bill removes costly parking mandates for new development near transit and job corridors. Parking is very expensive — between $10,000 and $50,000 per parking space — and yet, over half of the parking spaces near transit sit empty. By reducing or eliminating parking mandates, we can direct our limited resources toward the creation of more affordable homes instead of car storage, one reason that Denver decided to slash parking requirements for affordable housing in 2022
  6. The bill helps to stretch our public and private funding further by legalizing lower-cost housing types like Accessory Dwelling Units (ADUs), duplexes, triplexes, fourplexes, and multifamily housing. With greater economies of scale and land use efficiency, these units cost 25-50 percent less to build than single-family homes and, therefore, require less subsidy per unit to make them Affordable. When we combine zoning reform with affordable housing investments, it allows us to stretch our dollars further across more units. Hypothetically, if the public subsidy required to keep a 3-bedroom home affordable for a family making 60 percent of AMI is $500,000 for a single-family home and $200,000 per unit in a fourplex — then our public investment goes 2.5 times further for the smaller, attached units. 
  7. The bill allows “by-right” development, which lowers development costs by streamlining the permitting process. 
  8. The bill lowers combined housing and transportation costs by aligning state funding programs with new “strategic growth objectives to encourage more affordable, transportation-efficient development. Transportation is the second largest household expense after housing, and by enabling affordable housing in walkable, transit-rich communities, this bill reduces combined housing and transportation costs. The cost of owning a new car in Colorado is almost $900 per month, and households in sprawling car-dependent areas pay twice as much per year on transportation as those in more walkable, transit-rich areas.  The bill’s amended Strategic Growth section and new Buildable Lands Analysis will limit sprawl and prioritize affordable housing opportunities in areas with access to low-cost transportation options.
  9. The bill maximizes the potential impact of Colorado’s historic Affordable Housing investments from the 2022 legislative session. Current zoning restrictions limit how much housing we can build where. By relaxing them, we can unleash the full potential of our new funding programs and build Affordable Housing where it makes sense — near jobs, grocery stores, schools, transit, and other key destinations. 
  10. The bill takes some pressure off the low-income housing market by increasing overall housing supply and stabilizing home prices. Without increasing supply, prices will continue to escalate, adding more families to the ever-growing waitlist for below-market-rate Affordable Housing.

To ensure the bill results in more regulated affordable housing (subsidized and income-restricted housing) and lighten the workload for  Colorado’s capacity-constrained DOLA, legislators added the menu of affordable housing strategies into the bill instead of leaving it to a future administrative process. This expedites the process and gives local governments plenty of time to adopt affordable housing strategies before they update their zoning regulations by mid-2025. The amended bill includes two affordability menus – one for Urban Municipalities, which have to select two strategies and three if they have fixed-rail stations, and one for Rural Resort Job Center (RRJC) municipalities, which have to select at least 5 strategies by the end of 2026. (Amendments L.013 and L.018). 

The new affordability menus include the following strategies:

  • Implement an inclusionary zoning ordinance,
  • Reduce or subsidize affordable housing development fees for water and sewer taps, building permits, and other infrastructure,
  • Expedite the development review process for affordable housing,
  • Allow affordable housing as a use-by-right beyond what’s required by the bill, including strategies like affordable housing overlay zones or districts, 
  • Leverage municipally-owned land for affordable housing
  • Establish a dedicated local revenue source for affordable housing
  • Eliminate parking requirements for affordable housing,
  • Attain and maintain eligibility for Proposition 123 affordable housing funds,
  • Establish a density bonus program that allows larger building sizes in exchange for more affordable units (Urban Municipalities menu only),
  • Facilitate investment in land banking or community land trusts, (Urban Municipalities menu only),
  • AllowADUs with affordability protections (RRJC Municipalities menu only), 
  • Allow middle housing and multifamily housing units with affordability protections near transit (RRJC Municipalities menu only), 
  • Regulate short-term rentals or second homes (RRJC Municipalities menu only), 
  • Convert existing market-rate homes to affordable housing or preserving existing deed-restrictions (RRJC Municipalities menu only),
  • Adopt a regional housing needs plan with multi-jurisdiction commitments to build affordable housing (RRJC Municipalities menu only), and
  • Adopt other affordable housing strategies developed by local governments or state agencies in the future.

