Colorado Gov. Jared Polis is on a whirlwind tour this week, hustling to sign reforms to the state’s housing, transportation and tax laws that he’s been after for years.
The measures came from one of the most productive legislative sessions in recent memory.
Before lawmakers adjourned last week they approved a wide-ranging financial package that will cut property, income and, eventually, sales taxes. They also wrote new housing laws that override local zoning codes in urban areas to concentrate development around transit lines, ease parking requirements, and allow homeowners to build accessory dwelling units, or ADUs, on their properties. Those units, smaller and less expensive than other housing, are often occupied by family members or renters.
Polis told Colorado Matters senior host Ryan Warner the new laws won’t solve Colorado’s housing crisis immediately but “it'll start getting better rather than worse.”
The measures will provide “more affordable housing close to job centers, less traffic, and transit-oriented communities, along with more and better transit to help serve people who live there,” he said.
“So we've taken that turn, which means that over the next two years, three years, five years, Colorado will be more affordable, more livable, and more sustainable, from a housing perspective.”
Polis met Warner at a local facility that builds modular housing just before he signed the ADU bill Monday. They spoke about what Polis described as a “kumbaya’’ legislative session that brought bipartisan support for some of his long-standing initiatives.
This interview has been edited for length and clarity.
Ryan Warner: How does a Coloradan's life change in measurable ways because of the session that just ended?
Gov. Jared Polis: Well, a number of ways. One is, you'll be holding onto more of your income because the income tax will be lower. In future years the sales tax will be a little bit lower as well.
Then the biggest issue we hear from people is housing costs too much, and so the bill that we're signing will allow accessory dwelling units to be built on most plots across Colorado in single-family zone areas, which means a couple things: obviously it means more housing, but let's say you are a homeowner, it means you can actually generate some extra income by creating another rental on your property if you choose, or perhaps it can be an apartment for a kid in their 20s or your mother-in-law. Some people even call them mother-in-law flats.
Warner: So, all sorts of things we're going to dive into. You know, Governor, housing markets can take years to turn around. A lot of the state's plan for passenger rail, for instance, requires matching federal money that may or may not come. The big tax compromise still faces a challenge at the polls in November. How quickly is any of this going to make a difference in Coloradans’ daily lives?
Polis: Well, it'll start getting better rather than worse. I mean, without action, the housing crisis gets worse, meaning it's harder to afford to live anywhere in our state, the new homes are further from job centers, more traffic. So that's one fork in the road. Thankfully, Colorado chose to take the other fork, which is more affordable housing close to job centers, less traffic, and transit-oriented communities, along with more and better transit to help serve people who live there. So we've taken that turn, which means that over the next two years, three years, five years, Colorado will be more affordable, more livable, and more sustainable, from a housing perspective.
Warner: So are you planting seeds that will bear fruit after you're out of office? Do you think this is for the long term?
Polis: Of course both. I am going to be serving for two-and-a-half more years, we're certainly going to see an impact in better transit and more housing. But yes, it'll continue to follow that fork of affordability, livability, and sustainability for years and decades to come. And frankly, we want to continue to build on these achievements in the future.
But even a bill I signed last week in Colorado Springs that got rid of government-imposed parking requirements is a big deal because having more parking than you need built into your unit or house adds about $30,000 per parking spot to your house. So if you need one parking spot, you should pay for one parking spot. If you need two, pay for two. If you want to live near transit and don't even own a car, why should you be forced to pay $60,000 more for your apartment or house, simply because you have to have two parking spots you don't use? So things like that all add up and are a big deal for Colorado.
Warner: Last year's session ended much differently. A land use package you pushed for died at the hands of your fellow Democrats. Political fights in the legislature were so bitter that Republicans walked out on the last day. This year indeed, a big compromise on tax reform, and most Republicans have praised the atmosphere of bipartisanship. What do you think changed?
Polis: This was the kumbaya year at the state legislature.
Warner: Why?
