Capitol Close Up: Construction Litigation Reform Bill Drops and More!

Yesterday, Sen. Rachel Zenzinger and Rep. Shannon Bird introduced legislation aimed at reforming construction liability litigation in Colorado that has severely restricted multifamily and affordable housing across the state over the past two decades. SB 24-106 will allow for the construction of this needed inventory and create more opportunities for Coloradans to build wealth through homeownership, by:

• Lessening insurance costs by reducing the magnitude and frequency of claims;
• Providing other means to resolve disputes faster for homeowners; and
• Distinguishing between claims where actual damages occurred or where life, health, or safety are threatened, and claims that are simply code violations that do not cause damages or threats to life, health, or safety.

Since 2001, there have been several amendments to the Construction Defect Action Reform Act, resulting in frivolous lawsuits and contractor’s liability insurance spiking since insurers have left the market. Development of condominiums – one of the most affordable housing options – has virtually halted, and the cost of litigation has been passed onto Colorado homeowners.

The Homeownership Opportunity Alliance—a coalition that includes the Metro Denver, Colorado Springs, and state HBAs, real estate and construction associations, business organizations and chambers, and local government and civic groups like the Metro Mayors Caucus—will be working to pass this legislation. CAHB CEO Ted Leighty is on the alliance’s executive committee.

SB 24-106 includes key provisions such as a Right-to-Remedy, Informed Consent and Negligence Per Se that will go a long way toward diversifying our housing stock and improving affordability throughout Colorado.

Colorado Association of Home Builders CEO Ted Leighty, who also serves as the Executive Vice President and CEO of the Home Builders Association of Metro Denver, recently shared some insights on the 2024 legislative session in a Metro Denver HBA column. Ted noted how strategic partnerships help leverage the HBA’s political capital—at the state and local levels—on key policy areas like construction-litigation reform; labor and workforce issues; and overall business climate. Below is a portion of the column. The full column is available by clicking here.

As most of you know, the 2024 General Assembly session began in early January. Like most legislative sessions, it began with a lot of speeches and promises about what will (and will not) get done this year. What was consistent across the opening day remarks from House and Senate leadership in both parties, as well as Governor Polis during his State of the State speech, is the continued focus on housing.

Solutions on how to provide more attainable housing, especially condos, range widely between the parties and individual legislators. While most legislators and the governor seem ready to work with our industry and partners in the real estate and general business community to address condo development, we are still on the defense against bills that will make housing more expensive and disincentivize development in our state. Already this session, we have seen bills that look to change consumer-protection laws to incentivize lawsuits against builders, another that will interfere with the construction liability insurance market, and yet another that would negatively impact business relationships between contractors and subs. Unfortunately, we expect many more bills of this nature—while we are trying to work proactively to solve the greater issues around housing availability.

If that sounds like a lot of political battles to fight, you are correct. I certainly wish that we could focus on proactive efforts and not play so much defense—but that’s the state of play in Colorado. One of the most important tools we have to deal with this is partnerships with industry and business groups that share our common goals. Through the Colorado Association of Home Builders, we regularly work with the Denver Metro Chamber of Commerce and its statewide advocacy arm the Colorado Competitive Council. By working with these two organizations, we can address legislation and other actions that impact the overall business climate in Colorado and the metro area.

Additional partnerships include the Homeownership Opportunity Alliance, which brings together builder, real estate, business and civic groups like the Metro Mayors Caucus and others to advocate for critical updates to Colorado’s construction-litigation laws to get condo construction moving again. We also partner in the Colorado Real Estate Alliance, or CREA, and Building Jobs 4 Colorado (BJ4C), to work together as the broader real estate and construction industries on legislative, regulatory and local government issues. With all of these groups, I serve on the governing boards to ensure that the homebuilder perspective is taken into account as part of the decision making and political efforts.

From what we have seen so far in the introduced legislation, this will be an active legislative session—both proactively and defensively. And we are still waiting on significant bills on construction litigation and dredge and fill. The CAHB through its Government Affairs Committee and lobbying team will be reviewing and taking positions on many bills to ensure that our industry and our members’ ability to provide housing is at the forefront. And we will be using these—and other strategic partnerships and alliances—to be as effective as possible when working with lawmakers and other government officials on behalf of the CAHB’s members.

The GAC met last Friday and received updates on several introduced and proposed bills. The GAC took a position on 10 different bills and switched its position from oppose to amend on another piece of legislation. To review a complete list of the CAHB’s legislative positions—including bills that the GAC supported, opposed and monitored—please visit https://statebillinfo.com/SBI/index.cfm?fuseaction=Public.Dossier&id=31374&pk=142

HB24-1095—Amend—This bill would increase penalties for violations of the Colorado Youth Employment Opportunity Act of 1971 and require that violators pay damages to the individual. The CAHB lobby team will try to ensure that this bill does not impact or interfere with workforce-training programs like the Careers in Construction Colorado and similar programs for high schoolers.

