Gov. Jared Polis on Friday effectively threatened to pull millions of dollars in funding from local governments that have balked at the difficulty of implementing zoning, building codes, and other housing changes pushed by the General Assembly over the last two years.

The governor signed an executive order that puts on the line more than $100 million in funds to local governments that don’t comply with a series of laws adopted in the 2024 and 2025 sessions.

The executive order follows a decision by the Department of Local Affairs to hold up a wastewater funding grant for a municipality with discrepancies in its election records.

The following laws are covered under the governor’s executive order: 

• House Bill 24-1007 prohibits residential occupancy limits; the compliance date is July 1, 2024

• HB 24-1152 deals with accessory dwelling units, which could require zoning changes; the compliance date is June 20, 2025

• HB 24-1304 tackles minimum parking requirements; the compliance date is June 30, 2025

• HB 24-1313 outlines housing in “transit-oriented” communities; the preliminary compliance date is June 30, 2025

• SB 24-174 delves into sustainable affordable housing assistance; the first compliance date is Dec. 31, 2026

• HB 25-1273 focuses on residential building stair modernization; the compliance date is Dec. 1, 2027

• SB 25-002 dives into regional building codes for factory-built structures; the compliance date is May 8, 2025

Under the executive order, known as “strategic growth through compliance with state laws,” funding for local governments from various state agencies, including the Department of Transportation, the Colorado Energy Office, the Department of Local Affairs, and the Office of Economic Development and International Trade, could be tied to compliance with those laws.

The executive order defines non-compliance as non-satisfactory completion of requirements outlined in those laws, the local government adopting a resolution or policy not to conform with them, or acting contrary to the directives in those statutes.

Polis hinted at an Oct. 6 deadline for state agencies to develop grants and other funding that could be subject to the executive order.

During a Friday news conference, Polis acknowledged that the housing laws didn’t win support from some local governments.

“Many are going at different paces,” the governor said.

“This had many different opinions of local government,” he said, noting that some are “pro housing” and welcomed the assistance, while others do not view the changes favorably. He added that his order gives local governments time to successfully implement the laws that would be in play by Oct. 6 without hurting their funding.

The Colorado Municipal League was among the opponents of some of the housing laws, arguing they imposed unfunded mandates or interfered with home rule local control, which, the group argued, is established in the state constitution.

In a statement to Colorado Politics on Friday, the group’s executive director, Kevin Bommer, said, “CML will review the executive order in detail to determine whether there is any legal or regulatory basis for it. Regardless, CML continues to advocate for ‘partnership, not preemption’.”

A letter from the group to the Department of Local Affairs (DOLA) last month expressed “grave concern” over the conditions the housing laws place on municipalities.

That concern includes a hold that had been placed on an energy impact assistance grant for wastewater planning for a municipality that had discrepancies in filing election records, which CML said was unrelated to the purpose of the grant application. According to the CML letter, DOLA’s response was that it was a “long-standing practice” to require local governments to be up to date on budget, election and audit filings to receive grants unrelated to those areas.

The group said that “statutes relating to filing budgets, audits, and elections contain no provisions subjecting municipalities to withholding grant funds for non-compliance.”

The group added that, while CML appreciates DOLA’s goals, it fears “that this practice could become coercive and undermine the General Assembly’s goals in funding important local government projects.”

Only the courts can determine whether a law applies or has been violated, the letter group, and that’s around the issue of whether specific state laws apply to home rule municipalities or whether unfunded mandates apply to local governments.

“A structure where a state agency can decide these matters and take funding without oversight or recourse is not feasible or justifiable,” the group said.

Colorado Public Radio reported in February that communities, such as Westminster, Arvada, Colorado Springs, and Northglenn, have hinted or even outright said they won’t comply with some of the new laws. 

The laws that appear to draw the most objections would block local governments from building parking next to new apartment buildings adjacent to transit, and eliminate residential occupancy limits, as well as on transit-oriented communities, which sets higher density requirements for multifamily housing built near transit centers.