What Local Governments Need to Know at the close of CO’s Legislative Session

The Colorado General Assembly passed numerous laws affecting public entities during the 2026 legislative session. This article highlights some of the new laws concerning affordable housing, transit and affordable housing, and homelessness. These laws are found in HB26-1001, HB26-1065, HB26-1202, HB26-1239, HB26-1313, and SB26-001, each of which is summarized below. Public entities should read these bills in their entirety and consult with an attorney, as many of these new laws are detailed, complex, and must be carefully studied and understood prior to implementing them.

New Laws Impacting Public Entities

HB26-1001: Housing Developments on Qualifying Properties 

HB26-1001 is known as the Housing Opportunities Made Easier (HOME) Act. Under the new law, a subject jurisdiction (i.e. a local government with a population greater than 2,000 people as of the last United States census) must allow a residential development to be constructed on a “qualifying property” if the qualifying property does not contain an exempt parcel beginning on December 31, 2027. However, if on December 31, 2027, the subject jurisdiction is in the process of updating its zoning or development code to comply with the new law, it has until June 31, 2028 to meet the requirements of the HOME Act. In addition, a subject jurisdiction is not required to allow a residential development on a qualifying property if the subject jurisdiction implements a transferable development rights (TDR) program on the qualifying property and the TDR program includes a policy for affordable resident housing that is restricted in ownership and occupancy in perpetuity by a deed restriction, covenant, or other statutory mechanism found in Colo. Rev. Stat. § 29-35-103(16)(b).

“Qualifying property” is defined to mean real property that contains no more than five acres of land and is:

• Owned by a school district, state college or university, board of cooperative services, housing authority, local or regional transit district or a regional transportation authority, nonprofit organization with a demonstrated history of providing affordable housing, or certain nonprofit organizations;
• Not adjacent to another qualifying property containing five or less acres that was part of a subdivision process that occurred within the past five years; and
• Within a municipality or a portion of a county that is within a census designated place with a population of five thousand or more that is also within a three-mile area extending in any direction from any point in a municipality as described in Colo. Rev. Stat. § 31-12-105(1)(e)(I).

The HOME Act identifies exempt properties, clarifies that it is not intended to prevent a subject jurisdiction from applying and enforcing a delineated list of state and local laws, and sets forth a detailed list of allowable uses on qualifying properties. The new law also requires that the Department of Local Affairs publish guidance to assist subject jurisdictions in verifying certain statutory requirements related to nonprofit organizations.

HB26-1001 takes effect immediately and is codified at Colo. Rev. Stat. §§ 29-35-103 and 29-35-501 to 29-35-506.

HB26-1065: Transit and Housing Investment Zones

HB26-1065 is known as the Transit Investment Area Act. Beginning on January 1, 2027, the new law allows a local government or group of local governments alone or in partnership with a transit agency within a proposed transit investment area to jointly undertake a transit investment project. The Transit Investment Area Act sets forth detailed rules relating to project applications, financing, approved financing entities, transit investment authorities, hiring, apprenticeship, and workforce standards. Notably, financing entities are authorized to receive state sales tax increment revenue and issue bonds to finance eligible improvements. Based on detailed statutory requirements, the Colorado Office of Economic Development (OED) must designate transit and housing investment zones. In consultation with the Department of Local Affairs and the Department of Transportation, the OED must also publish a transit and housing investment zone map on or before October 30, 2026.

The Transit Investment Area Act also creates the Colorado Affordable Housing in Transit and Housing Investment Zones Tax Credit, which is to be used to incentivize development of affordable housing projects in transportation and housing investment zones.

HB26-1065 takes effect immediately and is codified at Colo. Rev. Stat. §§ 24-46-401 to 24-46-409, 24-35-124, 24-48.5-136, 29-1-102, 30-31-116.5, 31-25-117, 32-1-1010, 39-21-113, 39-22-5701 to 39-22-5708, and 39-26-901.

