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FEATURE | REAL
TITLEESTATE LAW
INTRODUCTION TO AFFORDABLE
HOUSING IN COLORADO
As the coordinating editor for real estate articles in Colorado Lawyer, I am pleased to announce this series on affordable
housing issues in Colorado. While the focus of the series will be of particular interest to real estate lawyers, the issues cut
across practice areas, affecting municipal attorneys, tax specialists, land use lawyers, and litigators, among others. The
Real Estate Law Section committee that organized and oversaw this special series spent many hours identifying topics
of interest, working with authors and contributors, and editing the articles, which we hope you will find edifying and
educational. Please send your comments about the series to me at cbryan@garfieldhecht.com.
—Christopher Bryan
Series Overview
by Douglas R. Tueller
O
ver the past decade craft enforcement mechanisms incentivized ventures (e.g., purely
of growth in Colorado, for both initial certification and private undertakings and public/
communities throughout ongoing compliance? private joint ventures); and statutorily
the state have been focusing ■■ Once such decisions are made, mandated housing bodies, such as
increasingly on issues surrounding what staffing and other systems the U.S. Department of Housing and
the need to address shortages of are put into place to implement Urban Development.
quality affordable, accessible, and these decisions? That said, this series does not attempt
safe housing. This is as true in the We have tried to address these to address every possible legal or
urban/suburban Front Range as it issues while recognizing the context other issue related to affordable
is in mountain resort communities of each community’s specific local housing challenges in Colorado
like Telluride, Aspen, and Vail. It is political climate. For example, or elsewhere. Neither is there any
as pertinent in rural/agricultural Colorado Springs’ philosophical effort to identify “magic solutions”
communities as it is in college towns. approach differs decidedly from that to the multitude of issues that arise
Thus, while each community has its of the Boulder community, and the in this complex area. Rather, this
own unique local needs, the various approaches, needs, and perspectives series points out some of the most
areas of the state also face many in Alamosa vary significantly from current and pressing issues faced
common challenges. those in Telluride. To clarify the in recent years and illustrates how
This Colorado Lawyer series highlights discussion, we highlight examples of these are being addressed legally and
a number of pressing (and vexing) how issues are addressed in various structurally by the various players.
legal and political issues attending the regions of the state and what legal The series provides an overview of the
challenges associated with Colorado’s mechanisms and tools are being approaches employed and the pros
affordable housing needs. In employed both within Colorado and in and cons of each.
approaching this task, we have sought other states. Ultimately, the series strives to
to address issues such as: This series focuses on the roles played supplement and further the evolving
■■ How are communities responding by a wide array of authorities and public discourse regarding this
legally to common challenges and “players” in the affordable housing issue of paramount importance to
unique local needs and demands? arena, including housing authorities the continued vitality, health, and
■■ How do various communities (e.g., municipal, county, regional); “fairness” of our state. We hope our
decide who qualifies for housing housing trusts and other nonprofit efforts move the discourse forward
opportunities and financial entities; federal, state, and local productively.
assistance, and how do they governments; federal and state tax-
4
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9 9
Affordable Housing Series
“Hang ’em High”
Affordable Housing Covenants
in Colorado (Part I)
BY BE N D OY L E
Affordable housing covenants required as a condition of land use approval secure the public
interest and define expectations among developers, funders, regulators, and the broader
community. This article discusses affordable housing covenants with a focus on Meyerstein v. City
of Aspen, the first reported decision applying the amended rent control statute.
I
magine you’re getting ready to meet with a whether an agreement entered into with the
new client, an out-of-state developer who town as part of a land use approval process
wants to build apartments in a historic was entered into voluntarily? Who may enforce
Colorado mining town, now a beautiful but its terms?
expensive mountain resort area. She anticipates More fundamentally, what is the legal nature
that local land use approval will be conditioned of an affordability covenant granted to a gov-
on a commitment to build a certain number ernment as part of land use approval—does it
and type of affordable units. She is willing to set convey a property interest to the government, or
aside at least some of the units in her building the town will require her to record against does it create contractual rights only? Are these
for affordable housing, but she thought rent the property? How long will the affordability covenants instead one of many tools used by
control was illegal in Colorado. She also might restrictions last, and will they run with the localities in administering land use authority,
want financial assistance from the town. She land? What if she or her successor wants to different in kind than private deed restrictions
needs your advice on negotiating with the town. terminate the restrictions early; can the covenant like homeowner association (HOA) covenants?
