On August 27, 2026, updated rules and regulations governing Denver’s Energize Denver Building Performance Policy (the “2026 Rules”) went into effect. The 2026 Rules implement ordinance amendments approved by Denver City Council on May 18, 2026. Since then, a federal court challenge to Energize Denver has moved forward and at least one major multifamily lender has begun to underwrite for Energize Denver compliance. This post is a brief overview of these developments; for more information, please contact Otten, Johnson, Robinson, Neff & Ragonetti, P.C., or visit the Energize Denver Building Performance Policy Rules and Technical Guidance page.

Otten Johnson has previously published two alerts on these topics. Our January 2023 Alert provides a guide to Colorado’s statewide building performance standards under C.R.S. § 25-7-142 and Regulation 28, and our September 2025 Alert summarizes the April 2025 Energize Denver rules, including which buildings are covered, benchmarking requirements, timeline and target adjustments, and penalties. Readers looking for background on how the program works should start with those alerts. This post focuses only on what has changed since September 2025.

The 2026 Rules finalize the compliance options developed over several years of stakeholder outreach. According to the City, the 2026 Rules address four main areas:

1.     Timing Changes. The 2026 Rules provide clarity and flexibility around compliance deadlines. For example, owners may now obtain a timeline extension through the end of 2036 where building system upgrades must be aligned with existing capital planning cycles (or through the end of 2035 for buildings limited by the district steam loop system), with applications due by December 31 of the original target year.

2.     Planning Improvements. The 2026 Rules clarify compliance pathways and flexibility for buildings with unique circumstances (such as qualifying financial distress, lease termination timing, redevelopment plans and changes of ownership) which can support a 24-month delay without penalties. Notably, the 2026 Rules lower the debt-service coverage ratio threshold for “Financial Solvency Concerns” from 1.5 to 1.25 and provide that once the circumstance requiring the hold ends, the building returns to its original timeline unless the owner applies for a timeline extension.  Owners and buyers should confirm whether any such approved delay remains in place or is available for a building.

3.     Alternate Compliance Options. The 2026 Rules implement compliance options requested by the building community.  The 2026 Rules now provide a “Historical and Unique Building Target Adjustment,” under which the owner of a building on Denver’s Historic Landmarks and Districts’ list or the National or Colorado State Register of Historic Places may apply for an adjusted 2030 target by submitting an energy audit and supporting documentation, after which the Climate Action, Sustainability and Resiliency office will meet with the owner to propose an adjusted target.

4.     Enforcement Clarity. The 2026 Rules add transparency around enforcement options and processes.

Separately, Energize Denver was approved for “deemed compliance” status under the State’s building performance program in January 2026, under HB25-1269. This means owners of Denver buildings that also meet the State’s 50,000-square-foot threshold should be able to rely on Energize Denver compliance to satisfy the State program.  That is a meaningful change from the dual-compliance picture described in our January 2023 Alert.

Notably, Energize Denver and Regulation 28 are also the subject of a pending federal lawsuit brought by commercial property groups. The plaintiffs argue that the federal Energy Policy and Conservation Act (“EPCA”) preempts both rules. In August 2026, a federal magistrate judge recommended that the lawsuit be allowed to proceed. On October 2, 2026, the district judge allowed the plaintiffs’ claims against Denver’s building performance standards to continue, while dismissing the challenge to Denver’s appliance rules. The United States intervened in September 2026, taking the position that the rules violate federal authority. (This case should not be confused with a separate challenge to Denver’s Energy Code, which governs new construction and permitted modifications rather than existing buildings.)

Until the court finally resolves the Energize Denver litigation, the 2026 Rules remain in effect and enforceable. Owners should not pause or abandon compliance planning, energy audits, or capital improvement work on the assumption that the litigation will succeed.

