To address the housing shortage in Colorado, Governor Jared Polis signed Executive Order D 2025 005 (“EO”). This EO, among other things, directs state agencies to determine whether Local Governments are compliant with recently passed strategic growth laws when awarding certain discretionary funding opportunities. To learn more about the EO, visit our recent blog post here.

On June 30, 2025, the Department of Local Affairs (“DOLA”) published their Compliance Guidelines. The guidelines provide the framework and criteria that will be used to determine each Local Government’s compliance status with HB24-1007, HB24-1152, HB24-1304, HB24-1313, SB24-174, HB25-1273, and SB25-002 (collectively, the “Strategic Growth Legislation”). As directed by the EO, DOLA published a comprehensive list (the “Compliance Dashboard”) on October 6, 2025, categorizing the Local Governments subject to the Strategic Growth Legislation as compliant, compliance-in-progress, or non-compliant with respect to each of the bills. In addition, $58 million was appropriated by the General Assembly to assist local governments in their efforts to become compliant.

DOLA has since reported a high rate of compliance and compliance-in-progress among Local Governments. In particular, 60% of Local Governments are in compliance, and 9% are in compliance-in-progress with HB24-1313 (incentivizing housing in transit-oriented communities). According to DOLA, the status of compliance-in-progress indicates that while the Local Government may not have met all the requirements of the Strategic Growth Legislation, a good faith effort to comply in a timely manner was made. In assessing whether a good faith effort has been made, DOLA considers the following factors: whether Local Governments have made use of DOLA guidance and templates; whether they are engaging with DOLA staff in receiving such guidance; and whether they have or are in the process of establishing mutually acceptable alternative timelines to meet the compliance standards.

Although compliance with SB24-174 (comprehensive plan to address sustainable affordable housing) is not due until December 31, 2026, sixty-seven Local Governments are already in compliance. Twenty-eight of those are in compliance by voluntarily participation, meaning that they are not subject to the requirements of SB24-174 but have chosen to follow the Compliance Guidelines in an effort to receive priority for funding programs that support local strategic growth work.

In contrast, DOLA saw the lowest levels of compliance with the requirements of HB24-1152 (accessory dwelling units). With only 9% of Local Governments currently listed as compliant and 73% listed as compliance-in-progress, there is still work to be done, but the high levels of participation indicate a willingness to work with DOLA in achieving satisfactory compliance.

There are currently 34 funding opportunities across multiple agencies that may be impacted by a Local Government’s compliance status. Notably, non-compliance with the Strategic Growth Legislation does not expressly prevent Local Governments from being eligible for these funding opportunities. Rather, Polis has stated that DOLA’s determinations will serve as a factor in grant prioritization.

DOLA’s Compliance Dashboard can be found here and will be updated quarterly in accordance with the requirements of the EO.

After several years of high sublease activity, Denver’s office market is showing signs of stabilization.  According to Cushman & Wakefield’s Q3 2025 Denver Office MarketBeat, total sublease availability in Metro Denver in Q3 2025 declined by 2.5% from Q2 and 5.4% year-over-year.  While overall vacancy remains high at 26%, this represents a meaningful slowdown in sublease listings since 2022.  The slowdown reflects a combination of expiring leases, direct leases replacing sublet space, and a modest return of corporate office demand.

Nationally, similar patterns are emerging.  Microsoft’s recent decision to pull approximately 480,000 square feet off the sublease market near its Redmond, Washington, campus after implementing a stricter in-office work policy highlights a potential reversal among large tenants.[1]  Similar mandates at Amazon, Google, and Salesforce, reflect a broad reassessment of workplace strategy that could ripple through markets like Denver.

For Denver landlords, this shift presents an opportunity to refine lease provisions that define who truly controls the space when corporate needs shift.