Polis: Well, on most of the housing issues – including, by the way, accessory dwelling units – Republicans joined Democrats in the vote, the property tax cuts. I think that all sides felt heard and felt part of the solution.
The nature of legislative work, both within one party and between both parties, is that nobody gets their way entirely, and sometimes that can break down where nobody gets anything, which on housing for instance, is what happened last year. But this year, to their credit, the Republicans and Democrats rolled up their sleeves and said, ‘This is too important for the people of Colorado to let our partisan or ideological differences stand in the way. Let's not let the perfect be the enemy of the good, and let's make it happen.’ And as a result, we're going to take the trajectory towards affordability, livability, and sustainability in housing, it'll become better rather than worse. Property taxes will go down a lot, especially for small businesses, and our state will prosper and succeed as a result of that collaboration.
Warner: You said kumbaya. I'm wondering if you had a come to Jesus with the Democrats in the legislature after last session to say, ‘Hey, I need more of an ally in getting these issues passed through, I need less resistance.’
Polis: Well, all these issues are championed by individual legislators and they were not ultimately able to be successful when all bundled together.
I think legislatively, two things. One is, it's a year later and people realize the housing crisis doesn't solve itself and we need to take action, so I think there's more of a drumbeat for change.
The second thing that happened on tactics is, we divided up one big omnibus bill into five or six different bills, pretty much all of which passed, and that allows for more flexibility in assembling the coalitions. Many of those were bipartisan too, in terms of the coalition that ultimately led to their success.
Warner: So essentially the state, on accessory dwelling units, ADUs, is saying there ought to be way more flexibility at the local level to add these to your property, to use your property as you wish. Of course, there are local governments who say, ‘But we want to have the role in determining the shape of our community.’ Why shouldn't local governments decide what's best for their neighborhoods?
Polis: It's kind of where do your personal property rights end and I think a common sense answer that most people, local (or) state, Republican, Democrat would say, if it affects your neighbor's property, like if you build a 30-floor tower that obstructs the view of your neighbor, that affects them, right? So that's why it's subject to, and not allowed generally by, local government.
The truth is the overwhelming majority of Coloradans, upwards of 80%, believe in property rights to build an accessory dwelling unit when and if you choose. And the truth is, it doesn't affect your neighbor. I mean, if your neighbor thinks it affects them, you have a nosy neighbor, that's very unfortunate for you, but it doesn't affect anything related to the community. It's not like opening up a retail store in your neighborhood, and it contributes to meeting the housing needs of our state. It can improve your quality of life if it's for a teenager or an aging parent. It can provide additional income for you if you want to rent it out. Most importantly, it meets a housing need in the community.
That's how we look at it systemically, when we look at it from the state perspective, it unleashes the ability to build a lot of units where the infrastructure already exists, that's also key. Remember, you have garbage, you have utilities, you have water, you have all of that right there. And so it's a very easy kind of inventory to add, if we can get out of our own way and simply remove the paperwork and approval processing costs and let people build casitas, accessory dwelling units, mother-in-law flats, they go by many different names. A standalone unit, usually 700, 800 square feet where one or two or three people can live on a property that already has all the infrastructure in place.
Warner: If someone today wants an accessory dwelling unit despite their nosy neighbor, how much easier will it be? Because you've got to think about the financing of that. You've got to think about the permitting of that. How much easier does that become?
Polis: It depends on where you live, right? Because there are areas of our state where the local government wants to make it as easy as possible to do it under current law, but there are also areas where you have to fight city hall to be able to actually get that done.
We want to do it by right, which means no long approval process, you generally wouldn't even necessarily need a lawyer, you can do it yourself. I would say in many areas of our state, it could take one to two years and probably upwards of $20,000 in legal costs before you can even break ground on an accessory dwelling unit before we passed that law. Now going forward, it will eliminate or almost entirely eliminate legal fees and delays and allow people to build accessory dwelling units quicker and easier and at lower cost.