The market is also beginning to integrate Energize Denver compliance into pricing. In a June 23, 2026, Guide Bulletin, Freddie Mac added requirements to its Multifamily Seller/Servicer Guide for properties subject to Energize Denver. Borrowers financing Denver multifamily properties should expect lenders to ask about benchmarking status and compliance plans during underwriting. Borrowers may also face reserve or escrow requirements if a property is not on track. Buyers should consider requesting Energize Denver compliance information from sellers early in due diligence, so that financing is not delayed. Otten, Johnson, Robinson, Neff & Ragonetti, P.C. attorneys regularly advise building owners, buyers, lenders and associations on Energize Denver compliance and related transactional matters and are happy to discuss these developments in more detail.

On April 22, 2024, several trade associations representing Denver landlords (the “Plaintiffs”) sued the State of Colorado, the City and County of Denver, and other related entities (collectively, the “Defendants”) in federal court, challenging a state statute and the Energize Denver Ordinance, which together impose a collection of energy efficiency requirements for commercial buildings (the “Efficiency Regulations”). The amended complaint can be found here. The Plaintiffs claim the Efficiency Regulations are preempted by the federal Energy Policy and Conservation Act (the “EPCA”), which grants the Department of Energy authority to regulate the energy efficiency of certain consumer and industrial appliances – formally known as “covered products” and “covered equipment”. Plaintiffs argue the Efficiency Regulations effectively force them to replace gas-powered equipment, covered in the EPCA, with more efficient electric-powered equipment to meet a building’s required efficiency target. For more information on efficiency targets, see Otten Johnson’s July 2023 Alert. Another complaint alleging similar issues was filed on July 3, 2024, by national trade associations and can be found here.

Initially, the United States District Court dismissed the case for failing to allege a non-speculative injury, but allowed the Plaintiffs to amend the complaint. On June 10, 2025, the Plaintiffs filed their amended complaint, and, again, the Defendants moved to dismiss. Briefing on this Motion to Dismiss concluded on November 25, 2025, and the Court has yet to rule on the motion. The Public Health Law Center at Mitchell Hamline School of Law is tracking the status of this case and providing updates on its Litigation Tracker Page.

Notably, on June 18, 2026, the Department of Justice (the “DOJ”) filed a Notice of Potential Participation stating that the case presents questions of interest related to the preemptive scope of the EPCA. However, the DOJ indicated it would only intervene if the proceedings continued past the pending motion to dismiss.

The DOJ’s involvement may bolster the Plaintiffs’ preemption claim, which relies on the Ninth Circuit Court’s decision in California Restaurant Association v. City of Berkeley in which the Court determined that the City of Berkeley’s regulation was preempted by the EPCA. 65 F.4th 1045 (9th Cir. 2023). However, the Ninth Circuit’s decision is not binding on the Tenth Circuit, and the Defendants distinguish this case because Berkeley’s regulation directly prohibited the installation of natural gas connections, as opposed to the Efficiency Regulations, which regulate a building’s efficiency in totality. The Defendants also note that federal courts in two separate districts in New York declined to follow the Ninth Circuit’s holding. In each case the court considered whether a ban on the use of fossil fuels in newly constructed buildings was preempted by the EPCA. The courts found, in both cases, that the ban was not preempted because it regulated the type of energy used, not the amount of energy output by a particular appliance covered by the EPCA.

The Defendants continue to assert that (1) the Plaintiffs never utilized any of the timeline or target adjustment tools available, which would have allowed the Plaintiffs greater flexibility in hitting the energy efficiency target, and (2) there is no current injury to the Plaintiffs and any future injury to the Plaintiffs would be caused by a refusal to utilize adjustments. However, the Plaintiffs counter that the adjustments only prolong the inevitable expenses caused by the Efficiency Regulations. Lastly, there is an ongoing dispute with respect to commencement of the two-year statute of limitations to file a complaint regarding new building requirements.

This issue is ongoing and Otten Johnson will continue to monitor developments in this case.

In an effort to curb money laundering in residential real estate transactions, the Financial Crimes Enforcement Network (“FinCEN”) enacted the Anti-Money Laundering Regulations for Residential Real Estate Transfers rule (the “Rule”), which imposes extensive reporting requirements for certain non-financed residential real estate transactions.  This post provides a high-level overview of the Rule and discusses a recent federal case that struck down the Rule as exceeding the authority granted to FinCEN by the Bank Secrecy Act (the “BSA”).

