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.

On May 16, 2025, Governor Jared Polis signed Executive Order D 2025 005 (“Order 005”) to address implementation of recently-passed strategic growth legislation.  As discussed below, Governor Polis has ordered certain state agencies to consider whether municipalities are compliant with the requirements of seven laws when awarding millions of dollars of discretionary funding.  Three days after Order 005 was signed, seven Colorado cities filed a lawsuit challenging the order, arguing it exceeds the Governor’s authority.  

Order 005 sets forth guidance to State agencies and local governments in furtherance of the following laws, enacted to address the statewide housing shortage: HB24-1007 (prohibiting residential occupancy limits), HB24-1152 (accessory dwelling units), HB24-1304 (minimum parking regulations), HB24-1313 (housing in transit-oriented communities), SB24-174 (sustainable affordable housing assistance), HB25-1273 (residential building stair modernization), and SB25-002 (regional building codes for factory-built structures) (collectively, the “Strategic Growth Legislation”).  Summaries of the 2024 bills can be found in our February 21, 2025 Alert, our November 25, 2024 Alert, and our July 29, 2024 Alert.  Governor Polis reiterated that the availability and cost of housing is a statewide issue and that compliance by Colorado’s home rule, territorial charter, and statutory cities; city and counties; and towns (each a “Local Government”) with the Strategic Growth Legislation is critical to addressing the statewide housing shortage and declared that Local Governments’ receipt of certain state funding will be tied to compliance with Strategic Growth Legislation. 

Order 005 is directed to the executive directors of the Colorado Energy Office, the Department of Local Affairs (“DOLA”), the Office of Economic Development and International Trade, and the Colorado Department of Transportation (collectively, the “Relevant Agencies”).  It orders them to identify certain grants, contracts, loans, incentive programs, and discretionary tax credits administered by the Relevant Agencies that provide support to Local Governments relating to housing development, land use, transportation, infrastructure, historic preservation, mixed-use incentives, conservation, energy, or climate (collectively, the “Funding Opportunities”).  The list of Funding Opportunities must be submitted to the Governor’s office within 30 days.  In the same time period, DOLA must publish a summary of the criteria set forth in the Strategic Growth Legislation that can be used to determine the Local Government’s compliance with such laws (the “Compliance Criteria”).  Using the Compliance Criteria, DOLA must publish a list by October 6, 2025, and quarterly thereafter, that identifies every Local Government and states whether it is compliant, non-compliant, or non-compliant but making progress with the Compliance Criteria.  Order 005 directs the Relevant Agencies to review Local Governments’ compliance and use their compliance status to establish priority for the Funding Opportunities. 

On May 19, 2025, the cities of Aurora, Arvada, Glendale, Greenwood Village, Lafayette, and Westminster filed suit claiming that Order 005’s directive to the Relevant Agencies to withhold funding is unlawful and not authorized by HB24-1304 and HB24-1313.  The lawsuit also challenges HB24-1304 and HB24-1313, arguing that these laws violate Article XX to the Colorado Constitution, which guarantees local control over matters of local and municipal concern.  The plaintiffs have requested, among other relief, a declaratory judgment holding that (i) HB24-1304 and HB24-1313 are unconstitutional, (ii) such laws unlawfully infringe on Local Governments’ power, and (iii) Order 005 exceeds the Governor’s powers.  Publication of the Funding Opportunities and the Compliance Criteria will occur in the near future.  We will continue to monitor the implementation of Order 005 and the legal challenges to the same.

The City of Denver (“Denver”) released the first draft of its proposed amendment to the Denver Zoning Code (“Zoning Code”) known as Modernizing Parking Requirements Text Amendment (“Text Amendment”), in which it proposes removing minimum vehicle parking requirements for all land uses throughout Denver.  This Text Amendment comes as the June 30, 2025 deadline to comply with House Bill 24‑1304 quickly approaches.  

House Bill 24‑1304 prohibits certain municipalities (like Denver) from enacting or enforcing minimum vehicle parking requirements for certain developments (like multifamily residential developments and adaptive re‑use developments with 50 percent or greater residential use) within an applicable transit service area.  Notably, Denver’s proposed Text Amendment goes much further than House Bill 24‑1304’s requirements by extending the elimination of minimum vehicle parking requirements and enforcement to all existing and future land uses in Denver. 

The Text Amendment maintains the Zoning Code’s existing maximum vehicle parking standards and seeks to simplify the Zoning Code’s use tables by removing all minimum vehicle parking space requirements and consolidating bicycle parking requirements into a separate article of the Zoning Code.  The Text Amendment will also extend to properties still zoned under Former Chapter 59.