We also included financing mechanisms in this bill to give it meaning because we know that financing is hard. I mean somebody could potentially – if there's room in their mortgage – add to it, take out a second mortgage, finance it, and (they) can make a profit because the rental income they get would be more than the increased mortgage income. You have to run those numbers yourself if you're a homeowner.
But we know that a lot of people don't have that capacity. Maybe they don't have a good credit record, maybe they don't have equity in their home. And so that's why we created a statewide credit facility to help encourage the construction of these new housing units as well. These are inherently the most affordable form of housing, meaning rents are low, they're 700 square feet, they're standalone, this is starter housing for rent or it can be subdivided for sale. They usually cost upwards of about $200,000 or so to construct. So it is a more affordable kind of housing than much of the other single family housing that we see being erected.
Warner: The major focus of this package of bills was not just housing, but where housing is placed and how it interacts with transportation, how we get around. So other bills, tailored primarily to urban areas, would increase density, especially along bus and rail corridors, partly by requiring cities to allow more units there and eliminating those parking minimums. Governor, do you think Coloradans are ready to give up cars and use transit more?
Polis: It goes to the old saying, “different strokes for different folks.” No, of course Coloradans aren't going to give up cars and many people want to have a single-family home with a yard and detached parking and they want to have three cars for a family of four, maybe they have a teenager and two parents, whatever it is. Many families want to live that way.
The problem is we have so many opportunities to live that way, we don't have what is also demanded by people, which is a different lifestyle, “different strokes for different folks,” folks who maybe they're young or maybe they're retired, they don't want to own a car, they want to be able to get where they want to go and bus or train. They don't want to have that expense, they'd rather use that for vacations to Mexico or whatever it is, because the cost of owning a car is very substantial. Or, they can't afford – they want to live five minutes from work, but they're forced to live 40 minutes from work. Most people don't want to live 40 minutes from work. Again, if you want to because you want to have a garden or a horse or whatever it is, there's plenty of opportunities to live 40 minutes from Denver and yes, it costs less. But what is lacking in supply is the ability to live within walking or biking distance of your job in an affordable way. And that is a lifestyle that many Coloradans want.
So we've artificially inhibited the choice that many Coloradans would make, certainly not all, to live close to work conveniently near transit, and there are plenty of opportunities for those who want to have larger plots, might not mind larger commutes and live further out.
Warner: So the legislature passed bills promoting transit-oriented housing, new dollars for transit service. You've been quite open about your distaste for RTD, going back to a failure to build rail to Boulder and Longmont. Why is it important to you to support these bills?
Polis: Well first of all, we're going to get Front Range passenger rail done, it's behind schedule. The northern piece, which is the Denver-Longmont-Boulder piece – now we define it as including Loveland, Fort Collins – was supposed to be completed in 2017, according to the FasTracks initiative. Not only was it not completed in 2017, the years given for its completion are in the 2040s, which I said was unacceptable. That was the status quo.
So we're saying, rather than just sit here and complain about it … let's actually just make it happen. And so that's really the work of this legislature. Two key components to that: one is the oil and gas environmental compromise, very important for other reasons, but part of the net benefit of that is funding for rail.
Warner: Revenues will be generated.
Polis: Revenues generated from that.
The other source is rental car fees. We had one of the lowest rental car fees compared to our neighboring states, Utah, New Mexico, and we simply put ours in line with where most other tourism states are. That will help fund the completion of Front Range passenger rail this decade, so in the 2020s. My optimistic side, I like to say it'll be '27 or '28, but certainly by '29, and that'll be the northern part of the corridor. And then of course the full corridor Pueblo to Fort Collins, will be in the early 2030s.
Warner: On the subject of the oil and gas grand compromise: Among other things, it puts a fee on production to provide revenue for transit. Many climate groups support this strategy since it requires the industry to help with the goal of getting people out of their cars. Other environmental advocates, though, think it will make Colorado further dependent on oil and gas and make it harder to transition to other energy sources, in a way that you're furthering the addiction by drawing revenue from oil and gas extraction. Is that a risk?