Preventing involuntary displacement. The status quo is fueling the involuntary displacement of low-income households by driving up rents. A 2020 study found that Denver was the second fastest-gentrifying city in the country. Increasing housing supply should alleviate some of the economic displacement pressure, but we must also introduce specific guardrails to protect vulnerable communities, particularly as we see larger investments and redevelopment in transit-oriented areas. 

➤   SB23-213 requires local governments to identify neighborhoods at high risk of involuntary displacement and implement strategies to protect those households. To assist in this work, the state will create a menu of anti-displacement measures for local governments to use, which could include strategies like foreclosure and rental assistance programs, legal support for tenants, tenant relocation assistance, community opportunity to purchase, and prioritization policies for vulnerable households to access future affordable housing. Here’s a full list of example policies from the Colorado Sustainable Housing Coalition.

DOLA will provide guidance to identify areas at the highest risk of displacement based on factors like income, the share of renters, housing cost burden, educational attainment, primary language, employment rates, and other factors. Similar methodologies and tools have been developed by cities like Denver to assess displacement risk and inform displacement mitigation programs (See Denver’s Tracking Vulnerability to Displacement map). DOLA will provide technical assistance and funding to support local displacement analyses and policy development. (Amendments L.015 and L.033).

It’s worth noting that several other bills have been introduced this legislative session to protect residents from involuntary displacement, such as HB23-1171, which would prevent landlords from evicting tenants without “just cause,” and HB23-1115, which would allow local governments to enact rent control.

Accessory Dwellings Units

What’s the problem?

ADUs, also known as granny flats or backyard cottages, are modestly sized and modestly priced homes that can be tucked into existing single-family homes or placed in a backyard. ADUs present a great opportunity for cities to increase the number of low-cost and energy-efficient housing options without eating up more undeveloped land. They’re particularly popular among organizations like AARP because they provide an opportunity for seniors and empty nesters to “downsize” and age in place without having to leave their communities. Same for families with young adults who want to live nearby but can’t afford their own single-family home.

The problem is that ADUs are illegal to build on the majority of residential lands. For example, 73 percent of lots in Denver do not allow ADUs. Where they are legal, there tend to be significant regulatory barriers that limit their production and drive up costs, such as requirements for off-street parking, separate water and utility connections, lengthy permitting processes, and overly-restrictive size limits.

In looking at other states around the country, it’s obvious that there’s pent-up demand for ADUs. For example, after Seattle legalized and removed barriers to ADU construction in 2019, they saw a 250 percent increase in ADU permits. That’s another 3,000 relatively affordable homes that would otherwise not have been built.

➤   SB23-213 legalizes and removes barriers to ADU construction in cities across Colorado.

Urban cities and non-urban towns with over 5,000 people must allow residents to build ADUs “by-right” in single-family zones. They are prohibited from enforcing parking mandates, setting overly-restrictive size caps, or implementing other local laws that create “unreasonable costs or delays.” To be clear, getting rid of parking mandates does not get rid of parking but allows the builder to determine how much parking is needed for a particular project depending on market demand and context.

As with the other zoning elements in the bill, cities are given two options to comply with the ADU requirements by mid-2025:

  1. The local flexible option: They can choose to update their own zoning regulations to meet the “minimum standards” articulated in the bill, or
  2. The state model code: They can choose to adopt the state’s forthcoming ADU model code, which will be developed by state agencies through a public possess over the next year. 

This dual-pathway approach is similar to that of other states like Oregon. Faced with a similar choice, every city in Oregon that’s subject to the requirements picked the local flexible option over the state model code, with many going above and beyond the model code. For example, Portland allows two ADUs per lot and, in the case of Middle Housing, higher Floor-Area-Ratios than the state model code. 

In many municipalities, particularly rural resort towns, ADUs have been used as short-term rentals through platforms like AirBnb and VRBO to provide hotels for vacationers instead of housing for locals. Cities like Summit County have taken important steps to limit the use of ADUs for short-term rentals, and this bill explicitly allows cities to implement these policies with the goal of creating more housing.