As you prepare, questions arise: What are the be modified or released in the future without Answers to these questions depend on
key terms in the affordable housing covenant incurring penalties? How will successors know the type of affordable covenant at issue, the
J U LY 2 01 9 | C OL OR A D O L AW Y E R | 45FEATURE | REAL
TITLEESTATE LAW
“
town’s and the owner’s long-term vision for of statewide concern; therefore, no county or
the property, the voluntary or involuntary municipality may enact any ordinance or reso-
nature of title transfers, and other factors. This lution that would control rent on either private
two-part article aims to assist practitioners in Statewide, 50% residential property or a private residential
negotiating voluntary affordability covenants, housing unit.”4 The statute was a response to
with a special focus on those imposed as a of all Colorado an effort by the City of Boulder to adopt a rent
condition of land use approval. Part 1 describes
how affordable covenants are most commonly renters are cost- control scheme. However, the rent control statute
does not preclude the provision of affordable
created in Colorado, how each type of covenant
is affected, if at all, by the rent control statute,
burdened, paying housing through certain restrictive covenants
entered into voluntarily.
and the exception in the rent control statute 30% or more of
their monthly
that allows for “voluntary” agreements. Part Private Covenants
2 will offer a transcript from a hypothetical The rent control statute does not govern restric-
pre-application meeting between a developer
and a town, and each party’s counsel, to discuss
household tive covenants voluntarily granted by one private
party to another. For example, a church may sell
the terms of a voluntary affordability covenant. income toward surplus land to a nonprofit organization on the
rent. Nearly
condition that the nonprofit use the land only to
Affordable Housing Covenants house low-income individuals or households for
Colorado needs more affordable housing. State-
wide, 50% of all Colorado renters are cost-bur-
one in four some period of time. Or a Habitat for Humanity
affiliate might sell property to one of its home
dened, paying 30% or more of their monthly households is ownership program participants with certain
extremely cost-
household income toward rent.1 Nearly one in affordability restrictions added to the deed. Such
four households is extremely cost-burdened, agreements are voluntary agreements between
paying 50% or more of its monthly income
toward rent.2 However, the specific affordable
burdened, paying private parties, which do not implicate the rent
control statute.
housing needs of each local community vary 50% or more Perhaps the most familiar private cove-
widely across the state. The benefit of using nants are those governing HOAs. As relevant
affordable housing covenants to address this of its monthly to affordable housing, in 2009 the legislature
need is that they can be tailored to reflect the
specific objectives of the property owner, the income toward amended the Colorado Common Interest
Ownership Act (the CCIOA) to prevent common
project funders, and the local community.
Affordable housing covenants take a variety
rent. interest communities in “ski lift counties” with
populations less than 100,000 from prohibiting
”
of forms. Three distinct categories of covenants— the right of a unit owner—public or private—to
private, public partner, and regulatory—are restrict or to specify by deed, covenant, or other
discussed below. The two most well understood document “[t]he permissible sale price, rental
covenants are those between private parties and rate, or lease rate of the unit; or . . . [o]ccupancy
those granted to a government by a property or other requirements designed to promote
owner in exchange for public funding or public affordable or workforce housing as such terms
land. Regulatory covenants voluntarily granted may be defined by the local housing authority.”5
to a local government to secure land use approval quality standards; allowable uses; occupancy
are less well understood and more often the standards; and violation and enforcement Public Partner Covenants
subject of disputes. procedures.3 With rare exceptions, affordable housing is
Regardless of the type of affordable housing not financially possible to build or operate in
covenant, certain terms are typically included The Statutory Prohibition Colorado without public support, particularly in
in virtually all such instruments. Depending on on Rent Control high-cost jurisdictions. As a result, local or state
the parties’ desired level of detail, these include Since its adoption in 1980, Colorado’s rent governmental entities may decide to support
eligibility qualifications to lease or purchase control statute has always included a version a project by providing public land or financial
a unit, such as maximum allowable income of this prohibition: “The general assembly finds assistance, such as grants, below-market loans,
and assets; the methodology for determining and declares that the imposition of rent control income tax credits, or property tax exemptions6
maximum rents or sale prices; minimum size and on private residential housing units is a matter in exchange for the recipient’s execution of a
46 | C OL OR A D O L AW Y E R | J U LY 2 01 9Affordable Housing Series
restrictive covenant running in favor of the as the lead agency for the Boulder-Broomfield Another example is Boulder’s use of general
government. In this context, the government is Regional Consortium. When the City awards fund dollars, property taxes and development
not mandating restrictions on private property; federal HOME funds to an affordable developer excise taxes, and cash-in-lieu payments obtained
rather, the owner is voluntarily agreeing to the on behalf of the Consortium, HUD requires through the City’s inclusionary housing program
restriction in exchange for a readily identifiable a recorded covenant to ensure compliance to create and preserve affordable housing in
benefit. The rent control statute does not govern with federal regulations governing the HOME the City. In both cases, the localities require