  1. Recapture Rights.  Recapture rights remain one of the most effective tools for landlords managing sublease requests.  By maintaining the ability to reclaim all or part of the space proposed for sublease, landlords can re-lease directly to a new tenant at current market rates, protect overall building value, and prevent below-market sublease deals from setting unfavorable comparables.
  2. Renewal Options.  Landlords should structure renewal options to ensure they are personal to the original tenant and do not automatically transfer to a subtenant or assignee without landlord’s consent.  As tenants sublease or reorganize portions of their space, these renewal clauses can become points of contention.  Limiting renewal rights to the original tenant allows landlords to reassess creditworthiness, market rent, and space utilization before committing to another term.
  3. Early Termination.  Landlords should take a close look at early termination provisions.  As hybrid work policies continue to evolve, tenants increasingly request termination flexibility, but these clauses must be drafted with precision.  Clear notice periods, termination fees, and restoration requirements help ensure that landlords are compensated for lost rent and that returned premises are in marketable condition.

Collectively, these three provisions can significantly influence a landlord’s ability to manage risk and capture upside in a changing leasing environment.  As Denver’s office market moves from contraction toward gradual stabilization, landlords who approach lease negotiations with this strategic mindset will be better positioned to protect asset value and respond quickly to the next market shift.

[1] https://www.costar.com/article/1777421789/microsoft-pulls-sublease-listings-as-it-ramps-up-office-requirements

The National Zoning Atlas (NZA) team is digitizing, demystifying, and democratizing information about zoning conditions in more than 33,000 jurisdictions in the United States.  Fully comprehending the zoning conditions of a particular state, and therefore housing and development opportunity, is often stifled by lack of standardization.  Which jurisdictions have the authority to exercise powers is typically delegated through state statutes, commonly referred to as “enabling acts.”  In Colorado, the state enabling acts grant both counties and municipalities zoning authority, resulting in 334 current zoning jurisdictions statewide with 59 declining to exercise such authority.  Across these jurisdictions terminology varies for common regulatory tools.  For example, how much “open space” is required in connection with development depends not only upon the jurisdiction’s land area requirement, but how the jurisdiction defines “open space.”  And, with respect to uses, there is variation in how many dwelling units qualify as “multifamily”.

The NZA recognized the restraint on sound policymaking that these inconsistencies presented, not only in Colorado but across the country, and therefore sought to collect and standardize zoning code data in an effort to provide comprehensive state-level zoning information.  In reviewing Colorado’s zoning codes, the NZA logged the characteristics of 4,139 zoning districts.  The information collected includes the regulations on uses, including those related to accessory dwelling units and affordable and age restricted housing types, regulations on lots, and regulations on buildings, as well as procedural requirements in connection with development approvals.  Notably, the NZA found that 16 Colorado jurisdictions that have zoning codes, do not make those codes public nor was the NZA able to gain access after repeated requests.

With the information available, the NZA made the following key findings:

  1. Most Colorado jurisdictions have zoning.
  2. Land is predominantly zoned for single-family housing, and multifamily housing over three units is prohibited on two-thirds of residential classified land.
  3. Minimum lot size mandates are widespread with 93% of residential land in Colorado requiring minimum one-acre lots.
  4. Parking mandates exist on 85% of residential land. *Notably, the NZA conducted Colorado research prior to House Bill 24-1304 being signed into law.
  5. Accessory dwellings are often banned or very difficult to build. *Notably, the NZA conducted Colorado research prior to House Bill 24-1152 being signed into law.

The full Zoning Report: Colorado by Sara C. Bronin, Scott Markley, Matthew Harris, Diana Drogaris can be found here.

*See our Alert 2024 Land Use and Housing Legislation Taking Shape for more information on House Bill 24-1304 and House Bill 24-1152.

Denver’s Department of Housing Stability (“HOST”) and Denver Housing Authority (“DHA”) are partnering to pilot a program aimed at spurring development of middle-income housing.  As reported in the Denver Post, Denver Mayor Mike Johnston has described the pilot program as a way for the city to promote the development of housing units for people with annual incomes between $60,000 to $100,000.

The program will offer property tax rebates and exemptions for developers who commit to building deed restricted apartment units affordable to households earning less than 100% of the area median income (“AMI”).  As a part of the program, DHA will enter into the ownership structure of each project as a special limited partner.  The program, a sort of parallel to an existing DHA program that involves projects for people making no more than 60% of AMI, aims to include about five projects or approximately 500 units in the first phase, according to Dr. James Rife with HOST.

