Colorado’s New Property Tax, Protections for Tenants Become Law

The price of housing has been top of mind for Colorado legislators and residents for the past several years, and this year’s legislative session was no different. Property taxes were a focal point for legislators at the start of the 2024 session, convened just over a month after a November 2023 special session to address the failure of a property tax ballot measure. 

But property tax wasn’t the only focus of the session. Legislators also worked to create new protections and rights for tenants and to increase the supply of affordable housing in the state. 

Changes to Property Tax 

Lawmakers, after working all session to come up with a new property tax compromise, introduced Senate Bill 24-233 in the final days. It took less than 10 days to become law, and will go into effect in the 2025 property tax year. 

The new law creates a limit on specified property tax revenue for local governments, with certain carveouts. The limit imposed by the legislature is equal to the local government’s base year qualified property tax revenue, with a 5.5% increase each year since the base year, including the relevant property tax year. The limit may be waived with voter approval. 

If the revenue exceeds the limit, the local government is required to establish a temporary tax credit that would equal the number of mills necessary to bring them under the limit. 

On the commercial property side, the bill lowers the valuation for assessment each year through 2027. Beginning in 2024, the valuation drops from 29% of the actual value of the property to 27.9% of the amount equal to the actual value minus the lesser of $30,000 or the amount that causes the valuation for assessment of the property to be $1,000, which is the alternate amount. In 2025, it drops to 27%, in 2026 to 26% and in 2025 and beyond to 25%. 

The bill also reduces the tax liability for residential property valuation using a similar formula. To make up for the lost revenue to local governments, the bill also establishes a reimbursement mechanism for certain local government entities. 

New Protections for Tenants 

In a measure aimed at creating more housing security for renters, House Bill 24-1098 now requires a cause for eviction of residential tenants in Colorado, with certain exceptions. The bill defines cause as existing if a tenant or lessee is guilty of unlawful detention of real property under circumstances described in existing law, as amended in the bill, if a tenant has engaged in conduct that creates a nuisance or disturbance that interferes with the quiet enjoyment of the landlord or other tenants at the property or where the tenant is negligently damaging the property or conditions exist constituting grounds for a “no-fault eviction.” 

In a case where a landlord proceeds with an eviction without cause, a tenant may seek relief and may assert the landlord’s violation as an affirmative defense to an eviction proceeding. 

Residential tenants will also have more rights to safe housing if the governor signs SB24-094. The bill clarifies what actions constitute a breach of habitability and the procedures for both landlords and tenants when a claim is alleged. 

In addition to the breach of habitability updates, the bill establishes legal standards and court procedures related to those claims. One of those is the authorization of a tenant to raise a breach of habitability as an affirmative defense against a landlord’s action for possession or action of collection against the tenant. 

Efforts to Produce More Affordable Housing

Several different bills with the intent to create more affordable housing for Coloradans succeeded in the legislature. One of the first to get through, HB24-1007, prohibits local governments from enacting or enforcing residential occupancy limits based on familial limits.

Accessory dwelling units are now broadly allowed in Colorado after HB24-1152 became law. ADUs, while allowed, will still be subject to an administrative approval process conducted by the subject jurisdiction. 

Two bills, HB24-1175 and HB24-1308, aim to expand the affordable housing supply and help with the implementation of affordable housing programs, respectively. 

HB24-1175 gives local governments a right of first refusal and a right of first offer for certain types of multifamily rental properties. The right of first offer is temporary and expires on Dec. 31, 2029. But the right of first refusal is subject to a commitment from the local government to use the property as long-term affordable housing. 

HB24-1308 will change the affordable housing application process, requiring the Division of Housing to accept applications for affordable housing once a quarter. It also adds a requirement to publish final decisions on applications or submit them to the board of housing for a final decision within 45 days of their submission. Within 30 days of an application’s approval, the division is also required to provide a draft contract to the applicant. 

A significant bill for many local governments across Colorado is HB24-1313. The bill establishes a new category of local government, a transit-oriented community. This new category will be required to meet a housing opportunity goal, which the bill defines as a zoning capacity goal based on the average zoned housing density and the amount of transit-related areas within a transit-oriented community. 

The bill comes with a carrot and stick, in the form of government funding. For transit-oriented communities that have their housing opportunity goal approved, they will have access to funding from the transit-oriented communities highway users tax account and the transit-oriented communities infrastructure fund grant program.

But for transit-oriented communities who don’t submit a plan, don’t have their plan approved or don’t submit a progress report every three years, the state treasurer will transfer any money they would have been otherwise allocated from the highway users tax fund to the transit-oriented communities highway users tax account. 

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