HB26-1202: Strategy to Reduce & Prevent Homelessness

HB26-1202 has three key features. First, it requires the Colorado Department of Local Affairs to submit and present a proposal in compliance with multiple statutory requirements for the development of a statewide strategy on homelessness prevention and resolution as part of its SMART Act hearing in January of 2027. Second, the new law allows local governments to enter into intergovernmental agreements with one another to create a Multijurisdictional Homelessness Response Authority, which is a new type of governmental entity. HB26-1202 includes detailed provisions related to the intergovernmental agreements, as well as the purpose and powers of these new entities. Third, the new law allows counties to designate a portion of certain documentary filing fees to be transferred to the county government or housing authority for the purpose of developing, preserving, or acquiring affordable housing that meets certain criteria.

HB26-1202 takes effect on August 12, 2026,* and is codified at Colo. Rev. Stat. §§ 24-32-3901, 24-32-3902, 29-1-204.7, and 39-13-102.

HB26-1313: Adjust Requirements Statewide Affordable Housing Fund

HB26-1313 changes the requirements for local and tribal governments receiving funding from the statewide affordable housing fund.

Under the new law, a local government desiring to receive funding is no longer required to increase affordable housing units by 3% each year. Instead, beginning on January 1, 2027 and each 3-year cycle after that date, a local government must meet a target increase number of affordable housing units. HB26-1313 sets forth different formulas to determine the target increase number based on average annual job growth rate thresholds in the county where the local government is located and provides the Department of Local Affairs (DOLA) with criteria for determining whether a local government has achieved the target increase number. DOLA is also required to establish specific numerical ranges for the job growth rate thresholds. Local governments who fail to meet the target increase number in a 3-year cycle may seek a waiver from DOLA subject to certain parameters. Waivers for the 2024 cycle must be filed between June 15, 2026 and October 31, 2026.

In addition, when affordable housing is developed and the county did not provide any money to develop the affordable housing, DOLA may, in its discretion, allow housing units used to calculate the target increase number to count as up to 1.15 affordable housing units for the county at the time of vertical construction.

Applicable to tribal governments, the new law provides that to be eligible for direct funding or for affordable housing projects within a tribal government’s territorial boundaries to be eligible for funding, tribal governments are required to implement a system to expedite the development approval process for affordable housing projects and submit evidence to DOLA establishing that it has been done.

HB26-1313 takes effect immediately and is codified at Colo. Rev. Stat. §§ 29-32-102, 29-32-104, and 29-32-105.

SB26-001: Workforce Housing & Housing Tax Credit

SB26-001 allows counties and municipalities to sell and dispose of property owned by them to provide affordable housing and allows a municipality to enter into a long-term rental or lease agreement for the development of affordable housing. Under the new law, multijurisdictional housing authorities may now be approved during a general election and may be combined with a question about a tax, impact fee, multiple-fiscal year debt, or other financial obligation. The new law also allows a county to use ad valorem tax revenue for housing authorities, housing programs, and workforce housing.

In addition, SB26-001 provides that an entity subject to income tax to which a middle-income housing tax credit is transferred by a governmental entity or quasi-governmental entity may claim the credit without owning an interest in a qualified project.

Under existing law, a sales and use tax exemption applies to all sales of construction and building materials to contractors and subcontractors for use in the building, erection, alteration or repair of structures, highways, roads, streets, or other public works owned and used by the federal government or the state government or its political subdivisions acting in their governmental capacities. Applicable to contractors, SB26-001 clarifies that the definition of “governmental capacities” includes the building, erection, alteration, or repair of structures for workforce housing projects undertaken by counties.

SB26-001 takes effect on August 12, 2026,* except for the minor amendments related to recapture of credits found in Colo. Rev. § 39-22-5404, which take effect on January 1, 2027. The new law is codified at Colo. Rev. Stat. §§ 30-25-202, 31-15-713, 31-15-801, 29-1-204.5, 30-11-107, 39-22-5402, 39-22-5404, 39-24-5405, and 39-26-708.

Our Team

BHGR’s Public Entity Group counsels and defends public entities in state and federal courts on all aspects of local government law, including land use and zoning law, affordable housing, complex and competing land use regulations, and civil rights.