Colorado Passes Strong ADU Legislation

Colorado has passed a strong ADU law (House Bill -1152), making it the 5th state to pass strong ADU legislation. 

By “strong” ADU legislation, I mean laws that generally align AARP’s ADU model ordinances. The other states that have passed strong legislation include CA, OR, WA, and MT.

As of the publishing of this post, this legislation has not actually been signed into law, but it is fully expected that the governor will sign this bill in the coming weeks. (Author’s note: On May 13th, 2024, this bill was signed by the Governor, officially making it the law)

Colorado is having a big year! It is expected that legislation related to upzoning near transit, parking reduction laws, and housing needs assessments, will all pass. And last month, a bill was signed into law that prohibits residential occupancy limits on housing in Colorado. 

As with California, Oregon, Washington, and Montana, the ADU legislation was passed with bipartisan support. Other states have passed weak ADU laws that have not, and will not, result in much ADU production, such as NH, CT, FL, RI, VT. These weak laws are ineffective, have little substantive impact on ADUs as a viable housing form, and as such, they do not receive comparable accolades to Colorado.

The Details

As far as the things that matter to actual homeowners who wish to build an ADU, here’s what you need to know in plain language.

The Colorado legislation requires cities of certain size thresholds to allow ADUs. This is similar to Oregon and Washington. This bill requires jurisdictions to remove “restrictive design or dimension standards” in “subject jurisdictions”.

“Subject jurisdictions” are municipalities that are in metropolitan planning area with more than 1,000 people, which includes 3,960,000 people, or 67% of the population of the state. Here’s a list of the subject jurisdictions that are ‘a municipality that both has a population of one thousand or more, as reported by the state demography office and is within a metropolitan planning organization“

To remove “restrictive design or dimension standards“, subject jurisdictions must:

• Allow an ADU of up to at least 750 sq ft. 
• Not require off-street parking
• Not require the owner to occupy the property (*more on this momentarily). 
• Reduce side and rear setbacks to 5ft (with some sub-optimal caveats)
• Not have minimum lot size requirements
• Not have special design standards for prefab ADUs

This law would also supersede rules in HOAs that preclude ADUs. It disallows any prohibition on ADUs by a homeowners’ association in subject jurisdictions. Like California’s ADU laws, these rules will supersede rules that prevent ADUs in existing HOAs. By contrast, both Oregon and Washington have deferred to legacy HOAs that disallow ADUs, but will not allow future HOAs to ban ADUs.

The zoning changes are required to be implemented by June 30th, 2025. If the zoning changes are not implemented by jurisdictions by then, Colorado’s Department of Local Affairs (“DOLA”), will have a model code to which subject jurisdictions will default. 

The other laudable provisions of the bill relate to setting up grants and technical assistance for homeowners who wish to build an ADU. The bill sets aside $8M to set up a loss reserve program that offers affordable ADU loans, and will fund programs that buy down of interest rates on ADU construction loans, assists with down payment in connection with ADUs, and provides direct loans for ADUs. 

Once ADU regulations are strong, financing ADUs is the next barrier to their development. It’s impressive that Colorado has figured out how to help address both of these barriers in a meaningful way in this bill. 

Other states should take note of this kill-two-birds ADU legislative approach!

*From Insidious Owner Occupancy Requirements to Irrational Owner Developer Requirements

I’ll now spend some time focusing on one element of the bill that merits nuanced coverage; How the legislature ultimately reconciled the bill’s original aspirations to eliminate owner occupancy requirements.

To begin with, I’ll state here in the most clear way possible: I despise Owner Occupancy requirements for ADUs with a vengeance.

Owner occupancy ordinances are racist, classist, exclusionary, morally bankrupt, and thoughtless. They are also pervasive across most of the country.

Owner occupancy requirements make me sick to my stomach.

With that said, I’m also politically practical about these matters. Whatever tactic is required to root out this insidious poison pill from ADU regulations, I will get behind. 

I provided written and oral testimony on the owner occupancy requirements for this bill in the Senate Local Government & Housing, and am attaching the written testimony below.

Late in the legislative sausage making process for HB -1152 on April 23rd, after the hearing in the Senate Local Government & Housing, an amendment was quietly inserted that transformed the original language in the bill. Below, I’m copying the original bill text with the amended bill text. 

