Colorado lawmakers introduce bill to foster more condo construction

In yet another effort to alleviate soaring housing costs in Colorado, lawmakers on Monday introduced a bill aiming to boost condominium construction in the state — an option historically seen as a way for first-time homebuyers to enter the housing market. 

Senate Bill 106 is intended to attract condo developers to the state by reducing the number of lawsuits filed against them over construction defects. Developers have said they face abnormally high risk for lawsuits in Colorado, making their projects costly and difficult to insure. 

The bill would limit when homeowners are able to file lawsuits over defects they find in their home and create a “right to remedy” so owners can work with their developer or a third party to fix any issue instead of going to court. The bill would also make it more difficult for homeowners associations to file lawsuits by requiring them to get approval from at least two-thirds of the unit owners first. 

“There are a lot of reasons why we have challenges with affordability right now but this is one of them,” said Sen. Rachel Zenzinger, an Arvada Democrat and a lead sponsor of the bill. “Many things are out of our control. This is something we can change.” 

Reducing housing costs is a primary focus for state lawmakers at the Capitol again this year after a major bill supported by Democratic Gov. Jared Polis failed at the end of last session. 

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Though Polis has hinted in the past that he’s supportive of reducing construction defect lawsuits, the bill isn’t wrapped into the package of other housing measures propelled by his administration. In years past, similar bills on construction defects have faced significant battles and stoked furious tensions among lawmakers. 

The political future for this year’s bill remains uncertain. While it has early support from both Republicans and Democrats, some of the further left-leaning members are likely to mount a fierce opposition to the legislation. Opponents of the bill say it will take away rights from homeowners and give developers free rein to sell poorly constructed homes. 

“If they would build quality products and stand behind their products we wouldn’t be having all these problems,” said Jonathan Harris, chair of the group Build Our Homes Better, which opposes the bill. 

Harris is concerned that the requirement for HOAs to file lawsuits would be nearly impossible to accomplish because some owners live out of state or don’t keep up to date with information on their community. 

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The bill would also prevent homeowners from filing a case over a defect unless the error caused harm or is an “imminent and unreasonable risk.” And if a homeowner used the right to remedy created by the bill, they would no longer be able to sue over the issue. They could, however, still sue if it wasn’t properly repaired. 

Condo construction, once on par and even more abundant than new apartment buildings along the Front Range, dropped significantly following the Great Recession. While other types of housing in the state have rebounded since then, new condos haven’t, according to data gathered by Zonda, a company that does quarterly housing surveys of the eight-county Denver metro area. Many of the condos that are built are luxury units, which often have high enough margins to still attract developers.

The legislation would impact the entire state, including Colorado’s mountain towns, which face some of the highest housing costs. Other housing bills this session, such as one allowing more accessory-dwelling units to be built, exclude most mountain towns from the requirements. 

While some in the High Country support Senate Bill 106 and hope it can help bring more condo construction, they say it wouldn’t be a silver bullet.

“This does need to get addressed,” said Matt Scherr, an Eagle County commissioner. “It would have an impact here. Exactly what that impact would be is hard to tell.” 

For communities like Eagle County, simply creating more housing isn’t the solution because much of the existing units in the county are vacant for months or exclusively used for short-term rentals, Scherr said. 

Sen. Dylan Roberts, D-Frisco, represents much of the Western Slope and is a co-sponsor of the legislation. 

“I think the bill makes a lot of sense,” he said. “There’s certainly not a golden ticket fix to the affordable housing issues that mountain communities face. We’re going to make improvements by doing a variety of things.” 

Sen. James Coleman, D-Denver and Rep. Shannon Bird, D-Westminster are the other prime sponsors of the bill, which was assigned to the Senate Local Government and Housing Committee. 

The annual legislative session began Jan. 10 and will last until early May.