Accessory Dwelling Units

Section 1 of the act creates a series of requirements related to accessory dwelling units. Section 1 establishes unique requirements for subject jurisdictions and for qualifying as an accessory dwelling unit supportive jurisdiction (supportive jurisdiction).

As established in section 1, a subject jurisdiction is either:

• A municipality that has a population of 1,000 or more and that is within the area of a metropolitan planning organization; or
• The portion of a county that is both within a census designated place with a population of forty thousand or more, as reported in the most recent decennial census, and within the area of a metropolitan planning organization.

Section 1 requires a subject jurisdiction, on or after June 30, 2025, to allow, subject to an administrative approval process, one accessory dwelling unit as an accessory use to a single-unit detached dwelling in any part of the subject jurisdiction where the subject jurisdiction allows single-unit detached dwellings. Section 1 also prohibits, on or after June 30, 2025, subject jurisdictions from enacting or enforcing certain local laws or otherwise acting in certain ways that would restrict the construction or conversion of an accessory dwelling unit.

In order to qualify as a supportive jurisdiction, a local government must submit a report on or before June 30, 2025, to the department of local affairs (department) demonstrating that the local government:

• Has complied with the accessory dwelling unit requirements section 1 imposes on subject jurisdictions as a subject jurisdiction or, if the local government is not a subject jurisdiction, as if the local government were a subject jurisdiction; and
• Has implemented one or more specified strategies to encourage and facilitate the construction or conversion of accessory dwelling units.

Section 1 also creates the accessory dwelling unit fee reduction and encouragement grant program within the department. The purpose of this grant program is for the department to provide grants to supportive jurisdictions for offsetting costs incurred in connection with developing pre-approved accessory dwelling unit plans, providing technical assistance to persons converting or constructing accessory dwelling units, or waiving, reducing, or providing financial assistance for accessory dwelling unit associated fees and other required costs. In addition to providing grants, the department is required to develop a toolkit to support local governments in encouraging accessory dwelling unit construction. Section 1 requires the state treasurer to transfer $5 million to the accessory dwelling unit fee reduction and encouragement grant program fund created for purposes of implementing the grant program.

Section 2 requires the department to create, and for local governments to consider and adopt, model public safety code requirements related to geographic or climatic conditions for factory-built structures, including those structures that would be considered accessory dwelling units.

Section 3 grants the Colorado economic development commission the power to expend $8 million to contract with the Colorado housing and finance authority to operate and establish the following programs to benefit low- to moderate-income residents of supportive jurisdictions:

• An accessory dwelling unit credit enhancement program that supports lenders offering affordable loans to eligible low- and moderate-income borrowers for the construction or conversion of accessory dwelling units;
• A program that allows for the buying down of interest rates on loans made to eligible low- and moderate-income borrowers in connection with the construction or conversion of accessory dwelling units;
• A program that offers down payment assistance in connection with accessory dwelling units, principal reduction on loans to eligible low- and moderate-income borrowers made in connection with accessory dwelling units, or both; and
• A program through which the Colorado housing and finance authority offers loans, revolving lines of credit, or grants to eligible non-profits, public housing authorities, and community development financial institutions to make direct loans or grants to support the construction or conversion of accessory dwelling units for low- and moderate-income borrowers or tenants.

Section 4 directs the state treasurer to transfer $8 million from the general fund to the Colorado economic development fund for the purpose of the contracting described in section 3.

Section 5 prohibits a subject jurisdiction's planned unit development resolution or ordinance for a planned unit development from restricting the permitting of an accessory dwelling unit more than the local law that applies to accessory dwelling units outside of the planned unit development.

Section 6 states, subject to a reasonable restriction exception, that any prohibition on accessory dwelling units or the implementation of restrictive design or dimension standards by a unit owners' association in a supportive jurisdiction is void as a matter of public policy.

Section 7 makes appropriations to the department, the division of local government within the department, and the office of the governor for use by the office of information technology for the purpose of implementing the act.

APPROVED by Governor May 13, 2024

EFFECTIVE May 13, 2024
(Note: This summary applies to this bill as enacted.)