HB24-1098—Amend—This legislation would establish a “For Cause” eviction policy that prohibits landlords from evicting tenants from residential properties without cause, subject to certain conditions and requirements, including unlawful occupancy of a property, nonpayment of rent, inhabiting a property beyond the term of a lease, material or repeat violations of the terms of a lease, and the sale or transfer of a property under certain conditions. The bill also sets certain situations when a landlord can initiate a no-fault eviction. The legislation also states that landlords would not be able to increase rent to circumvent the requirements of the new eviction policy, and future rental agreements would be prohibited from including any provisions that waives the requirements of the bill.

HB24-1107—Support—This bill would require a court to award reasonable attorney fees to a prevailing defendant in an action for judicial review of a local land-use decision, except for an action brought by the land-use applicant before the governmental entity. The bill also states that filing an action for judicial review of a land-use decision would not affect the validity of decision and would allow the local government entity to rely on the land-use decision until judicial review is resolved.

HB24-1125—Support—This proposal would create a new refundable tax credit, from tax years commencing on or after January 1, 2026, and before January 1, 2036, for costs related to the conversion of a commercial structure to a residential structure. In order to claim the credit, an applicant must submit an application, a conversion plan, and an estimate of the qualified conversion expenditures under the conversion plan to the Office of Economic Development. Within 90 days of receiving documents, the office would then be required to review the documents, determine whether to reserve a tax credit for the applicant and provide written notice to an applicant for whom the office determines to reserve a tax credit.

HB24-1144—Support—This legislation would create an income tax credit available for tax years starting on or after January 1, 2024, but before January 1, 2026, for sellers of residential property in Colorado who buy down the interest rates on the mortgage of the buyer of the property. The amount of the tax credit is 50 percent of the cost of the mortgage interest rate buy down. The credit would be refundable and transferrable to any other taxpayer.

HB24-1152—Amend—This bill would require subject jurisdictions (municipalities and counties in metropolitan planning areas and above a certain population size) to allow one accessory dwelling unit as an accessory use to a single-unit detached dwelling in any part of the subject jurisdiction where the subject jurisdiction allows single-unit detached dwellings. The bill also prohibits subject jurisdictions from enacting or enforcing local laws that would restrict the construction or conversion of an accessory dwelling unit. The bill would create a category of “supportive jurisdictions” that demonstrate compliance with requirements in the bill and have implemented one or more strategies to encourage and facilitate the construction or conversion of ADUs. These supportive jurisdictions would have access to grants and programs to further promote ADUs.

HB24-1158—Amend—This proposal would require that prior to an HOA turning over a delinquent account to collections or to an attorney for legal action that the HOA send notice to the unit owner that free information about collections and foreclosures may be obtained through the state’s HOA Information and Resource Center. This bill would also require before foreclosing on an lien that the HOA provides notice to the unit owner that credit counseling is available at the unit owner's expense relating to the impact of foreclosure and options to avoid foreclosure. The bill would limit a court's award of reasonable attorney fees that an HOA incurs when foreclosing on a lien to $2,500.

HB24-1173—Amend—This bill would establish an expedited permitting process for the approval of electric motor vehicle charging systems for counties and municipalities and states that a board of county commissioners or the governing body of a municipality must adopt an application procedure for an applicant to apply for an EV permit. The bill also says that once the application is complete, the permitting agency must review and approve, conditionally approve, or deny within 30 days after the application is considered complete for an application to build fewer than 13 charging stations on a parcel or within 60 days for an application to build 13 or more charging stations. If the permitting agency does not approve, conditionally approve, or deny a completed application within those time periods, the EV charger permit is granted to the applicant.

HB24-1175—Amend—This bill seeks to creates a right of first refusal and a right of first offer on multifamily housing for local governments. The right of first offer is temporary and terminates on December 31, 2029. For multifamily rental properties that are existing affordable housing (receiving federal or local financial assistance), a local government has a right of first refusal to match an acceptable offer for the purchase, subject to the local government's commitment to using the property as long-term affordable housing. The bill would require the seller of a property to give notice to a local government at least 2 years before the first expiration of an existing affordability restriction on the property and again when the seller takes certain actions as a precursor to selling the property. The local government would then have 14 calendar days to preserve its right of first refusal and an additional 60 calendar days to make an offer. The local government would then have to agree to close on the property within 120 calendar days of the acceptance of the local government's offer

SB24-092—Support—This legislation would direct counties and municipalities beginning January 1, 2026, to evaluate the cost-effectiveness of potential changes to their energy codes and prohibits them from adopting changes that are not cost effective. The bill specifies that cost-effectiveness requires a net economic benefit of the energy code change over a 10-year period.

Updated position:

HB24-1083—Amend—This legislation would require the Division of Insurance to conduct a study of construction liability insurance for construction professionals in Colorado. The bill would also require disclosure prior to closing the sale of a new residence, with the seller providing the purchaser and the county clerk and recorder's office for the county where the new residence is located with information regarding the insurance coverage for the property. The CAHB lobby team is working with the bill’s sponsor to address some of the most concerning provisions in the introduced version.

Please follow the CAHB on Facebook and X (Twitter). The CAHB website has been updated to be more user friendly and contains valuable information on all of the CAHB member benefit programs. If you have not already, please visit the website and be sure to check out all five of our member benefit programs including the newest Safety Program. All are outlined at https://www.hbacolorado.com/membership.