such “public partner” covenants. program.9 Requiring recordation of a restrictive recorded covenants to secure performance.12
Direct public subsidies of affordable housing covenant is typical when HUD funds are used In addition to funding from the traditional
are justified by the pressing need to maintain to build or operate affordable housing.10 The federal, state, and local government sources,
a diverse housing stock that offers a range same is true for projects that benefit from the Colorado legislature has authorized special
of housing choices and provides affordable an allocation of federal or state low-income districts to partner with the private sector to
housing for all the state’s residents, especially housing tax credits from the Colorado Housing facilitate affordable housing development
those with low to moderate incomes.7 As the and Finance Authority (the CHFA).11 and operation. For example, state law allows
legislature declared when authorizing Affordable Increasingly, Colorado communities have a city or town to form an urban renewal au-
Housing Dwelling Unit Advisory Boards, “the opted to create purely local sources of funding thority (URA). URAs can condemn property
inability of [low- and moderate-income persons] for affordable housing, which usually means to facilitate land assembly and title clearing,
to reside near where they work negatively more flexibility, less administrative burden as well as offer the redeveloper favorable tax
affects the balance between jobs and housing during the compliance period, and more local increment financing to make redevelopment
in many regions of the state and has serious control over how and where the funds are spent. economically feasible. URAs are typically only
detrimental transportation and environmental One example is Boulder County’s “Worthy willing to directly subsidize redevelopment if
consequences.”8 Cause” sales and use tax. Each year, based on the project promises sufficient public benefit,
In many public partner covenants tied to a competitive application process, the board of whether that means additional affordable
funding, the locality acts as a pass-through of county commissioners allocates Worthy Cause housing or other community amenities. These
funds from the U.S. Department of Housing tax revenues to nonprofits and housing author- promises are typically secured by covenants that
and Urban Development (HUD) or the state. ities to fund the acquisition, rehabilitation, or run with the land, such that when the private
For example, the City of Boulder (the City) acts new construction of eligible capital facilities. redeveloper itself sells, leases, or otherwise
J U LY 2 01 9 | C OL OR A D O L AW Y E R | 47FEATURE | REAL
TITLEESTATE LAW
transfers interests in real property acquired as condition written on the face of the land use run with the land, with the local government
part of an urban renewal project, successors approval document, such as a city council as the named beneficiary.19
are bound to the agreement.13 resolution, an administrative approval by the The distinctions between these two methods
Similarly, metropolitan districts may waive planning director, or the building permit itself. of carrying out a land use regulatory regime are
all or part of a tap or connection fee or extend That is, the use restriction was expressed in important. For example, a condition shown only
the time period for paying such fees “to facilitate writing and made part of the public record, but on the face of a land use approval that expires
the construction, ownership, and operation of not necessarily on a document recorded in the for lack of activity under an issued permit no
affordable housing on such property, as such county real estate records. Anyone who wanted longer has any legal effect. By contrast, a properly
affordable housing is defined by resolution drafted restrictive covenant recorded against
“
adopted by the board” in exchange for “the title will run with the land and bind successors
recordation against the property of a deed if the original parties intended it to, such that a
restriction, lien, or other lawful instrument successor must either comply with the terms
requiring the payment of such fees in the event of the covenant or negotiate with the locality
that the property’s use as affordable housing is Today, many to modify or release the covenant.
localities require
discontinued or no longer meets the definition of
affordable housing as established by the board.”14 Other Factors Affecting
While governmental agencies often have a
standard form of covenant that has been used
that the land Regulatory Covenants
Colorado’s Regulatory Impairment of Property
successfully in many transactions, there is no use applicant Rights Act (RIPRA) also affects the feasibility of
Colorado statute that clarifies the nature of local governments using regulatory covenants
an affordability covenant, what kind of terms execute and to secure affordable housing.
can or must be included, or how the covenant
should be interpreted by the courts, in con-
record a separate Ad hoc Regulatory Covenants and RIPRA
trast to statutes governing HOA covenants,15
conservation easements,16 and environmental
instrument Suppose a property owner approaches a town
with a proposal to add an accessory dwelling
covenants required for clean-up of certain granting unit (ADU) on a large lot currently used for a
covenants
contaminated sites.17 single-family home. Faced with a sustained
campaign by locals over the past few years for
Regulatory Covenants
The third major category of affordability cov-
intended to run more senior housing, the town decides on the
spur of the moment to condition approval on
enants encompasses use restrictions affecting with the land, a requirement that the owner deed restrict the
with the local
title to real property imposed on a developer property such that the ADU can only be rented
as a condition of land use approval, where the to low-income seniors. Such a requirement is
locality has an expressly stated right to enforce
the grantor’s promises against the current
government almost certainly prohibited by the rent control
statute.
property owner (referred to in this article as as the named But assume a slightly modified fact pattern
beneficiary.