Denver hopes the Text Amendment will promote the development of more housing, lower the cost of housing, provide greater flexibility for redevelopment and infill development, and result in more efficient and quicker staff review times for development applications.  With the Text Amendment, Denver will join the likes of other municipalities like Austin, Minneapolis, and Portland – all of which have reported success in eliminating minimum vehicle parking requirements – and will become the second municipality in Colorado to eliminate vehicle parking minimums, as the City of Longmont previously eliminated all vehicle parking minimums in 2024.

The Text Amendment is currently undergoing public outreach and review.  It will go before the Planning Board, the Land Use, Transportation & Infrastructure Committee (“LUTI”), and City Council over the next two months for consideration and may be further modified.  The anticipated schedule is below.

  • April 2025: Community Engagement and Public Review Draft
  • May 7, 2025: Planning Board Public Hearing
  • May 13, 2025: LUTI Public Hearing
  • June 2, 2025: City Council First Reading
  • June 30, 2025: City Council Public Hearing and Adoption
  • July 2025: Implementation

You can read more about the Text Amendment here.

When a buyer in a Merger and Acquisition (M&A) transaction seeks to obtain representations and warranties insurance (RWI), one of the key steps is the underwriting call. This call is a critical part of the insurer’s diligence process, where the underwriters assess the risks involved in the deal before issuing the policy. Preparation for this call can significantly impact the coverage obtained and the efficiency of the underwriting process. Below are insights and tips to help navigate this stage effectively.

Understanding the Underwriting Call

The underwriting call typically takes place after the insurer has reviewed the buyer’s due diligence materials and before finalizing the insurance policy. The call involves representatives from the insurer, the insured party (usually the buyer), their legal counsel, and sometimes financial and tax advisors. The primary objective is to ensure that the buyer has conducted thorough due diligence and to identify any areas of heightened risk. Since RWI covers breaches of representations and warranties in the acquisition agreement, the focus is strictly on the target’s historical operations, not post-close plans or improvements.

Key Areas of Focus

Underwriters tend to concentrate on specific aspects of the deal, including:

  • Financial Due Diligence – Reviewing quality of earnings, working capital adjustments, and debt obligations.
  • Legal Due Diligence – Examining material contracts, regulatory compliance, employment matters, and litigation risks.
  • Tax Diligence – Identifying potential tax liabilities and structuring risks.
  • Operational Risks – Understanding supply chain dependencies, customer concentration, and cybersecurity vulnerabilities.
  • Underlying Insurance – Evaluating historical Errors & Omissions, cyber, and other coverage, loss history, and prior acts coverage on claims-made policies.

How to Prepare for the Call

Effective preparation can streamline the process and help secure broader coverage. Key steps include:

  • Ensuring Robust Due Diligence – Underwriters will scrutinize the depth and quality of diligence performed. A well-documented diligence process with clear issue tracking will instill confidence in the insurer. Be prepared to explain how specific risks were assessed through independent diligence efforts rather than relying on the seller’s warranties.
  • Understanding the Transaction – Participants should be able to articulate the strategic rationale for the acquisition, key financial and operational drivers, and any identified risks. Since the insurer has spent less time on diligence, patience and collaboration are essential.
  • Coordinating with Advisors and Assigning Roles – Aside from the lead legal counsel, third-party advisors should be scheduled for specific time blocks for their respective sections. Designating a lead for each topic helps avoid multiple (or different) responses to the same question.
  • Addressing Known Risks Proactively – If there are red flags (e.g., pending litigation, regulatory matters), having clear explanations for risk mitigation can be beneficial.
  • Ensuring the Latest Purchase Agreement and Disclosure Schedules Are Available – The insurer may ask specific questions about these documents, so all parties should work from the most recent versions.
  • Being Prepared to Discuss Materiality – Since RWI policies often include a materiality scrape, underwriters may ask whether the seller disclosed items without regard to materiality. Certain areas may not have been reviewed because, given the deal size and retention level, the risk was deemed immaterial.
  • Identifying the Buyer’s Deal Team – Insurers always ask for the two to three buyer representatives most involved in the transaction, as breaches known to these individuals are excluded from coverage. The insurer assumes those answering underwriting questions are the designated deal team members.
  • Providing Written Follow-Ups When Necessary – If a question cannot be answered during the call, it is best to state that a response will be provided in writing post-call rather than speculating.
  • Understanding That Open Items Will Be Tracked – The underwriter and broker will keep notes and circulate an open items list after the call.

Common Pitfalls to Avoid

  • Inconsistent Responses – If different advisors provide conflicting answers, it raises red flags for the insurer.
  • Lack of Preparation – An unorganized or vague discussion can lead to narrower coverage or higher premiums.
  • Over-Sharing Information – While transparency is key, responses to agenda topics and questions from the insurer should be short, sweet and accurate.
  • Relying on Seller Warranties – The insurer is looking for independent diligence, not reliance on seller representations.