The Rule’s Enactment and History

FinCEN is a bureau of the U.S. Treasury tasked with enforcement of the BSA, which requires financial institutions to maintain records that are useful for the detection and prevention of money laundering.  Stating that illicit use of residential real estate threatens economic and national security, FinCEN promulgated the Rule in 2024, imposing extensive reporting requirements for non-financed residential real estate transactions where ownership is transferred to an entity or trust (with limited exceptions). 

Legal Challenge of the Rule in Flowers Title Companies v. Bessent

Flowers Title Companies (“Flowers”) filed suit challenging the Rule as unlawful under the Administrative Procedure Act.  On March 19, 2026, the U.S. District Court for the Eastern District of Texas (the “Court”) ruled in Flowers Title Companies, LLC v. Bessent that the Rule exceeded FinCEN’s statutory authority under the BSA.

In response to Flowers’ challenge, FinCEN argued that two provisions of the BSA authorized its promulgation of the Rule: (1) 31 U.S.C. § 5319(g)(1), which authorizes FinCEN to require reporting of “any suspicious transaction”; and (2) 31 U.S.C. § 5319(g)(2), which permits FinCEN to require financial institutions to “maintain appropriate procedures, including the collection and reporting of certain information.”  The Court rejected both of these arguments.  First, it held that FinCEN is authorized to regulate “only those transactions that tend to arouse the belief that something is wrong” and FinCEN provided no persuasive explanation for its determination that the entire category of non-financed residential real estate transactions meets this definition.  The Court agreed with Flowers that there are “myriad legitimate reasons” an individual would purchase property without financing and “there is nothing unusual about an investor creating [an incorporated entity] to acquire and hold real estate.” 

Second, the Court held that 31 U.S.C. § 5319(g)(2) does not authorize FinCEN to impose substantive obligations on financial institutions to report information.  Explaining that “reporting” is ordinarily not a “procedure” but rather “the substantive act of giving an account or making a record,” the Court ruled that this section of the BSA authorizes FinCEN to “require institutions to maintain procedures including maintaining collection and reporting procedures.”  However, the Rule vastly expands this requirement, and FinCEN’s proposed interpretation of this statute “smuggles expansive reporting authority into a provision that is focused on procedures.”  Therefore, the Court entered judgment in Flowers’ favor and issued an order that the Rule be vacated under 5 U.S.C. § 706(2).

Impact of the Order on Enforcement of the Rule FinCEN has announced that it will appeal the Flowers decision to the 5th Circuit Court of Appeals.  Even though another federal court in Florida reached the opposite conclusion, the order vacating the rule applies throughout the country pending the appeal.  FinCEN has issued an alert stating that reporting entities who do not file reports required under the Rule while the Court’s order remains in effect will not be subject to liability.

Congress has passed 21st Century ROAD to Housing Act, HR 6644.  The bill contains dozens of provisions to address America’s ongoing housing affordability crisis.  Chief among the provisions is Title X, Home-Ownership for Main Street America, which institutes a 15-year ban on Large Institutional Investors from purchasing “or enter[ing] into a contract to directly or indirectly purchase” single-family homes.

Because a “Large Institutional Investor” is, by definition, an entity that owns or controls 350 or more single‑family homes, this prohibition functions as a cap on the number of homes such entities can own or control and imposes financial penalties on investors who exceed that limit. However, several types of purchases are excepted, as described below.

Violations of this prohibition can trigger civil penalties of up to $1,000,000 per violation or three times the purchase price of the subject property, whichever is greater.

Key Definitions

  • Large Institutional Investor

The bill defines a “Large Institutional Investor” as a for‑profit legal entity that is “in the business of investing in, owning, renting, managing, or holding single-family homes” (in whole or in part) and controls 350 or more single-family homes in the aggregate. This definition applies whether the entity works alone or in concert with other entities to control such homes.  To control a single-family home means that the entity either owns or generally controls the property, and the bill describes a broad array of qualifying activity. For example, such control can be established by owning or controlling (directly or indirectly) the general partner or managing member of the entity that owns the home, owning more than 25 percent of equity interests in the entity that owns the home (with an exception for passive investors), controlling the manager, management company, or investment advisory of the owner entity, or being the owner, or having primary authority or fiduciary responsibility to make material investment or management decisions relating to, the single‑family home, among others.