regulatory covenants). There is no standard label where the same property owner wishes to
for these covenants: the instrument may be titled redevelop her lot from a single-family detached
a development agreement, zoning agreement, home into a duplex, and the town conditions
”
restrictive covenant, deed restriction, regulatory approval on a requirement that one of the new
agreement, or something else. units be deed restricted as for-sale affordable
In contrast to the private party and public housing. This condition would not be prohibited
partner covenants discussed above, regulatory by the rent control statute, which doesn’t govern
covenants are directly affected by the Colorado to know whether a property was burdened by restrictions on sale. It could, however, face other
rent control statute, which provides “no county such a restriction was obliged to affirmatively hurdles, such as a challenge based on RIPRA,
or municipality may enact any ordinance or seek out the records by contacting the city or which dictates that “[n]o local government shall
resolution that would control rent on either county. impose any discretionary condition upon a
private residential property or a private residen- Today, many localities require that the land land-use approval unless the condition is based
tial housing unit.”18 Years ago, these regulatory use applicant execute and record a separate upon duly adopted standards that are sufficiently
restrictions appeared in the form of a short instrument granting covenants intended to specific to ensure that the condition is imposed
48 | C OL OR A D O L AW Y E R | J U LY 2 01 9Affordable Housing Series
in a rational and consistent manner.”20 Without appears to be a municipal resolution mandat- the Colorado Court of Appeals reversed in
language in the town code authorizing such ing rent control, the rent control statute was part, holding that the need for further factual
a condition, adopted after sufficient public amended in 2010 to clarify that it does not development precluded summary judgment.
input, due process, and compliance with the prohibit “voluntary agreements” to limit rent Specifically, the Court declared that it was
law governing adoption of local regulations, on a property.24 unclear whether CRS § 38-12-301(2), which
it may be difficult for the town to prove that If a developer is willing to enter into such provides an exception from the rent control
requiring this covenant meets this test. a voluntary agreement, the statute states that ban for voluntary agreements between counties
RIPRA also provides: the agreement may specify how long private or municipalities and permit applicants or
In imposing conditions upon the granting residential property is subject to its terms, property owners, applied without evidence that
of land-use approvals, no local government whether a subsequent owner is subject to the Meyerstein’s predecessor “voluntarily” entered
shall require an owner of private property agreement, and remedies for early termination.25 into an agreement with the city.29
to dedicate real property to the public, or In contrast, where a developer declines to In addition to his claims of rent control
pay money or provide services to a public enter into an affordable housing agreement, statutory violations, Meyerstein asserted that
entity in an amount that is determined the locality cannot deny an application on that he was denied due process because “(1) the
on an individual and discretionary basis, basis alone.26 Localities do, however, retain board as a whole was biased, given that its
unless there is an essential nexus between their ability to deny or condition discretionary mission is to promote low income housing, and
the dedication or payment and a legitimate development permits where other unrelated (2) an individual board member was biased, as
local government interest, and the dedi- code criteria are not met. evidenced by certain public statements that he
cation or payment is roughly proportional had made.”30 On its way to rejecting Meyerstein’s
both in nature and extent to the impact of When is a Regulatory claims, the Court of Appeals quoted the board
the proposed use or development of such Covenant Voluntary? member: “I am a firm believer in people living
property.21 The rent control statute does not prescribe a up to their contractual obligations and if they
If a court treats the covenant as a real prop- method for determining voluntariness. The don’t, since we live in the West, hang ’em high
erty interest, here again it may be difficult for statute makes clear that it “is not intended to . . .Whoever developed this property received
the town to prove that this condition complies impair the right of any state agency, county, benefits and they should uphold the deed
with RIPRA. or municipality to manage and control any restrictions on it.”31
property in which it has an interest through a The lack of clarity in the Meyerstein ad-
Regulatory Covenants Negotiated housing authority or similar agency.”27 Housing ministrative record on voluntariness was the
in a PUD Agreement authorities, which are entities with a statutory primary reason the Court of Appeals remanded,
Assume a town has adopted regulations allowing charter to create housing options for low-income although it did not specify how the district court
planned unit developments (PUD), and the residents, are a good example of developers was to make this determination. On remand,
regulations encourage the creation of more willing to voluntarily deed restrict property. But the Pitkin County District Court construed
workforce housing by allowing developers how does a private developer, who doesn’t have a the term “voluntary agreement” to mean a
who choose to build affordable housing more statutory mission to own and operate affordable voluntary contract and reasoned that “a contract
density than is typically permitted in the zone. housing, know whether its agreement with a is not voluntary if it is the result of duress.”32
Town regulations contemplate execution of a local jurisdiction to deed restrict property for Because the administrative record contained
development agreement tailored to the specifics affordable rental housing is truly “voluntary”? no evidence that Meyerstein’s predecessor
of the project.22 A developer approaches the assented to the city’s deed restrictions because
town with a request for increased density in Meyerstein v. City of Aspen he was threatened and had no reasonable alter-
exchange for providing a significant number A recent dispute illustrates the intricacies native, the court concluded that the agreement
of affordable rental units on site, as the code of determining whether affordable housing was in fact voluntary. When Meyerstein again
allows. The town likes the project and adopts covenants were voluntarily entered into. Arnold appealed, the Court affirmed the district court
