On May 13, 2024, Governor Jared Polis signed House Bill 24-1313 (HB24-1313) into law. This act incentivizes transit-oriented development (TOD) by providing $35 million in grants to transit-oriented communities (TOCs) to help upgrade infrastructure.

This Alert outlines the act’s key provisions and limitations and provides a timeline of critical milestones to watch in the coming months.

Background

HB24-1313 is part of a comprehensive legislative package of land use and transit bills seeking to create more affordable, walkable, and transit-accessible communities. Many of these concepts were consolidated into last year’s omnibus housing bill, SB23-213 (discussed here), which failed on the last day of the 2023 legislative session. In response, lawmakers adopted a new strategy, dividing the package into several individual bills and conducting extensive stakeholder outreach to solicit feedback.

The Denver Metropolitan/Front Range area has been in nonattainment status under the Clean Air Act since 2016. To achieve compliance with national air quality standards, Colorado must reduce household driving by 20 percent by 2030. Consequently, Colorado has invested more than $6 billion in constructing the Regional Transportation District’s (RTD) FasTracks rail and Bus Rapid Transit (BRT) system, with plans to finalize four new BRT corridors by 2030. Yet, despite these investments, transit ridership in Colorado lags behind peer agencies in Minneapolis, Portland, and Seattle, which moves two to four times more people per service mile than RTD. Lawmakers attribute this lag in ridership, at least in part, to a lack of density near these transit lines. According to 2020 census block housing unit data, over 90 percent of rail stations and 84 percent of BRT and frequent bus corridors in Colorado average less than 15 housing units per acre within walking distance. Researchers generally agree that a minimum density of 15 housing units per acre is necessary to support frequent transit services. Additionally, studies show that residents living in TOCs drive 50 percent less than those living in the suburbs.

By encouraging TOD, HB24-1313 aims to alleviate Colorado’s housing crisis and reduce greenhouse emissions.

HB24-1313 Overview

What qualifies as a TOC?

The act requires a TOC to meet its housing opportunity goal. To qualify as a TOC, a city must be within one of Colorado’s five metropolitan planning organizations, have a population of over 4,000, and have at least 75 acres of transit area. A county qualifies if it is located in a metropolitan planning district and contains either light/commuter rail stations or a transit corridor in an unincorporated part of the county entirely surrounded by municipalities. Approximately 31 jurisdictions on the Front Range (only two of which are outside the Denver metro area: Fort Collins and Colorado Springs) will qualify as a TOC. See the list of jurisdictions likely to qualify below.

Cities

• Arvada
• Aurora
• Boulder
• Broomfield
• Centennial
• Cherry Hills Village
• Colorado Springs
• Commerce City
• Denver
• Edgewater
• Englewood
• Fort Collins
• Glendale
• Golden
• Greenwood Village
• Lafayette
• Lakewood
• Littleton
• Lone Tree
• Longmont
• Louisville
• Northglenn
• Sheridan
• Superior
• Thornton
• Westminster
• Wheat Ridge

Counties

• Adams County
• Arapahoe County
• Douglas County
• Jefferson County

Housing Opportunity Goal (HOG)

To calculate its HOG, a TOC must add up the total acreage of eligible parcels in “Transit Areas” within its jurisdiction and multiply it by 40 units per acre. Transit Areas include both “Transit Station Areas,” which are a quarter mile buffer around urban bus rapid transit and frequent bus (15-minute service or better) corridors, and “Transit Corridor Areas”, which are a half mile buffer around light rail, commuter rail, and commuter bus rapid transit stations. The act directs the Department of Local Affairs (DOLA) to publish an official map of these areas by September 30, 2024. For example, if a local jurisdiction has 100 acres of land within Transit Areas (after removing the exempt parcels), the jurisdiction will have to allow 4,000 units of zoning capacity (100 acres x 40 units per acre).

However, unlike SB23-213, the act does not mandate the upzoning of any specific parcel. Instead, it sets the overall HOG and allows local governments the flexibility to designate “Transit Centers” and allocate housing development based on what best suits their community. But at a minimum, a Transit Center must meet the following criteria:

1. Allow a net housing density of at least 15 units per acre;
2. Account for dimensional and other restrictions impacting density;
3. Exclude areas with exclusive housing occupancy restrictions;
4. Have an administrative approval process for multifamily residential developments on parcels that are five acres or less in size; and
5. Be within or partially within a Transit Area or optional transit area.

Additionally, non-qualifying communities may voluntarily opt-in to access state TOC grants by designating certain areas within their jurisdiction as “Neighborhood Centers.” Although the qualifying criteria for a Neighborhood Center is similar to that of a Transit Center, DOLA is tasked with further defining the Neighborhood Center concept to account for varying regional and local contexts.

Is the Incentive Enough?

While the act introduces progressive measures for enhancing housing density and infrastructure near Transit Areas, it is not without its limitations. One of the primary limitations of the act is the absence of penalties for TOCs that fail to meet their HOGs. As originally introduced, the act would have withheld highway maintenance funding from jurisdictions that failed to meet their HOGs. However, that penalty was removed to secure sufficient support from the Colorado Senate Local Government and Housing Committee. Without enforceable penalties, there is a risk that some jurisdictions may not feel compelled to comply with the act.

Another significant limitation is the varied readiness of jurisdictions to meet the act’s density requirements. Jurisdictions that are already zoned to support higher density may be able to seamlessly integrate the act’s goals. However, those that are not currently zoned for such levels of density face challenges:

1. Market Demand: There is uncertainty regarding whether the market can absorb the increased housing density in areas that are not traditionally high-density zones. This includes concerns about the attractiveness of these areas to potential residents and developers.
2. Infrastructure Support: Adequate infrastructure, particularly water supply, is a critical concern. The act does allow for requests to modify HOGs if there is an insufficient water supply, but this adds another layer of complexity to the planning process.

Conclusion

HB24-1313 sets ambitious goals for enhancing housing density and transit infrastructure, but its success hinges on the willingness of local governments to embrace these changes without the pressure of penalties. Additionally, the varying capabilities of jurisdictions to support increased density—both from a market and infrastructure standpoint—pose significant challenges. Local governments and developers should closely follow the outlined timelines and requirements to fully leverage the opportunities presented by this act.

Timeline of Key Dates to Watch

• September 30, 2024: Deadline for DOLA to develop a map identifying Transit Areas for calculating HOGs.

• January 1, 2025: Deadline for DOLA to publish HOGs, models, and guidance for local governments.
• June 30, 2025: Deadline for TOC to submit preliminary assessment reports.
• December 31, 2026: Deadline for TOC to identify affordability and displacement mitigation strategies, submit the HOG report, and request modifications due to insufficient water supply.
• December 31, 2027: Deadline for the DOLA to approve HOG reports and designate certified TOCs.
• TBD: DOLA to develop criteria for non-qualifying jurisdictions to opt-in as Neighborhood Centers.