Final Thoughts

A well-handled underwriting call can mean the difference between robust coverage and limited protections. By preparing thoroughly, aligning with advisors, and anticipating underwriters’ concerns, deal participants can help ensure a smooth and successful process.

In response to housing shortages throughout the state, Colorado legislators are proposing policy changes relating to affordable housing.  House Bill 25-1169 (“HB25-1169”) is one of the most significant bills proposed to date. Titled “Housing Developments on Faith and Educational Land,” this proposed legislation aims to allow for affordable multifamily development on properties owned by faith-based organizations, school districts, and state colleges or universities (each a “Qualified Owner”) throughout Colorado. For multifamily developers that are able to collaborate with Qualified Owners, HB25-1169 presents a potential opportunity to take advantage of historically underutilized or undeveloped land with fewer legal and administrative obstacles.

Benefits and Opportunities for Developers

HB25-1169 is designed to facilitate increased affordable and mixed-income housing development by allowing multifamily developments on land owned by a Qualified Owner (even if not zoned for such purposes). Historically, much of this land has been restricted from use for residential developments in accordance with local zoning ordinances. HB25-1169 proposes an administrative approval process that streamlines project approvals and removes significant zoning-related barriers for Qualified Owners (and, potentially, private developers).

Key benefits include:

  1. Expedited Approvals: Qualified Owners and/or developers can bypass rezoning and discretionary permitting processes, reducing project timelines and lowering development soft costs.
  2. More Density, Fewer Restrictions: Local governmental authorities are prohibited from denying proposed developments based on structure height (up to three stories or 45 feet) or unit density unless the proposed development is cause for safety or environmental concerns.
  3. Mixed-Use Opportunities: HB25-1169 allows for additional uses within multifamily developments, including childcare centers, community spaces, and educational services (such uses in some jurisdictions may be limited to 15% of the square footage of the ground floor of the project).
  4. Potential Tax Incentives: As projects will be required to incorporate affordable housing elements as set forth below, such projects may qualify for state and federal tax credits and grants from the U.S. Department of Housing and Urban Development.
  5. Land Availability: Many faith-based and educational institutions own property in prime infill locations, making them ideal for multifamily developments.

Opportunities for private developers:

As currently proposed, in order for the benefits of HB25-1169 to apply, the land in question must be owned by a Qualified Owner. Private developers may be able to benefit from HB25-1169 through long term land leases and/or joint venture agreements with Qualified Owners whereby the Qualified Owner retains the ownership interest in the land while both parties benefit from revenue generated by the development.

Affordable Housing Requirements

HB25-1169 introduces specific affordable housing requirements for residential developments on qualifying properties. As currently drafted, these requirements vary based on the presence of local inclusionary zoning ordinances and the area’s market-rate rent relative to the area median income (“AMI”):

  1. Local Inclusionary Zoning Ordinance or Affordable Housing Policy: If the local jurisdiction has an existing inclusionary zoning ordinance or affordable housing policy applicable to the qualifying property, the proposed residential development must comply with these local regulations.
  2. Absence of Local Policy and Market Rate Rent at or Below 120% AMI: In jurisdictions without an inclusionary zoning ordinance, if the market rate rent is at or below 120% of the monthly AMI (as established annually by the U.S. Department of Housing and Urban Development), the development must align with the jurisdiction’s demonstrated housing needs as determined by a housing needs assessment.
  3. Absence of Local Policy and Market Rate Rent Above 120% AMI: In jurisdictions without an inclusionary zoning ordinance, where the market-rate rent exceeds 120% of the monthly AMI, at least 20% of the dwelling units in the development must be designated for households earning no more than 80% of the AMI.

Legislative Status and Next Steps

HB25-1169 has passed through the House and is currently under review in the Senate. Below is a summary of the significant legislative approvals received to date and the next legislative steps:

  • February 4, 2025: Introduced in the House of Representatives and assigned to the Transportation, Housing & Local Government Committee.
  • March 17, 2025: Passed in the House of Representatives on Third Reading with a 40-23 vote.
  • March 27, 2025: Passed in the Senate Committee on Local Government & Housing with 4-3 vote
  • Next Steps:
    • The Senate Committee of the Whole will debate and vote on April 14, 2025.
    • If HB25-1169 passes without additional amendments, it will proceed to Governor Polis for approval. If amended, it returns to the House of Representatives for reconciliation.
  • Governor’s Decision: If signed into law, HB25-1169 will take effect on December 31, 2026.

Conclusion

If enacted, HB25-1169 could unlock thousands of acres of land for affordable multifamily developments, providing an increase to Colorado’s affordable housing supply. Developers who take early action to understand the framework of HB25-1169 and align with Qualified Owners will be well-positioned to capitalize on these future opportunities in the affordable housing landscape.