The original bill allowed ADUs of up to 800 square feet or 50% of the size of the primary residence, which, as multiple stakeholders pointed out, could’ve resulted in excessively large ADUs in neighborhoods with single-family mansions. In response, legislators amended the ADU size thresholds to between 500 and 800 square feet, about the size of a 1-bedroom apartment. Cities may allow smaller or larger ADUs at their own discretion. 

The amended bill allows cities to request an extension or exemption from the ADU requirements if they can demonstrate they don’t have sufficient water, sewer, or stormwater services to support new ADU construction. Identical language was added to the Transit-Oriented Communities, Key Corridors, and Middle Housing sections to address concerns from local governments that SB23-213 would require cities to permit new housing without securing an adequate water supply. (Amendment L.017). 

Middle Housing: Legalizing two- to four-unit multiplexes, townhomes, and cottage clusters in single-family zones around frequent transit corridors or on 30 percent of single-family-zoned parcels, whichever is greater.

What’s the problem?

In most Colorado cities, over three-quarters of residential land is reserved for single-detached homes — one dwelling unit per lot, no matter how big that lot is. These regulations essentially mandate the most expensive housing type on the majority of urban land. The average rent for a single-detached home in Colorado is 35-40 percent more expensive than it is for duplexes, triplexes, and fourplexes, and yet, these more affordable “multiplexes” only represent 1-2 percent of new housing production because they’re illegal to build almost everywhere in Colorado. 

Single-family zoning, also known as exclusionary zoning, has racist roots in redlining and segregation. The intentional exclusion of Black families from homeownership opportunities has compounded the racial wealth gap for generations. Today, homeownership rates for white families in Colorado are almost double that of Black families and more than triple that of Hispanic families. To correct for decades of racial discrimination and income inequality, we need to reverse exclusionary zoning, increase the production of modestly-priced housing options, and expand homeownership opportunities for BIPOC (Black, Indigenous, and people of color) families.

In addition, single-family zoning fuels low-density, car-dependent sprawl, which pushes residents further from jobs and services and leads to more traffic, transportation pollution, and land and water consumption. Many of our favorite historic neighborhoods are sprinkled with middle housing types, which generates just enough population density — even at modest levels — to support nearby walkable businesses and frequent transit. Unfortunately, we’ve made it illegal to build more of these homes today. 

➤   SB23-213 legalizes Middle Housing options in urban areas across Colorado.

To open up more affordable housing options for families, workers, and elderly and young home seekers and allow more walkable, environmentally-friendly development in existing urban areas, the bill directs cities to legalize Middle Housing in single-family zones near fixed-rail stations and frequent bus corridors or on 30 percent of single-family-zoned parcels, whichever is greater. Like the ADU section, the legislation gives cities a choice to either develop their own Middle Housing regulations or adopt the forthcoming state model code by mid-2025. 

If cities choose the local flexible option, they must meet minimum standards in the bill and avoid parking mandates and overly restrictive building sizes. The intent is to allow 2 to 6 units on a single lot while preserving the same neighborhood feel with similar heights, setbacks, building, and greenspace requirements as existing homes. From the street, middle housing will look similar to neighboring single-detached homes, just with a couple more mailboxes and front doors. 

Source: American Planning Association and Opticos Design, Inc.

Cities must allow Middle Housing types to be 25 percent larger than single-detached homes to increase the potential for more homes. For example, in a historic neighborhood with 2,000 square foot homes, local regulations must allow 2,500 square feet for middle housing types — imagine a triplex of 830 square foot, 2-bedroom homes. 

There’s a growing trend around the country to legalize Middle Housing, most recently in states like Montana, Washington, and New Hampshire. Housing data from even earlier adopters like and Oregon and Minneapolis show a modest yet meaningful increase in housing supply. In Portland, a city with nearly 160,000 single-detached homes, 289 middle housing units were permitted in 2021. So rest assured, this isn’t going to upend our neighborhoods overnight. It’s a long-game housing strategy that produces a consistent trickle of lower-cost housing types in our communities — one piece of the larger housing puzzle. 

Legalizing Middle Housing is also a displacement mitigation strategy. A Portland study found that legalizing Middle Housing is expected to reduce low-income renter displacement by 21 percent by 2035. That’s because it allows the city to produce the same number of housing units on fewer lots. According to the study, “there is a net reduction in the frequency of demolition and redevelopment across the city while at the same time a net increase in the amount of housing units.”

