Housing in Transit-Oriented Communities

Section 1 of the bill establishes a category of local government: A transit-oriented community. As defined in the bill, a transit-oriented community is either a local government that:

• Is entirely within a metropolitan planning organization;
• Has a population of 4,000 or more; and
• Contains at least 75 acres of certain transit-related areas; or

If the local government is a county, contains either a part of:

• A transit station area that is both in an unincorporated part of the county and within one-half mile of a station that serves a commuter rail service or light rail service; or
• A transit corridor area that both is in an unincorporated part of the county and is fully encompassed by one or more municipalities.

The bill requires a transit-oriented community to meet its housing opportunity goal and relatedly requires the department to:

• On or before July 31, 2024, publish a map that designates transit areas that transit-oriented communities shall use in calculating their housing opportunity goal; and
• On or before December 31, 2024, publish models and guidance to assist a transit-oriented community in meeting its housing opportunity goal.

A housing opportunity goal is a zoning capacity goal determined based on an average zoned housing density and the amount of transit-related areas within a transit-oriented community. The bill requires a transit-oriented community to meet its housing opportunity goal by ensuring that enough areas in the transit-oriented community qualify as transit centers. In order to qualify as a transit center, an area must:

• Be composed of zoning districts that uniformly allow a net housing density of at least 15 units per acre;
• Identify the net housing density allowed by law;
• Meet a housing density established by the transit-oriented community;
• Not include any area where local law exclusively restricts housing occupancy based on age or other factors;
• Have an administrative approval process for multifamily residential property development on parcels that are 5 acres or less in size;
• Be composed of contiguous parcels, if located partially outside of a transit area; and
• Be located wholly within a transit area and not extend more than one-quarter mile from the edge of a transit area, unless the department allows otherwise.

A transit-oriented community is required to demonstrate that it has met is housing opportunity goal by submitting a housing opportunity goal report to the department of local affairs (department). A housing opportunity goal report must include:

• The housing opportunity goal calculation that the transit-oriented community used in determining its housing opportunity goal;
• Evidence that the transit-oriented community has met its housing opportunity goal;
• A map that identifies the boundaries of any transit centers within the transit-oriented community;
• If relevant, a plan to address potential insufficient water supplies for meeting the transit-oriented community's housing opportunity goal;
• A description of community engagement that the transit-oriented community conducted in meeting its housing opportunity goal, identifying affordability strategies, and identifying displacement mitigation strategies;
• Affordability strategies that the transit-oriented community will implement in meeting its housing opportunity goal. The transit-oriented community shall select some of these strategies from the standard and long-term affordability strategies menus in the bill, and the transit-oriented community shall include an implementation plan describing how it will implement these strategies.
• Any displacement mitigation strategies that the transit-oriented community has or will adopt from the displacement mitigation strategies menu in the bill and an implementation plan describing how it will implement these strategies.

Additionally, the bill requires a transit-oriented community to submit a progress report to the department every 3 years.

After receiving a transit-oriented community's housing opportunity goal report, the department shall either approve the report or provide direction to the transit-oriented community for amending and resubmitting the report and require the transit-oriented community to resubmit the report. If a transit-oriented community does not submit a housing opportunity goal report to the department on or before December 31, 2026, or if the department does not approve a transit-oriented community's housing opportunity goal report, the department will designate the transit-oriented community as a nonqualified transit-oriented community. Similarly, if a transit-oriented community does not submit a progress report to the department every 3 years, or if the department does not approve a transit-oriented community's progress report, the department will designate the transit-oriented community as a nonqualified transit-oriented community.

The state treasurer shall transfer any money that a nonqualified transit-oriented community would have otherwise been allocated from the highway users tax fund instead to the transit-oriented communities highway users tax account (account). The department shall not use any money in the account that is attributable to a specific nonqualified transit-oriented community until 180 days after the transit-oriented community became a nonqualified transit-oriented community. If a nonqualified transit-oriented community no longer qualifies as a nonqualified transit-oriented community during that 180-day period, the treasurer shall issue a warrant to the transit-oriented community for the amount of money that was diverted from the transit-oriented community to the account.

If the department does not approve a transit-oriented community's housing opportunity goal report on or before December 31, 2027, the department may seek an injunction requiring the transit-oriented community to comply with the requirements of the bill.

In addition to designating an area as a transit center for purposes of meeting a housing opportunity goal, the bill allows local governments to designate an area as a neighborhood center so long as the local government ensures that the area:

• Has an average zoned housing density sufficient to increase public transit ridership;
• Has an administrative approval process for multifamily residential property development on parcels that are no larger than a size determined by the department;
• Has a mixed-use walkable neighborhood; and
• Satisfies any other criteria required by the department.

The bill also creates the transit-oriented communities infrastructure fund grant program (grant program) within the department. The purpose of the grant program is to assist local governments in upgrading infrastructure within transit centers and neighborhood centers. In administering the grant program, the department shall prioritize grant applicants based on the information in the reports described in the bill. Grants from the grant program are awarded from money in the transit-oriented communities infrastructure fund (fund). The fund consists of gifts, grants, and donations along with money that the general assembly may appropriate or transfer to the fund and money in the account described in the bill. The fund is continuously appropriated. On July 1, 2024, the state treasurer shall transfer $35 million from the general fund to the fund.

Section 2 prohibits a planned unit development resolution or ordinance for a planned unit development that is adopted on or after the effective date of the bill and that applies within a transit-oriented center or neighborhood center from restricting the development of housing more than the local law that applies to that transit-oriented center or neighborhood center. Section 3 states that any restriction by a unit owners' association within a transit-oriented center or neighborhood center on the development of housing that is adopted on or after the effective date of the bill and is beyond the local law that applies to that transit-oriented center or neighborhood center is void as a matter of public policy. Sections 4 and 5 require the Colorado housing and financing authority to allocate tax credits under the state affordable housing tax credit to qualified housing developments within transit centers. Section 4 increases the amount of the Colorado affordable housing tax credit by the following amounts:

• $8,300,000 for credits allocated in the 2024 calendar year;
• $6,300,000 for credits allocated in the 2025 and 2026 calendar years;
• $5,700,000 for credits allocated in the 2027 calendar year; and
• $5,000,000 for credits allocated in calendar years 2028 through 2031.

A taxpayer who receives a tax credit attributable to these increased amounts must claim 70% of the awarded credit amount in the first year of the tax credit period and then 6% of the awarded credit amount in the remaining 5 years of the tax credit period.

Section 5 creates the Colorado affordable housing in transit-oriented communities income tax credit (tax credit). The tax credit is a refundable tax credit and administered in the same manner as the Colorado affordable housing tax credit; except that the tax credit:

• Is awarded in connection with qualified low-income housing projects in transit-oriented communities that are not nonqualified transit-oriented communities;
• Must be claimed over a 5-year credit period; and
• Must be claimed in accelerated manner such that 70% of the tax credit is claimed in the first year of the credit period, 8% in both the second and third years of the credit period, and 7% in both the fourth and final years of the credit period.

The bill allows for the following tax credit amounts to be awarded:

• $8,600,000 for the 2025 calendar year;
• $7,200,000 for the 2026 calendar year;
• $5,600,000 for the 2027 calendar year;
• $5,000,000 for the 2028 calendar year; and
• $3,600,000 for the 2029 calendar year.

Section 6 reduces the amount of money transferred to the housing development grant fund by $35 million for state fiscal year 2024-25 and each state fiscal year thereafter.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)