Polis: We really look at that as how do we have cleaner air and reduce our carbon emissions? And being able to deploy these resources generated by the oil and gas industry to fund transit and rail will help reduce air pollution and reduce the carbon emissions of the state by being able to offer more convenient transit. Tying into that, we talked about the land use reform, more people living near transit, so they all kind of tie together. It's more people having the opportunity to live near transit, but also more and better transit, more convenient, lower cost. And that's really what these funds will allow, for significant net reductions in carbon emissions as well as improved air quality.
Warner: Except that the very source of the revenue is carbon-generating.
Polis: Well, I think most people in the environmental sector would say it's better than not generating the revenue if this activity is going to occur.
I think it's a fair question to say how long will the extraction sector continue in Colorado, 50 years, 30 years, 20 years? There is an overall transition away from fossil fuels, obviously vehicles are part of that. We're now at 15% of new vehicles sold are electric vehicles in our state.
If you were shopping for electric lawn equipment, lawnmowers, leaf blowers, check it out because we have state refundable tax credits at point of purchase that reduce the cost of those, and they're much more pleasant than what we all remember growing up with – the ones that smell and are really loud. The experience with an electric lawnmower, much better. Leaf blower, same thing. And so this is where we're going in our state.
In fact, through an executive order on all of our state property, including our universities and right of ways, we're going to be using exclusively electric leaf blowers and lawn equipment by next year. And we expect that the private sector and many cities and municipalities will follow the same path.
Warner: We, the state?
Polis: The state of Colorado, yeah.
Warner: Okay. A property tax reform deal came together very late in this session in the final days. Backers say it would provide more than a billion dollars in relief, but people's tax bills would still go up, just not as much as they otherwise would have. We talked about housing affordability and yet taxes continue to rise, which of course adds to the affordability problem. What's going on there?
Polis: So first of all, while this passed in the final days, I want to say that a lot of work from Republicans and Democrats went into this. We had a bipartisan property tax commission and of course, whether your home property taxes go up in the future will first and foremost depend on assessments. And let's just go back – what created the pressure here is that assessments went up a record amount the last period. They went up 40%.
First of all, they're not going to go up 40% again for next year, just looking at where the market is. Where you live, it might affect it. We capped that at 5.5%, so depending on what happens in future years, the property tax scenario won't go up by more than 5.5%. We also provided an additional reduction of $70,000 from your home price. So if in the future you have a $700,000 home, you'll effectively be paying taxes on $630,000. So we knocked for taxation purposes, $70,000 off.
So again, there's going to be some people, because their home prices are steady, their property taxes will likely go down. There's going to be others that their property taxes go up a little bit while their home value goes up a lot. So it all depends on what your home value does in your neighborhood, but we did provide a way of capping it and providing significant relief. Just so you know, this is about $1.3 billion less revenue that local districts will take in because of this property tax cut.
Warner: What is sacrificed as a result of that?
Polis: I think very little on the public side because we're still dealing with the fact that we had a 40% assessment increase.
I think Democrats and Republicans agreed, we said, “This was a high inflationary period but costs didn't go up 40% and incomes didn't go up 40%. Over that two-year period maybe they went up 10, 12% – a lot more than usual. So how do we make sure that some of those resources are in fact reduced in property tax rates? And I also called on local governments to do this, and there were a number of local governments across the state that on their own reduced their own assessment rate. They're able to do that, we encouraged them to do that, but we wanted to provide some modicum of statewide relief, and we did, and Republicans and Democrats worked together to do it.
Homeowners will save money as a result and also have the assurance that their property taxes won't go up at a rate that's significantly above the rate of inflation going forward.
Warner: There are several proposals that could go to voters this fall that are much more aggressive in limiting taxes. One's already made the ballot: Initiative 50 would put a statewide cap on property taxes at 4%. Supporters argue that it's good to put a firm cap to control growth of the state budget. I mean, to some extent you've said that here yourself. They say the bill that passed is not a tax cut, it is just slowing the rate of increase. I know that you oppose these initiatives. Why?