Every day, older single-detached homes get torn down and replaced with larger and more expensive single-detached homes or McMansions — the only option on the majority of residential lands. In Portland, half of those demolished single-detached homes are now being replaced with duplexes, triplexes, and fourplexes, doubling the productivity of small-lot redevelopment in the city and providing hundreds of new homes at relatively-affordable price points. 

Critically, the bill prevents Homeowner Associations and Planned Unit Developments from blocking ADUs, Middle Housing, and Transit-Oriented Development (TOD).

The amended bill walks back the complete, citywide legalization of middle housing types and, instead, requires cities to allow middle housing on single-family-zoned parcels in Transit-Oriented Communities (within a half-mile of rail stations and Commuter Bus Rapid Transit stations) and Key Corridor areas (within a quarter-mile of Urban Bus Rapid Transit and frequent bus routes) unless those neighborhoods are found to be at high risk of displacement, in which case a city can relocate that portion of their middle housing allocation to another, less-vulnerable single-family neighborhood further from the transit corridor. 

Importantly, the amendment creates a “floor” for middle housing at 30 percent of the total single-family-zoned parcels. This direct tie to transit means that cities with better transit coverage and a greater number of frequent bus routes will likely rezone more than 30 percent of their residential land for middle housing. Cities with less transit will rezone about ⅓ of their single-family lands to allow middle housing types. (See the “Corridors and Centers Zoning Compliance” graphic below for more details.)

Corridors and centers: Transit-oriented communities, key corridors, and middle housing.

What’s the problem we’re trying to solve?

Colorado’s greenhouse gas (GHG) target for transportation — the largest contributor to climate emissions — is 23 million metric tons (MMT) by 2025, but we are nowhere near close to meeting that target. According to the most recent state report, we will exceed that number by an alarming 10 MMT. To course-correct, we need to cut household driving by 20 percent by 2030 by increasing investments in transit, biking, and walking infrastructure and building homes closer to jobs, schools, grocery stores, and other key destinations.

In 2020, the Denver Regional Council of Governments (DRCOG) modeled a series of transportation and land use scenarios to better understand what it will take to meet our climate and vehicle-miles-traveled (VMT) reduction goals. Their “Transit” scenario assumes we invest an additional $36 billion in transit by 2050, resulting in a 2 percent decrease in VMT per capita against the baseline forecast — not nearly enough to meet our targets. However, when the Transit scenario is combined with a “Centers” land use scenario, which focuses 75 percent of new housing and job growth in urban centers and transit corridors, the result is a 24 percent VMT reduction, three times as many walk and bicycle trips, and six times as many transit trips. The expansion of public transit is almost 10 times more effective in reducing GHG pollution when coupled with transportation-efficient land use.

When we consider the full climate benefits of smart land use, including both transportation and building sector emissions, the potential GHG savings could be 2 MMT or more. This is on par with Colorado’s goal of getting 1 million electric vehicles on the road by 2030.

Enabling Transit-Oriented Development. Residents of TOD drive half as much as those living in the suburbs. Yet, two-thirds of the light-rail stations in the Denver region are surrounded by low-density development, vacant land, and vast parking lots, many of which sit empty. Our transportation system is only as useful as the places it takes us, and when we fail to build housing and jobs around transit, we limit our system’s value and utility. 

At a minimum, transit needs densities of 10-20 homes per acre within half-mile of the stations to thrive, and double that number with additional focus on mixed-use development (homes and jobs) to support rapid transit systems like light-rail, Bus-Rapid Transit, and high-frequency bus routes. But most of the land around our transit stations is zoned for a tiny fraction of that density.

Light-rail stations in the Denver metro (Google Earth)

As a result, the Regional Transportation District’s (RTD) system is underutilized and inefficient compared to peer transit agencies. Across 10 peer cities in the western United States, RTD’s 2019 rail service delivered the fewest passenger trips per service mile, a common metric of transit system efficiency and cost-effectiveness. In other words, trains in Portland, Seattle, Minneapolis, and Phoenix are more than twice as full. The COVID-19 pandemic and the sustained shift to telework have only made the problem worse, and current ridership is about 60 percent of pre-pandemic levels.