a resolution approving a PUD development Meyerstein, successor owner of an apartment in an unpublished decision Meyerstein v. City
agreement that includes detailed rental housing building, sued the City of Aspen, the Aspen/ of Aspen (Meyerstein II).33
restrictions, which per standard town practice Pitkin County Housing Authority, and Music Beyond Meyerstein II, Colorado case law on
will be recorded and run with the land. Is this Associates of Aspen, claiming that an affordable voluntariness is sparse.34 Some states statutorily
a defensible approach? housing deed restriction recorded against his authorize voluntary agreements with localities
In this instance, RIPRA is less likely to pose property constituted illegal rent control under as part of the land use review process.35 Cases
a problem, as it does not apply to legislatively CRS § 38-12-301.28 The district court issued interpreting those statutes, and other relevant
adopted regulations.23 While at first blush this summary judgment for the City of Aspen, and case law, reveal facts and circumstances where
J U LY 2 01 9 | C OL OR A D O L AW Y E R | 49FEATURE | REAL
TITLEESTATE LAW
“
courts are more likely to find that an agreement developers of projects such as malls and hotels
with a locality was entered into voluntarily. to generate affordable housing for 40% of the
Obviously, it helps if such agreements are new employees created by development. Given
expressly authorized by state law and reflect-
ed in local code.36 In the absence of express
However, multiple legislative declarations over the past
few decades, it’s widely accepted that creation
authorization, agreements are more likely both the 2010 and preservation of affordable housing furthers
legislative
to be seen as voluntary where the developer a public purpose.46 But no statute expressly
sought approval for a project the locality had authorizes local adoption of “inclusionary”
the discretion to deny.37
Courts also examine the administrative
clarification of housing or zoning ordinances such as the one
at issue in Telluride. Rather, local governments
record for evidence of the developer’s willingness the rent control rely on their authority to impose reasonable
statute and
to consent to the agreement requested by the conditions on zoning and building permits
government. Telling the developer to “take it in the exercise of the police power47 and, in
or leave it” will not further the government’s
cause.38
the Meyerstein municipalities like Telluride, home rule powers.
In Telluride, the respondent-developer
Courts tend to uphold covenants as vol- decisions challenged the ordinance as violating CRS §
indicate that
untary where the evidence indicates that 38-12-301. The Court of Appeals reversed the
they have a reasonable relationship to public grant of summary judgment in favor of the town
health, safety, and welfare and are intended
to mitigate the development’s impact.39 Con-
regulatory and invalidated the ordinance, and the Colorado
Supreme Court affirmed. The Court found that
versely, courts are more likely to invalidate affordability rent control implicates mixed state and local
agreements that appear intended to improperly concerns, the ordinance conflicted with the
influence the local body to act on behalf of the covenants that statute, and the state statute superseded the
developer rather than in the best interest of
the community.40 are supported by authority of a home rule municipality. The Court
held that though the town’s ordinance included
Courts are also more likely to find that an
agreement was voluntary where there is evidence
sufficient record several options for satisfying an affordable
housing requirement, its options for constructing
of the negotiated exchange of benefits and evidence of new housing or imposing deed restrictions on
voluntariness are
obligations incurred by all parties.41 As the U.S. existing housing constituted rent control.48
Court of Appeals for the Ninth Circuit put it, “a The practical result of the Telluride decision
contractual promise which operates to restrict
a property owner’s use of land cannot result in
enforceable. has been twofold. First, while a number of
jurisdictions retain some form of inclusionary
a ‘taking’ because the promise is entered into housing, these regulations are drafted or im-
”
voluntarily, in good faith and is supported plemented to avoid the mandatory imposition
by consideration.”42 Courts do recognize that of rent control on rental housing units on the
“in some cases, the process by which proffers permit applicant’s site. Instead, the regulations
become incorporated into the zoning system typically give the applicant a variety of ways to
may involve a degree of negotiation,” but this satisfy the requirement for contributing to the
practical reality “does not convert an exercise of generation of more affordable units, for example,
the police power into an exercise in contract.”43 Covenants Required by through creation of off-site units, cash-in-lieu
Courts will look behind the labels, whether Inclusionary Housing payments, or off-site land dedication. To the
titles of documents or statements made on Before the 2010 rent control statute amendments extent affordable rental units are generated
the record.44 and the Meyerstein opinions, the key decision by the inclusionary ordinance, localities may
The Meyerstein dispute reinforces that those interpreting the effect of the rent control statute require that the applicant affirm that a housing
drafting affordability covenants must consider on deed restrictions imposed at the local level authority is a part owner of the project, thereby
how the instrument will operate many years after was Town of Telluride v. Lot Thirty-Four Venture, avoiding the need to prove the agreement was
its execution, when the parties to the agreement, L.L.C.45 In that case, Telluride, a home rule sufficiently “voluntary” under the rent control
the economic and political environment, and municipality, was faced with a shortage of statute.49
the community’s vision for the highest and best available housing for its working citizens. It Second, some property owners mistook the
use of its finite land supply have all changed. passed a comprehensive ordinance requiring decision overturning Telluride’s inclusionary
50 | C OL OR A D O L AW Y E R | J U LY 2 01 9Affordable Housing Series
program as a declaration of open season on reg- the property in question, without a clear record law requires developers who benefit from
ulatory affordability covenants, with Meyerstein it can be difficult for a Colorado locality to prove discretionary approval of developments to
as one prominent example. However, both the that a requirement for on-site affordable rental respect the conditions on that public support.
