Colorado House Republicans

House GOP Newsletter

Monday, October 03, 2016

♦More affordable housing requires a state-led construction defect reform effort
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More affordable housing requires a state-led construction defect reform effort  

By Representative Cole Wist (R-Centennial)

Colorado's affordable housing shortage continues to worsen, forcing more and more people into the surging rental market. There are a number of issues contributing to this shortage, but none have more impact on this problem, or the potential to reverse this trend, than reforming Colorado's construction litigation laws.

To their credit, a number of municipalities along the Front Range have adopted ordinances meant to help spur development of affordable for-purchase multi-family housing (condominiums and townhomes). In addition, Denver is attempting to create a revenue stream for affordable housing through "impact fees" on builders. We can't tax our way out of this problem nor can we fix it through a patchwork of municipal ordinances. We need comprehensive statewide construction litigation reform, and we need it now.

This is not about protecting bad builders. Builders should be expected to remedy legitimate construction defects if they occur. However, even the most reputable builders can make mistakes or have unforeseen problems during the construction process. But rather than give builders an opportunity to remedy a mistake first, many multi-family development homeowners associations (HOAs) are using the defect as an opportunity to sue a builder for damages that often far exceed the cost of the repairs. To make matters worse, current Colorado law also permits an HOA to litigate an issue on behalf of all homeowners without the consent of a majority, and even if only a small minority of units is affected. The result is high litigation risk and crippling insurance rates for builders, contractors and developers. Because the risk of litigation outweighs the benefits of building these projects, they are simply not being built.

To put this problem into context, consider individually-owned, multi-unit complexes made up more than 20 percent of new home construction in 2005. Today, that number has fallen below 5 percent. It's easy to see there are dozens of apartment complexes under construction around the metro area, indicating the demand for multi-family housing complexes remains high. But, with so few projects available for home ownership, these new apartments are doing little to create more for-sale affordable housing options.

Local ordinances may help, but builders are skeptical about how well an ordinance will protect them and reduce litigation risk for what is widely considered to be a statewide problem. Colorado law should grant builders the right-to-cure a defect prior to initiation of litigation. Second, HOAs should be required to have a majority of the homeowners' approval in order to litigate an issue on behalf of a complex. Third, arbitration and speedy resolution of disputes should be incentivized to drive down litigation cost and lower insurance rates.

Colorado needs a wide range of housing options to grow our economy and to meet the needs of people coming here for work and opportunity. To do that we need laws that enable private industry to meet market demands. Trial lawyers profiting from HOA lawsuits have been successful blocking these kinds of reforms in previous years, but I am hopeful a broad coalition of support can get this much-needed legislation to the governor's desk in the upcoming session.

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Cole Wist

In The News

    • Individual health insurance premiums will rise by more than 20 percent in Colorado next year as insurers are pulling out of the market or greatly scaling back their offerings to state residents who don't receive their insurance through their employer. ("Colorado individual insurance rates rising significantly in 2017," Denver Business Journal, 09/20/2016)

    • Colorado and other states went to federal court Tuesday, September 27,  to fight the country's first-ever program to reduce carbon pollution from coal-fired power plants. Colorado's leadership is split on whether to fight the Clean Power Plan. Republican Attorney General Cynthia Coffman signed on with about two dozen other states to challenge a key provision of the Obama administration's fight against global warming. It seeks to reduce carbon emissions 32 percent by 2030. ("Colorado, Divided Over Clean Power Plan, Heads To Court," CPR, 9/26/2016)

    • Governor John Hickenlooper formally expressed support for three measures on Colorado's statewide ballot: a minimum wage hike, an increase in tobacco taxes, and a law to allow terminally ill people to end their lives with medication prescribed by a doctor. ("Governor Backs Minimum Wage And Tobacco Tax Hikes, Medically Assisted Death," CPR, 09/28/2016)

    • Despite the fact that Colorado and other states saw an increase in income and a decrease in poverty rates between 2014 and 2015, more young adults are living with their parents than at any time in the past 130 years, according to recent national studies. The U.S. Census Bureau's American Community Survey, released on September 15, revealed that 34.1 percent of all 18 to 34-year-olds in the U.S. lived in their parents' home in 2015. New Jersey had the highest amount at 46.9 percent, while North Dakota had the lowest at 14.1 percent. Colorado falls in the middle at 24.6 percent — meaning 316,983 of the state's 1.3 million 18 to 34 year-olds are living with their parents. ("Colorado's share of millennials living with parents beats the national average," Denver Post, 09/29/2016)

    • Colorado's economy is holding steady with no change in its unemployment rate in August, according to the latest numbers released by the Colorado Department of Labor and Employment. Employers added 4,100 non-farm payroll jobs from July to August for a total of 2,617,800 jobs, according to the survey of business establishments. Private-sector payroll jobs increased 3,400 and government increased 700. ("Colorado's employment holding steady; jobless rate unchanged in August," Denver Business Journal, 09/20/2016)

    • Governor John Hickenlooper is considering an executive order that would mandate cutting carbon dioxide emissions from Colorado's power sector. The executive order, if released, could mean additional restrictions or costs for Rawhide Energy Station, which produces coal-fired electricity for Fort Collins, Loveland, Estes Park and Longmont. Those costs would likely be passed on to consumers through the various utilities Rawhide serves. ("State CO2 mandate could mean higher utility costs," Fort Collins Coloradoan, 09/14/2016)

    • A groundbreaking new study on air pollution from oil and gas wells along Colorado's Front Range indicates that pollution levels are higher during relatively short periods of time before wells go into production than they are in the years that follow. ("Groundbreaking CSU study of oil and gas wells offers new pollution insight," Denver Business Journal, 09/15/2016)  

    Tweets of the Week

    I attended the ribbon cutting of the new stadium at Durango High School followed by an exciting, hard fought football game between Durango and Bayfield. Durango finally won in overtime, but Bayfield can hold their heads high. Congratulations to all!

    Kit Roupe @KitRoupe

    #KitRoupe just so proud of our schools, especial @CarmelHSD2 6th graders! Fantastic job! Keep it going! #coleg #education

    Jon Becker @RepJBecker

    So much for affordable! Colorado health-insurance rates to jump 20% for individual buyers in 2017 via @denverpost

    Capitol Pictures

    Representative Kim Ransom (R-Douglas County) working at the Denver Rescue Mission.
    Representative Cole Wist (R-Centennial)  and Senator Jack Tate taking to time to visit the Cherry Creek Academy in Englewood.
    Representative Kit Roupe (R-Colorado Springs) attending the Urbanites Leading the Pikes Peak Region's 5th Annual Salute to the Community Breakfast.

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