Note that these projects will also be subject to the City’s new Expanding Housing Affordability policy (“EHA”), meaning that the projects will be eligible for the related incentives and that the units within the project subject to the EHA policy must be deed restricted for 99 years.  The deed restrictions on all other units must have a term of at least 30 years.

To be eligible, projects must be new construction that would not be financially feasible without a property tax exemption for at least the first five years as demonstrated by a projected debt service coverage ratio of less than 1.2 without the exemption.  The proposed length of the tax exemption must be less than 15 years (with the intended term being 10 years).  Additionally, financial closing must be achieved by the end of 2026.

HOST will give preference to projects that are:

•           Transit-Oriented Communities, as defined by C.R.S. § 29-35-202(11);

•           located in Neighborhood Equity and Stabilization (“NEST”) neighborhoods; and

•           aligned with Denver’s affordable housing priorities.

Additional requirements apply. Go to HOST’s website for more information, including a complete list of eligibility requirements, a timeline for the program, and the required documentation to include with a letter of intent.

Denver will accept letters of intent between July 15, 2025, and August 15, 2025.  Following the letter of intent deadline, HOST enters a “quiet period” to ensure awards are based on the merits of the project. Then, in September, HOST and the DHA will announce projects invited to submit applications and enter underwriting. 

Following this solicitation cycle, the city will assess whether an additional winter solicitation cycle is necessary to meet program goals.

Read more about the launch of the program from CBS News and the Denver Post.

Several Colorado municipalities have sued the state challenging the constitutionality of landmark zoning reforms enacted in 2024.  The lawsuit specifically concerns two new laws passed by the legislature and one executive order issued by Governor Polis related to those measures.  The first law, HB 24-1313, is aimed at increasing housing density around transit.  Under the law, certain cities and counties that meet the definition of a “transit-oriented community” based on their population and proximity to transit (commuter rail, light rail, and high frequency bus lines, or “bus-rapid transit”) must ensure that their zoning laws allow for a certain minimum housing density near transit.  The other law, HB 24-1304, prohibits municipalities or counties that fall within one of Colorado’s five Metropolitan Planning Organizations from enacting or enforcing parking requirements at multifamily residential developments and adaptive re-use residential developments that are within one-quarter mile of certain transit stops.  Lastly, in May of this year, Governor Polis signed Executive Order D 2025 005, which prioritizes the awarding of discretionary grant funding towards localities that comply with the state’s housing reforms.

The lawsuit, filed in Denver District Court, was brought by Greenwood Village, Arvada, Aurora, Glendale, Lafayette, and Westminster, all home-rule cities under Article XX, § 6 of the Colorado Constitution.  Under that provision, cities of at least two thousand people may enact a home-rule charter that supersedes state law on all “local and municipal matters.”  The plaintiff cities allege that land use and zoning are matters of exclusive local concern and that, accordingly, HB 24-1313 and HB 24-1304 are unconstitutional and void within their boundaries.  (For further discussion of this issue and HB 24-1313 generally, see our alert from April.) Furthermore, the cities argue that both HB 24-1313 and HB 24-1304 violate Article II, § 11 of the Colorado Constitution.  That provision prohibits laws that impair the obligations of contracts or that are retrospective in their application.  The suit maintains that the laws are constitutionally problematic in this regard because they invalidate existing development agreements between certain cities and developers.

The suit also alleges that HB 24-1313 specifically is unconstitutional for two other reasons.  First, it argues that the law violates due process by limiting the plaintiff cities’ abilities to allow for public hearing on new developments.  Next, it contends that the law violates the plaintiff cities’ duty to provide for referendum and initiative pursuant to Article V, §1(9) of the Colorado Constitution because it contains no allowance for deviation from its requirements in the event a referendum or initiative voids local legislation designed to implement HB 24-1313.

Lastly, the suit alleges that the governor’s executive order exceeds his authority because it imposes criteria in the award of grant funding beyond what is contemplated under state and federal law.