2010 legislative clarification of the rent control housing was truly “voluntary” as opposed to While covenants are flexible tools that can be
statute and the Meyerstein decisions indicate impermissible rent control. The best guidance calibrated to deal with individual circumstances
that regulatory affordability covenants that available for the time being is Meyerstein II, unique to a property, a development proposal,
are supported by sufficient record evidence affirming the district court’s decision that, for and a specific community, they must be drafted
of voluntariness are enforceable. Based on purposes of complying with the rent control with care and a long-term view, as they typically
the Telluride Court’s interpretation of the rent statute, inclusionary housing deed restrictions restrict what can be done with property for
control statue, it’s clear that a local government are entered into voluntarily absent evidence decades.
cannot, strictly speaking, require that a developer of duress.
create affordable rental housing on its property
as a condition of land use approval. The CRS § Conclusion
38-12-301 language underpinning this holding Colorado’s rent control statute affects affordable
Ben Doyle is an associate at Bryan
remained unchanged in the 2010 amendments. housing covenants imposed by virtue of a local Cave Leighton Paisner LLP in Boulder.
What is less clear from the statute, as amended government’s land use authority or police The focus of his practice is affordable
in 2010, is what makes an agreement between power. We don’t actually “hang people high” for housing development in Colora-
do—@ben.doyle@bclplaw.com.
a private developer and a locality “voluntary,” covenant violations in Colorado, as the Aspen
as seen in the Meyerstein dispute. Unless a housing authority board member memorably Coordinating Editor: Christopher D. Bryan,
housing authority has an ownership interest in demanded in the Meyerstein hearing. But state cbryan@garfieldhecht.com
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J U LY 2 01 9 | C OL OR A D O L AW Y E R | 51Affordable Housing Series
NOTES
1. CHFA, The Housing Affordability any interest therein acquired by it as a part Enter., LLC, 184 P.3d 106 (Colo.App. 2007).
Gap at 4 (Oct. 2018), www.chfainfo. of an urban renewal project for residential, In this case, two special districts in Gunnison
com/news/ResourceLibrary/wp/WP_ recreational, commercial, industrial, or other County sought to foreclose statutory liens as a
HousingAffordabilityGap.pdf. uses or for public use in accordance with the result of the developer’s failure to pay certain
2. Id. urban renewal plan, subject to such covenants, fees. The developers asserted counterclaims
conditions, and restrictions, including based on alleged overpayments of the fees.
3. See Centennial-Aspen II Ltd. P’ship v. City of
covenants running with the land . . . as it deems The Court of Appeals affirmed the lower court’s
Aspen, 852 F.Supp. 1486, 1490 (D.Colo. 1994).
to be in the public interest or necessary to finding that the developer’s payments were
4. CRS § 38-12-301(1). carry out [its] purposes”). voluntary, given the absence of a showing
5. CRS § 38-33.3-106.5(1)(h)(I). 14. CRS § 32-1-1001(1)(j)(II). that they were made under written protest or
6. For more examples, see Colorado duress, or that there was a mistake as to all
15. CRS §§ 38-33.3-101 to -222 (common
Department of Local Affairs (DOLA), relevant facts.
interest communities).
Affordable Housing Guide for Local 35. See, e.g., Va. Code Ann. § 15.2-2303
16. CRS §§ 38-30.5-101 to -111 (conservation
Officials, https://drive.google.com/file/d/0B- (conditional zoning in certain localities; proffers
easements).
vz6H4k4SESOFN0LUNhVFd1c2s/view. of conditions offered in writing).
