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.