  • Single-Family Homes

The bill defines a single‑family home as “a structure that contains 2 or fewer dwelling units that are each intended for residential occupancy by a single household” but does not include manufactured homes.

  • Purchase

Note that the prohibition on purchases of single‑family homes by Large Institutional Investors is also broad and includes “any purchase, transfer, or other acquisition of single family homes, including through mergers, acquisitions, construction, foreclosures, or bulk purchases, whether or not for cash consideration.”

Exceptions

The bill includes several purchases that do not count towards the 350‑home cap, such as certain build-to-rent programs, certain renovate-to-rent programs, homes operated as part of a 55+ community, and homes acquired from other Large Institutional Investors that owned the property at enactment or who acquired it compliantly.  The bill also allows for “purchases” in connection with a foreclosure, a deed-in-lieu of foreclosure, enforcement of mortgages and other security interests, and similar circumstances so long as the action is “not as a long-term investment strategy.”  Additional exceptions apply, and we recommend any entity that may fall into the category of Large Institutional Investor carefully review the exceptions in connection with an assessment of their portfolio.

What Happens Next?

Following Congress’s passage of the bill, the President has initially refused to sign the bill until the SAVE Act is enacted—⁠thrusting the bill’s fate back into flux.  However, after the President receives the bill, the bill will automatically become law 10 days later unless the President formally vetoes the measure.

If enacted, the Large Institutional Investors provision becomes effective 180 days later.  Additionally, by December 31st, (and every year thereafter) all Large Institutional Investors must comply with certain reporting requirements regarding the number and location of the single-family homes it controls.

The Colorado General Assembly has recently passed (and the Governor signed into law) Senate Bill 26-001, “Workforce Housing & Housing Tax Credit”, with the intent of increasing financial flexibility and county authority to promote workforce housing, low-income housing, and general housing needs.

SB 26-001 grants a board of county commissioners the power to sell any public building or real property, with the exclusion of public parks, for the purposes of developing housing.  This is intended to provide greater flexibility for counties when selling their property and to provide counties additional funds for housing developments.  In particular, under SB 26-001, counties now have the power to appropriate property tax revenue, county general funds, and other specified funds, towards housing programs.  This removes the prohibition under prior law on using property taxes for housing, opening up previously inaccessible funds to necessary housing projects.

The bill also authorizes governmental or quasi-governmental entities to transfer what is known as the middle-income housing tax credit to any income taxpayer that has acquired credits for the development of affordable housing.  The middle-income housing tax credit provides an income credit for housing developments that serve households whose income is between 80% and 120% of the area’s median income.  Under current law, the Colorado Housing and Finance Authority may allocate the tax credit to any governmental or quasi-governmental entity, who may in turn transfer the credit only to taxpayers with an ownership interest in a qualified development.  This new bill removes the ownership interest requirement, increasing taxpayer eligibility for the credit.

Under the new law, a county may also enter into long-term rentals or leasehold agreements. This expands governmental authority and opportunities for developing affordable housing or housing identified in a needs assessment developed by the county.

The law also provides that construction and building materials are exempt from taxation for projects involving highways, roads, streets, workforce housing, and other public works owned and used by governmental entities.

SB 26-001 was signed into law on March 26, 2026, and will take effect 90 days after the adjournment of the Colorado General Assembly on May 16, 2026 (August 14, 2026), unless a referendum petition is filed.  The changes to the middle-income tax credit will take effect January 1, 2027.

This bill is one in a series of efforts by the Colorado General Assembly this session to encourage housing development.  The “Housing Opportunities Made Easier ‘HOME’ Act” (HB 26-1001) also signed in March of this year allows nonprofits, schools, universities, housing authorities, or regional transit authority to bypass local planning processes to build affordable residential housing on their land. In addition, HB 26-1065, signed in May, allows local governments to create transit and housing authority investment zones.  These zones can utilize state sales tax increment financing and tax credits to support relevant projects.