17. CRS §§ 25-15-317 to -327 (environmental
7. See CRS § 29-26-101 (affordable housing 36. See, e.g., Bd. of Cty. Supervisors v. United
covenants and restrictive notices).
dwelling unit advisory boards); CRS § States, 48 F.3d 520, 524 (Fed.Cir. 1995) (“the
29-4-202(1)(a) (city housing authorities 18. CRS § 38-12-301(1). Unlike private party Virginia legislature expressly authorized
needed to remedy unsanitary or unsafe and public partner affordability covenants, counties such as Prince William to engage
dwelling accommodations in various cities where disputes that lead to reported cases are in the process of conditional zoning; that is
due to “overcrowding and concentration of rare, two significant cases have arisen from what the County did here in the exercise of
population, the obsolete and poor condition regulatory covenants, Town of Telluride v. Lot its delegated police power to control land
of buildings, improper planning, excessive land Thirty-Four Venture, L.L.C., 3 P.3d 30 (Colo. use through zoning. There is no need, or
coverage, lack of proper light, air, and space, 2000); and Meyerstein v. City of Aspen, 282 justification, to overlay this exercise with a
unsanitary design and arrangement, lack of P.3d 456 (Colo.App. 2011), cert. denied, 2012 contract veneer. The County was not engaged
proper sanitary facilities, and the existence of Colo. LEXIS 335 (Colo. May 14, 2010). in the business of contracting when it dealt
conditions which endanger life or property by 19. Unlike other states, Colorado appellate with this developer, and the United States did
fire and other causes”); CRS § 29-4-501(1)(a) courts have not had occasion to analyze when not take from it any rights based on contract.”);
(county housing authorities needed to address it is appropriate for a locality to extract a land Dawson v. Loudoun Cty. Bd. of Supervisors, 59
“housing shortage for agricultural workers, use condition and a separate accompanying Va. Cir. 517, 524–525 (Va.Cir.Ct. 2001) (exactions
their families, and other families of low income restrictive covenant. See, e.g., City of New York claim failed given proof of voluntary proffer).
in the state . . . with the result that many v. Delafield 246 Corp., 236 A.D.2d 11 (N.Y.App. See also Nunziato v. Planning Bd., 541 A.2d 1105,
agricultural and other low income workers and Div. 1997) (“process of ‘conditional zoning’ 1110 (App.Div. 1988) (“if the agreement to pay
their families are unable to find decent, safe, may be accomplished by a municipality’s $203,000 to the borough for its affordable
and sanitary housing”); CRS § 29-4-702 (citing conditioning the zoning amendment on housing fund was entered into by the applicant
shortage of decent, safe, sanitary, and energy execution of a declaration restricting the use to induce the Planning Board to grant approval
efficient housing that is within the financial of the property by private parties interested in and was a consideration in the mind of the
capabilities of low- and moderate-income rezoning the property . . . once the conditions Board members when they voted approval
families, and the need for tools to alleviate are incorporated into the amending ordinance, [and where that condition was not set forth
the high cost of construction loans and home the conditions effectively become part of the with particularity in a zoning ordinance], such
mortgage interest costs). zoning law”). action could not be other than arbitrary and
8. CRS § 29-26-101(1)(b). 20. CRS § 29-20-203(2). See Quaker Court capricious.”).
9. 24 CFR § 92.504(c)(1)(x). The means of LLC v. Bd. of Cty. Comm’rs, 109 P.3d 1027, 1032 37. “[T]he word ‘voluntary’ means precisely
enforcement of the HOME program may (Colo.App. 2004) (citing Bd. of Cty. Comm’rs v. that the developer has the choice of either
include liens on real property, deed restrictions, Conder, 927 P.2d 1339, 1348 (Colo. 1996), and (1) paying for those reasonably necessary
or covenants running with land. Beaver Meadows v. Bd. of Cty. Comm’rs, 709 costs which are directly attributable to the
P.2d 928 (Colo. 1985)). developer’s project or (2) losing preliminary
10. See, e.g., HUD regulations at 24 CFR §§
21. CRS § 29-20-203(1). plat approval. The fact that the developer’s
1.5(a)(2), 8.50(c)(3), 100.306(a)(4), 578.81(a),
choices may not be between perfect options
891.863, and 906.39(n). 22. CRS § 24-67-106 (enforcement of
does not render the agreement ‘involuntary’
11. 26 USC § 42(h)(6)(A) to (B) (buildings are PUD Plan); CRS § 24-68-104 (authorizing
under the statute.” Cobb v. Snohomish Cty.,
eligible for the federal low-income housing development agreements).