Over the last 20 years, the Denver region invested $6 billion to build nearly 80 miles of new FasTracks rail service. Many of the new stations were designed for commuters, with big Park-n-Ride lots surrounding them. By now, it’s clear that many of those former riders are not going to return to the office. To make this historic transit investment worthwhile and bring back ridership, we need to adjust our land use plans and build more TOD around RTD’s system.

RTD light rail crossing over Cherry Creek and pulling into Lamar Station in Denver

➤   SB23-213 increases housing options near transit stations and job centers.

The bill removes some of the biggest barriers to TOD: zoning restrictions, lack of infrastructure capacity (transportation, water, sewer, etc), excessive parking mandates, and lengthy permitting processes. 

The amended bill combines the Transit-Oriented Areas, Key Corridors, and Middle Housing sections into one new section called “Centers and Corridors” and focuses on new housing opportunities near frequent transit corridors and commercial centers.  It also gives cities more flexibility to locate housing density where it makes the most sense and reduces the minimum size of high-density multifamily zoning districts around transit stations. 

To address repeated concerns about DOLA’s regulatory capacity, the amended bill sets minimum standards for Key Corridor areas rather than leaving it to future rulemaking. Similar to the ADU section of the bill, the Centers and Corridors sections present two pathways for local governments to choose from – the local flexible option (minimum standards) and the state model code. The requirements for each are illustrated in the graphic below. (Amendment L.009)

Note: “Mixed-income multifamily development” is defined as a housing project where 10% of units are affordable to residents making 80% of AMI or below.

Geographic scope: Different approaches for urban and rural resort communities

Most of the zoning and planning requirements in the bill apply to cities in urban areas and the most expensive rural resort housing markets, where we desperately need state and regional solutions to increase house supply and grow more strategically. Within that, it creates the following tiers based on size and location:

  • Tier 1 urban municipalities refers to cities within the Denver metro region that have at least 1,000 residents and are part of the contiguous urban development area. It also includes cities in the other four Metropolitan Planning regions — Colorado Springs, Fort Collins, Grand Junction, and Pueblo — with more than 25,000 people.
  • Tier 2 urban municipalities refers to cities within the Metropolitan Planning Organizations (MPOs) that have between 5,000 and 25,000 people, and are slightly separated from contiguous urban development areas. Cities like Firestone, Dacono, Tinmath, and Berthoud. 
  • Rural resort job center municipalities are outside the MPOs, have relatively high numbers of people and jobs, and represent some of the most expensive housing markets in the state. Ski towns like Aspen, Vail, Breckenridge, Crested Butte, Steamboat Springs, and Telluride, and the surrounding communities that struggle to maintain low housing costs like Glenwood Springs, Frisco, Durango, and Dillon. 
  • Non-urban municipalities are outside the MPOs and have more than 5,000 people. 

Unlike urban areas, where Middle Housing and Transit-Oriented Area standards apply to every city, rural resort areas will embark on a regional planning process to determine which areas are most appropriate for Middle Housing and TOD. This acknowledges the fact that urban municipalities have a different set of challenges than resort towns, where the housing crisis is even more extreme and may react differently to broad zoning reform.

In the amended version of the bill, Rural Resort Job Center municipalities are no longer subject to the ADU, Middle Housing, Key Corridors, or Transit-Oriented Communities requirements. Local officials from some of the most expensive housing markets on the western slope argued that such zoning changes would only result in more vacation homes, short-term rentals, and very expensive luxury homes, having little to no impact on their workforce housing deficit. While exempt from the zoning requirements, RRJC municipalities do have to select at least five strategies from the affordability menu. (Amendment L.018). 

Here’s how the bill applies to each of those classifications:

Source: Colorado “More Housing Now” policy package summary

Strategic growth and sprawl prevention: Integrating transportation, land use, and water planning

What’s the problem we’re trying to solve?

By allowing for more infill in existing urban areas, the bill alleviates some of the exurban sprawl pressures, but we also need explicit provisions to directly limit low-density sprawl. 

