The Colorado General Assembly has recently passed (and the Governor signed into law) Senate Bill 26-001, “Workforce Housing & Housing Tax Credit”, with the intent of increasing financial flexibility and county authority to promote workforce housing, low-income housing, and general housing needs.
SB 26-001 grants a board of county commissioners the power to sell any public building or real property, with the exclusion of public parks, for the purposes of developing housing. This is intended to provide greater flexibility for counties when selling their property and to provide counties additional funds for housing developments. In particular, under SB 26-001, counties now have the power to appropriate property tax revenue, county general funds, and other specified funds, towards housing programs. This removes the prohibition under prior law on using property taxes for housing, opening up previously inaccessible funds to necessary housing projects.
The bill also authorizes governmental or quasi-governmental entities to transfer what is known as the middle-income housing tax credit to any income taxpayer that has acquired credits for the development of affordable housing. The middle-income housing tax credit provides an income credit for housing developments that serve households whose income is between 80% and 120% of the area’s median income. Under current law, the Colorado Housing and Finance Authority may allocate the tax credit to any governmental or quasi-governmental entity, who may in turn transfer the credit only to taxpayers with an ownership interest in a qualified development. This new bill removes the ownership interest requirement, increasing taxpayer eligibility for the credit.
Under the new law, a county may also enter into long-term rentals or leasehold agreements. This expands governmental authority and opportunities for developing affordable housing or housing identified in a needs assessment developed by the county.
The law also provides that construction and building materials are exempt from taxation for projects involving highways, roads, streets, workforce housing, and other public works owned and used by governmental entities.
SB 26-001 was signed into law on March 26, 2026, and will take effect 90 days after the adjournment of the Colorado General Assembly on May 16, 2026 (August 14, 2026), unless a referendum petition is filed. The changes to the middle-income tax credit will take effect January 1, 2027.
This bill is one in a series of efforts by the Colorado General Assembly this session to encourage housing development. The “Housing Opportunities Made Easier ‘HOME’ Act” (HB 26-1001) also signed in March of this year allows nonprofits, schools, universities, housing authorities, or regional transit authority to bypass local planning processes to build affordable residential housing on their land. In addition, HB 26-1065, signed in May, allows local governments to create transit and housing authority investment zones. These zones can utilize state sales tax increment financing and tax credits to support relevant projects.