Original bill text with amended provision in italics

A SUBJECT JURISDICTION SHALL NOT: REQUIRE AN ACCESSORY DWELLING UNIT, OR ANY OTHER  DWELLING ON THE SAME LOT AS AN ACCESSORY DWELLING UNIT, TO BE OWNER-OCCUPIED

 ….EXCEPT THAT A SUBJECT JURISDICTION MAY REQUIRE A PROPERTY OWNER TO DEMONSTRATE THAT THE PROPERTY OWNER RESIDES ON THE PARCEL WHEN AN APPLICATION IS SUBMITTED TO CONSTRUCT OR CONVERT AN ACCESSORY DWELLING UNIT. 

THIS EXCEPTION DOES NOT APPLY FOR AN ACCESSORY DWELLING UNIT THAT IS BEING CONSTRUCTED SIMULTANEOUSLY WITH A NEW PRIMARY DWELLING UNIT.

This amendment limits ADU development to amateur homeowner developers. It rules out professional developers from adding ADUs to existing single family homes. 

Importantly, this bill removes the ability for cities to have an owner occupancy requirement, accomplishing one of the key elements of the bill!

But, in its place through this amendment, it’s instituted an optional owner developer requirement. 

This amended standard will still allow the grassroots ADU movement to grow-it’s not going to kill ADUs like owner occupancy requirements do. Furthermore, this owner developer requirement will not impact financing of ADUs, one of the many problems that owner occupancy deed restrictions create (see testimony below).

The Irony of the Owner Developer Amendment 

It is ironic that policy makers fear professionally developed ADUs: 

1) Because people live in homes that were speculatively developed by someone else at some point, including the policy makers who raise the specter of speculative ADU development. Who do they think developed their home and homes around them? 

2) Indeed, the ONLY type of home that is generally NOT developed by speculative developers in the United States are, in fact, ADUs. 

This provision is like a wartime draft that only grants entry for women, children and the elderly.

It’s a totally irrational position to take.

No matter who develops ADUs, the units will help buttress the inventory of lower cost rental units and starter homes in a given community. 

The irony is that due to the nature of the real estate market in most areas, ADUs are generally developed by homeowners. My own research of permits in Portland, and an academic study conducted ADU ownership in California, both indicate that ~90% of ADUs are developed by amateurs, not by professionals. This is one of the core features of ADUs that distinguishes them from other housing types.

Irrationality aside, here’s why I actually don’t mind the amendment as a political matter

I suspect that within a few years, once Colorado legislators realize how beloved ADUs are among constituents…it will become readily apparent to a working majority of them that it does not make sense to arbitrarily throttle ADU supply relative to all other housing forms.

Colorado will come to the obvious conclusion that there’s no reason to exclusively limit ADUs to be developed by homeowners. Once this epiphany is understood by a working majority of legislators, they’ll update their ADU laws to a standard that eliminates owner developer requirements, providing parity with other housing forms. 

The other reason that I don’t mind this amendment is that Colorado cities don’t have to adopt this silly provision. “A SUBJECT JURISDICTION MAY REQUIRE”. Subject jurisdictions can simply allow ADUs to be developed by anyone, out of the gate, and they should! Adult cities like Denver can leapfrog past this baby step, and just allow professionals to develop ADUs like they already allow all other housing to be built.

In the end, the owner developer amendment may have been necessary to gain political support to ensure passage of the legislation. And, as an olive branch to the obstructionists who would not otherwise support the bill, this solution does not serve a roadblock to the ADU movement arising in Colorado.

The owner developer limitation is a quantum leap ahead of the insidious owner occupancy requirement. And, progress takes time. So, with all those caveats in mind, this amendment is a middle ground policy position that other states may look to emulate as a political matter, to move past obstinate owner occupancy sticking points in legislative policy discussions.

7/9/2023: A couple minor revisions were made to the regulations described above related to size and the subject jurisdictions.

About Kol Peterson

Kol is an ADU consultant, advocate and author of Backdoor Revolution: The Definitive Guide to ADU Development. Read more here: AccessoryDwellingStrategies.com and learn about building your own at BuildingAnADU.com. Email at Kol@accessorydwellingstrategies.com

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