Sprawl contributes to climate change and eats up Colorado’s precious open space and natural resources. Dispersed development patterns lock in car-dependence, which fuels more traffic and transportation pollution. In addition to the transportation impacts, larger single-detached homes on big lots consume up to three times more energy and twice as much water as more efficient attached homes like multiplexes and apartments. 

The lack of affordable housing options near jobs pushes many workers further from services and key destinations in search of housing they can afford — a concept known as “drive until you qualify.”  In many cases, the savings on monthly housing costs are offset by higher transportation costs as families spend more on car payments and gas. And for the 20-40 percent of Coloradans who don’t or can’t drive, car–dependent suburbs severely restrict access to opportunity.

Sprawl is also unsustainable from a financial perspective because, at such low densities, it doesn’t generate enough tax revenue to cover the costs it incurs on local municipalities to provide infrastructure and public services like schools, police, and firefighters. In contrast, compact development maximizes efficiency by increasing the number of homes served for each dollar invested in new roads, water pipes, sewage treatment plants, and fire stations. A Federal Transit Administration report estimates that smart growth would save the Denver-Boulder-Greeley area $4 billion in road and highway construction over 25 years — a savings of 21 percent for Colorado’s taxpayers. 

Without coordinated and intentional planning to limit sprawl, our metro regions will continue to expand, wasting money and natural resources. Over the last 25 years, DRCOG’s projected urban growth area has nearly doubled from 700 to 1,308 square miles. In contrast, the Portland metro area has expanded its urban growth area by just 14 percent over the last 44 years despite similar population growth rates to Denver. From 2001 to 2011, Colorado lost 525 square miles or 3 percent of its natural lands to development, the second most of any state in the west behind California. 

Discouraging new development in the Wildland-Urban-Interface also promotes climate resilience by protecting Coloradans from intensifying climate disasters like the 2021 Marshall Fire in Boulder County. 

➤   SB23-213 takes steps to rein in sprawl by directing the state to develop “Strategic Growth Objectives” to better integrate transportation, land use, and water planning and align state funding with affordable housing and climate-friendly land use.

In many cases, our state and regional policies have the effect of subsidizing and enabling sprawl, and that’s because state agencies like the Colorado Department of Transportation (CDOT) have not incorporated land use into the transportation planning process. Without considering land use and transportation together, we will forever be throwing good money after bad land use decisions.

The bill directs state agencies to develop a set of “Strategic Growth Objectives” to guide new growth into urban areas with good access to transit, jobs, and other services, reduce GHG emissions, promote fiscally-responsible growth, and prevent low-density exurban sprawl. State agencies will submit a report to the legislature by March 31, 2024, with an analysis of the state’s current development patterns and a set of policy recommendations to better align our planning and funding with Strategic Growth Objectives. 

The intent is for agencies like CDOT to incorporate smart land use criteria into their planning process and reward projects that support affordable housing, and transportation-efficient, mixed-use development. This could lead to more investment in transit-oriented development infrastructure and less in new, sprawl-enabling interchanges and road lane miles outside of urban areas.

The bill was amended to clearly articulate the housing and land use goals of the bill, which are to plan for future growth, increase housing affordability and economic mobility, align water supply and housing planning, balance regional jobs and housing, reduce air pollution and GHG emissions, and preserve open space and agricultural lands. To achieve these goals, state agencies are directed to:

  • Support a variety of housing options and transit-supportive densities, walkable mixed-use neighborhoods and urban centers, and water-efficient planning;
  • Encourage efficient and sustainable growth patterns in greenfield development areas;
  • Align investments, permitting processes, and project selection criteria with strategic growth objectives;
  • Develop performance measures and performance targets to track process toward goals (e.g. DRCOG’s Metrovision performance measures such as the share of housing within ½-mile of transit.) (Amendment L.011). 

Water supply has been a top concern among local officials and other stakeholders. The housing policies in the bill will inherently reduce water consumption by replacing water-intensive sprawl with water-efficient infill development, but a new amendment also requires state agencies to submit a Water Supply Report to the General Assembly by June 30, 2025 with policy recommendations to better align state land use and housing policies with water conservation efforts.

