Colorado House Bill 25-1169: An Affordable Housing Opportunity

In response to housing shortages throughout the state, Colorado legislators are proposing policy changes relating to affordable housing.  House Bill 25-1169 (“HB25-1169”) is one of the most significant bills proposed to date. Titled “Housing Developments on Faith and Educational Land,” this proposed legislation aims to allow for affordable multifamily development on properties owned by faith-based organizations, school districts, and state colleges or universities (each a “Qualified Owner”) throughout Colorado. For multifamily developers that are able to collaborate with Qualified Owners, HB25-1169 presents a potential opportunity to take advantage of historically underutilized or undeveloped land with fewer legal and administrative obstacles.

Benefits and Opportunities for Developers

HB25-1169 is designed to facilitate increased affordable and mixed-income housing development by allowing multifamily developments on land owned by a Qualified Owner (even if not zoned for such purposes). Historically, much of this land has been restricted from use for residential developments in accordance with local zoning ordinances. HB25-1169 proposes an administrative approval process that streamlines project approvals and removes significant zoning-related barriers for Qualified Owners (and, potentially, private developers).

Key benefits include:

1. Expedited Approvals: Qualified Owners and/or developers can bypass rezoning and discretionary permitting processes, reducing project timelines and lowering development soft costs.
2. More Density, Fewer Restrictions: Local governmental authorities are prohibited from denying proposed developments based on structure height (up to three stories or 45 feet) or unit density unless the proposed development is cause for safety or environmental concerns.
3. Mixed-Use Opportunities: HB25-1169 allows for additional uses within multifamily developments, including childcare centers, community spaces, and educational services (such uses in some jurisdictions may be limited to 15% of the square footage of the ground floor of the project).
4. Potential Tax Incentives: As projects will be required to incorporate affordable housing elements as set forth below, such projects may qualify for state and federal tax credits and grants from the U.S. Department of Housing and Urban Development.
5. Land Availability: Many faith-based and educational institutions own property in prime infill locations, making them ideal for multifamily developments.

Opportunities for private developers:

As currently proposed, in order for the benefits of HB25-1169 to apply, the land in question must be owned by a Qualified Owner. Private developers may be able to benefit from HB25-1169 through long term land leases and/or joint venture agreements with Qualified Owners whereby the Qualified Owner retains the ownership interest in the land while both parties benefit from revenue generated by the development.

Affordable Housing Requirements

HB25-1169 introduces specific affordable housing requirements for residential developments on qualifying properties. As currently drafted, these requirements vary based on the presence of local inclusionary zoning ordinances and the area’s market-rate rent relative to the area median income (“AMI”):

1. Local Inclusionary Zoning Ordinance or Affordable Housing Policy: If the local jurisdiction has an existing inclusionary zoning ordinance or affordable housing policy applicable to the qualifying property, the proposed residential development must comply with these local regulations.
2. Absence of Local Policy and Market Rate Rent at or Below 120% AMI: In jurisdictions without an inclusionary zoning ordinance, if the market rate rent is at or below 120% of the monthly AMI (as established annually by the U.S. Department of Housing and Urban Development), the development must align with the jurisdiction’s demonstrated housing needs as determined by a housing needs assessment.
3. Absence of Local Policy and Market Rate Rent Above 120% AMI: In jurisdictions without an inclusionary zoning ordinance, where the market-rate rent exceeds 120% of the monthly AMI, at least 20% of the dwelling units in the development must be designated for households earning no more than 80% of the AMI.

Legislative Status and Next Steps

HB25-1169 has passed through the House and is currently under review in the Senate. Below is a summary of the significant legislative approvals received to date and the next legislative steps:

• February 4, 2025: Introduced in the House of Representatives and assigned to the Transportation, Housing & Local Government Committee.
• March 17, 2025: Passed in the House of Representatives on Third Reading with a 40-23 vote.
• March 27, 2025: Passed in the Senate Committee on Local Government & Housing with 4-3 vote
• Next Steps:
  • The Senate Committee of the Whole will debate and vote on April 14, 2025.
  • If HB25-1169 passes without additional amendments, it will proceed to Governor Polis for approval. If amended, it returns to the House of Representatives for reconciliation.
• Governor’s Decision: If signed into law, HB25-1169 will take effect on December 31, 2026.

Conclusion

If enacted, HB25-1169 could unlock thousands of acres of land for affordable multifamily developments, providing an increase to Colorado’s affordable housing supply. Developers who take early action to understand the framework of HB25-1169 and align with Qualified Owners will be well-positioned to capitalize on these future opportunities in the affordable housing landscape.