829 P.2d 169, 173 (Wash.Ct.App. 1991) (noting
tax credit only if the minimum long-term 23. CRS § 29-20-203(1). that in this instance, developer had no absolute
commitment to low-income housing is in effect 24. CRS § 38-12-301(2). right to receive plat approval: “The county is
through an agreement between the taxpayer authorized to withhold approval if appropriate
25. CRS § 38-12-301(3).
and the housing credit agency that is binding provisions have not been made for the public
on all successors of the taxpayer, and the 26. CRS § 38-12-301(4).
health, safety, and general welfare.”).
agreement is recorded pursuant to state law as 27. CRS § 38-12-301(5).
38. Henderson Homes, Inc. v. City of Bothell,
a restrictive covenant); CRS § 39-22-2102(4) 28. Meyerstein, 282 P.3d 456. 877 P.2d 176, 179 (Wash. 1994) (superseded by
(no state low-income housing tax credit may
29. Id. at 466. statute on other grounds) (finding agreements
be allocated unless the property is the subject
30. Id. at 467. not voluntary, given lack of record evidence
of a recorded restrictive covenant requiring the
31. Id. At 468. to that effect during proceeding from staff,
development to be maintained and operated as
applicant, or Council, as well as evidence
a qualified development). 32. Meyerstein v. City of Aspen, Colo. Court of that “When the applicant asked what would
12. Both jurisdictions have included covenants Appeals No. 13CA0330, 5–6 (Jan. 30, 2014) be the consequences if they did not sign the
within a recorded performance deed of trust. (unpublished). agreement, he was told ‘it would probably
13. CRS § 31-25-106(1) (URAs “may sell, 33. Id. be the eventual disapproval of my project.’”);
lease, or otherwise transfer real property or 34. See, e.g., Skyland Metro. Dist. v. Mt. West Humbert Birch Creek Constr. v. Walla Walla Cty.,
J U LY 2 01 9 | C OL OR A D O L AW Y E R | 53FEATURE | REAL
TITLEESTATE LAW
185 P.3d 660, 663–64 (Wash.Ct.App. 2008) (9th Cir. 2008). approaches to increase their affordable
(noting unequal balance of power where the 42. Leroy Land Dev., 939 F.2d at 698. housing stock, such as those listed in DOLA’s
permit granting authority is the same entity Affordable Housing Guide for Local Officials,
43. Board of Cty. Supervisors, 48 F.3d at 524.
negotiating a “voluntary” agreement; hence the supra note 6. Some believe that repeal of the
legislature’s limitations on the locality’s power 44. Nunziato, 541 A.2d at 1110 (overturning rent control statute would be an effective
to enter into such agreements). land use approval in light of “illegal extortion” method of increasing affordable housing in
from applicant of money for the affordable the state, but recent attempts to repeal the
39. Rando v. Town of N. Attleborough, 692
housing fund, notwithstanding applicant’s rent control statute have failed. See, e.g., Perry,
N.E.2d 544 (Mass.App.Ct. 1998) (rezoning
insistence that the funds were a gift); Pollard “What Would Rent Control Mean for Colorado?”
that had a reasonable relationship to public
v. Comm’r, T.C. Memo 2013-38, P18 (T.C. 2013) 5280 (Apr. 16, 2019), www.5280.com/2019/04/
welfare and safety was valid exercise of
(despite documents containing “gift” and what-would-rent-control-mean-for-colorado
town’s zoning power; the voluntary offer of a
“voluntary offer” language, taxpayer’s grant (referencing Colorado SB 19-225).
mitigation payment and a deed restriction was
of conservation easement to county did not
not an extraneous influence that caused the
qualify as a charitable contribution, since it
town to act improperly because the payment
was a quid pro quo exchange for county’s
and covenant were intended to mitigate the
approving land use application, a personal
development’s impact).
benefit to the taxpayer).
40. West Park Ave., Inc. v. Ocean Tp., 224
45. Town of Telluride, 3 P.3d 30.
A.2d 1, 4 (N.J. 1966) (“We have no doubt the
municipality was conscious of the illegality of 46. See supra note 8.
what it did and for that reason refrained from 47. See, e.g., Bethlehem Evangelical Lutheran
adopting an ordinance, seeking instead to Church v. City of Lakewood, 626 P.2d 668 (Colo.
achieve its ends through the guise of ‘voluntary’ 1981); King’s Mill Homeowners Ass’n v. City of
contributions with spurious ‘agreements’ to Westminster, 557 P.2d 1186 (Colo. 1976).
make them stick.”). 48. Telluride, 3 P.3d at 32–33.
41. Leroy Land Dev. v. Tahoe Reg’l Planning 49. See CRS § 38-12-301(5). Other communities
Agency, 939 F.2d 696, 698 (9th Cir. 1991); have elected to use alternative regulatory
McClung v. City of Sumner, 548 F.3d 1219, 1230
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