Every 5-10 years, local governments update their Master Plans or Comprehensive Plans for their communities. At a minimum, these plans advise local planning and decision-making, but many local governments take them more seriously and adopt them as binding plans. The bill adds several requirements to Master Plans to better integrate land use, transportation, and water planning, including 

  • A water supply element with a list of water conservation strategies to support current and future growth. Previously, these elements were optional for local governments, but they will now be a mandatory part of comprehensive planning. Local governments must also conduct a water loss audit to identify opportunities for water conservation and efficiency;
  • Natural and agricultural land priorities to protect open space and agricultural lands from development. State agencies are directed to prepare a Natural and Agricultural Land Priorities Report to inform local and regional planning;
  • A Buildable Lands Analysis (BLA), which requires cities to prioritize growth within urban areas and near jobs centers and transit before considering greenfield development on natural and agricultural lands. The BLA reorients and expands upon the Greenfield Development Analysis to first prioritize “Greyfield Development” on surface parking lots, abandoned strip malls, and commercial areas with vacant or underutilized parcels. If a city does want to pursue greenfield development and annexation, it must demonstrate that its housing needs can’t be met within the existing urban area. This is a critical anti-sprawl measure that will reduce vehicle travel and climate emissions, optimize the use of existing infrastructure, conserve water, and protect open space and agricultural lands from development. The analysis also requires cities to measure existing gaps in transportation, water, sewer, and other infrastructure and identify potential funding sources and policy solutions to enable infill development. Similar policies in the Northwest U.S. have successfully slowed the rate of exurban sprawl, annexation, and greenfield development, resulting in more efficient, equitable, and sustainable growth. (Amendment L.024).
  • The housing needs plans outlined in Section 2 of the bill.

Parking reform

One of the most important policy pieces to the housing puzzle is a shift away from local parking mandates. Many cities across Colorado have parking minimums that require developers to build a certain number of spaces per dwelling unit or commercial square foot. The problem is that parking mandates are not steeped in science and tend to be completely arbitrary and disconnected from parking demand. They result in too many spots, tack on upwards of $26,000 per unit for Denver housing costs, and encourage a car-centric culture that results in more vehicles on the road. The majority of developers bundle parking costs into the rent to the tune of $225 per month whether you have a car or not. 

According to RTD’s 2020 Parking Study, about half of the parking spaces around their transit stations sit empty, even during peak periods. This amounts to hundreds of acres and millions of dollars that could’ve been allocated to housing, businesses, outdoor parks, and other public spaces instead of car storage.

➤   SB23-213 shifts this paradigm by eliminating parking mandates for ADUs, Middle Housing, and TOD. 

To be clear, getting rid of parking mandates does not mean getting rid of all parking. It means that builders and businesses can respond to market demand and right-size parking provisions based on building type, walkability, transit-proximity, and other factors. 

Letting the market determine the number of parking spots could look like the Art District Flats in Denver’s La Alma — Lincoln Park Neighborhood, where the city allowed lower parking requirements. The building has eight floors and 126 affordable homes. Instead of having 1 or 1.5 parking spaces per unit, as is required in most Denver neighborhoods, Art District Flats has 49 spaces total, a ratio of 0.39 spots per unit. This has freed up 27,000 square feet and over $2 million to subsidize affordable units or build more of them. 

By preventing cities from enforcing costly parking mandates, the bill will free up land and buildable area for housing, lower housing costs, and enable lively and walkable Main Streets — many of which would be impossible to build with today’s parking requirements. 

The amended bill retains the elimination of parking requirements for ADUs and Transit-Oriented Communities (fixed-rail station areas), but increases the allowable minimum parking requirements for Key Corridor areas and Middle Housing to one-half of a parking space per unit. (Amendment L.009).

Other provisions to remove barriers to affordability

  • Minimum unit square footage. The bill prevents cities from requiring minimum home sizes to enable the development of smaller and more efficient homes.
  • Removing occupancy limits based on family status. Many cities in Colorado limit the number of unrelated people who can live in the same house, in some cases, to as few as three people. The bill prevents cities from enforcing residential occupancy limits based on the relationships of the occupants.
  • Promoting manufactured and modular housing. The bill removes barriers to the construction of manufactured and modular homes like mobile and tiny homes by preventing cities from applying more restrictive standards than they do for traditional, “stick-built” single-family homes. 

Implementation timeline (included in Amendment L.016)

Source: Colorado “More Housing Now” policy package summary