Polis: Well, there's many initiatives and usually, in fact always, I don't really talk about them until election time. I'm perfectly happy to talk about initiatives in August or September, but a statewide cap is different than a district cap. So if you have a statewide cap of property taxes of 4% or 5%, it still means that somebody's can go up 8 if somebody else's go up 2. If you have a per district cap, which is what the legislature did, it means that in Denver, in Fort Morgan, in Boulder, it won't go up more than 5.5%. So they're different. When you have a statewide one, some areas might go up more. In a way, it provides less assurance to homeowners and you don't know what you're going to get because there could be areas of the state where home values might even decrease or stay flat, and then you might be paying more just because other people have home values going down or staying flat.
Warner: Many of the housing and transit solutions that we've discussed are for urban areas, for the Front Range, for the cities. What is the solution for mountain, resort, rural communities that aren't necessarily included?
Polis: I personally support versions of many of these bills that would include more communities, but the vast majority of the housing in our state would fall under the accessory dwelling units. The transit one's a little different, but that is near bus and rail, and we think that more and more people have the opportunity to live there.
Part of the transit solution is statewide. So when we talked about funding, you and I talked about RTD. There's a lot more transit agencies than just RTD. As an example, Eagle County voters just last year approved a brand new transit agency for Eagle County. They will also get funding under this to provide more and regular service for people who can live in more affordable communities, get to work.
When we talk about mountain rail, it is very exciting. It's Denver, Winter Park, Steamboat, it's also Craig and Hayden to Steamboat. So an opportunity for people in areas that are transitioning out of the coal economy, for the more affordable cost of living and to be able to get to work quickly and easily, especially across treacherous mountain conditions more reliably as well. So there's many statewide dimensions to this work, and we look forward to doing more in the future.
Warner: Transit, particularly light rail, is often along highways. If you want people to move to those corridors, are they more often exposed to tailpipe emissions? Does this become an air quality issue?
Polis: Remember that when we are talking about Front Range passenger rail, it's the existing track. It's too costly, in fact it's cost-prohibitive, to add new tracks. So there are some areas where it crosses highways, there's other areas where it's several miles off the highway, it just depends where you're talking about.
In general, we are focused on the electric and low emission vehicle transition. Already 15% of vehicles sold are electric in our state, we're fourth in the country. If you're in the market for a vehicle you get at least $5,000 off an EV, you might get up to $7,500 off an EV, significantly reducing that sticker price at the point of purchase. As people assess the pros and cons, many people are opting for electric or hybrid vehicles, and I think we're going to see that aspect of pollution significantly reduced over time.
Warner: So the idea is that yes, people are living along busy automobile corridors, but the emissions are reduced because of the nature of those vehicles, is your hope?
Polis: Yeah. Again, I don't think these developments, housing is generally not on highways, I mean we're talking about a half-a-mile radius from a transit stop. So the transit might use the highway, but the stop itself already might be a quarter-mile off the highway, and so all of a sudden you're talking maybe three-quarters of a mile, a mile from even where the highway is. So it really just depends on where you're looking, but in general, we are all-in on the electric vehicle transition, very supportive of many of the national tax credits that are available, and we've added to those, our own state tax credits to make it easier and more affordable for people to make a choice that's good for all of our future and for cleaner air.
Warner: How much do you think the future that you're painting for us here is related to who the next president is?
Polis: Well, very specifically, I would say two things. One is on the continued rail investment, it's very important. If President Biden is reelected that funding will almost certainly, absolutely remain in place because it's a priority for him. If former President Trump is elected, it's a wild card. I mean, that could easily be negotiated away. We don't know where he is, it could be reduced, the amount of funding for rail.
I would say unfortunately, on protective tariffs that make it more expensive to buy electric vehicles and more expensive to buy solar panels, they're both pretty bad. President Biden probably gets a C minus and President Trump gets a D minus or F on the clean energy transition. So, I'm hopeful that if Biden's reelected, we can push him to allow more access to Colorado for electric vehicles, regardless of where they're made, because we need that to improve our air quality and reduce emissions.
