ColoradoHB26-10652026 Regular SessionHouseWALLET

Transit and Housing Investment Zones

Sponsored By: Dylan Roberts (Democratic), Julie McCluskie (Democratic), Steven Woodrow (Democratic), Tony Exum (Democratic)

Signed by Governor

Fiscal Policy & TaxesHousing

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

14 provisions identified: 3 benefits, 2 costs, 9 mixed.

Property owners gain transit taking protections

New transit investment authorities cannot impose any tax or take property through eminent domain. Other authorities and districts cannot use this project sales tax revenue to acquire property through eminent domain. That funding ban also applies when they receive revenue through a financing contract. It does not ban those other entities from using other funding sources for property acquisition.

Transit bond investors avoid state taxes

If you hold bonds issued under the transit investment law, the bonds are exempt from all Colorado state taxes. Their interest and income are also exempt from Colorado state taxes. This provision does not establish a federal tax exemption.

Local agencies gain transit financing powers

Designated county revitalization authorities, urban renewal authorities, and metropolitan districts can receive and use project sales tax revenue. Metropolitan districts gain this power despite limits in their service plans or usual powers. New transit investment authorities can invest, spend, or pledge revenue and borrow for approved improvements. They can support loans and developer funding or reimbursement agreements through authorized public entities. Related plan changes adding this revenue do not count as substantial changes and need no separate county or city approval.

Housing credits face repayment and expiration

During the compliance period, a drop in a development's qualified basis—the amount used to calculate credits—triggers credit recapture. The taxpayer's Colorado income tax increases based on the accelerated credit tied to that drop, using a 15-year amortization. Losing zone status after the initial award does not, by itself, trigger recapture. The development credit law ends on December 31, 2063.

Transit projects face firm start deadlines

Substantial work must start within five years of project approval. Debt issuance or development and predevelopment work count when they show an intent to finish the project. After notice and a chance to fix the delay, the Commission can change or revoke approval. Approval restored for good cause requires work to start within one year, or revocation is mandatory. Revocation stops future payments and can require repayment, except for revenue already spent or pledged for eligible costs.

Transit oversight expands with repayment rules

Transit authority boards must follow Colorado's public records and open meetings laws. Financing entities must submit annual reports and independent audits; state agencies also report to lawmakers. Revenue officials can share related tax data with economic development officials and independent analysts, while confidentiality rules and penalties remain. An audit finding unauthorized spending requires the entity to repay the General Fund using other money or future payment offsets. By July 1, 2029, and every three years afterward, Revenue must review delivered-sales calculations and ways to designate additional zones.

Broad transit funding with spending limits

Approved funding covers transit facilities, roads, sidewalks, bicycle routes, trails, parking, public safety facilities, and land purchases. Other eligible improvements include electric-vehicle charging, lighting, and landscaping. Funding can cover design, construction, maintenance, financing, certain developer advances and interest, third-party improvements, reports, and audits. Financing entities must keep this revenue in a separate fund and use it only for approved project costs and debt.

Local governments gain transit funding access

Beginning January 1, 2027, local governments can apply for transit project funding, alone or with a local transit agency. The state must publish its zone map by October 30, 2026, covering areas within two miles of listed stations. Project areas generally must be within a zone, unless waived, and may include separate pieces. In geographically constrained communities, boundaries cannot exceed three miles from a transportation facility, measured along roads or walking routes. Approval requires maps and financial analyses, substantially increased transit use, eligible costs, workforce compliance, and a need for this funding.

Local governments pay transit review costs

The state may charge local governments up to $7,500 per submission for baseline-growth analysis, adjusted yearly and rounded to $100. Applicants also must pay for independent project analysis. If economic development and local affairs officials find extreme financial hardship, the cash fund pays, or the General Fund covers a shortfall. Fees and legislative funding support the new cash fund; spending requires annual appropriation, and its investment income goes to the General Fund. For fiscal year 2026–27, the law provides $190,849 from the General Fund for implementation, assuming one additional full-time employee.

Transit borrowing expands with debt limits

Financing entities can issue bonds for eligible improvements and refinance, renew, or extend earlier project bonds. Bonds can be backed by entity funds, project sales tax revenue, project property, or a trust agreement. A single debt issue generally must mature within 30 years. For an expected series of debt, qualifying consolidation or refinancing can run up to 30 years from the new issuance. Only the issuing entity owes the debt—not the state or local governments—and officials and bond signers are not personally liable.

Transit workforce protections carry funding penalties

Transit investment authorities must apply the hiring, apprenticeship, and workforce standards used for projects financed by Colorado's infrastructure financing authority. These standards cover contracts, construction, purchasing, and project delivery where applicable and consistent with the transit investment law. Failure to follow applicable standards gives the Commission grounds to change or revoke project approval. Before revoking approval for this reason, the Commission must give notice and a chance to fix the problem.

Affordable housing developers gain capped credits

The Colorado Housing and Finance Authority allocates credits for qualifying affordable developments in transit and housing zones under its allocation plan. For 2027–2033, annual awards generally cap at $8.333333 million; up to half of the prior year's unused awards may carry over. Annual aggregate allocations are also limited to credits recaptured or returned that year. Credits last six tax years; awards must be the least needed for financial feasibility, and developments must meet affordability, accessibility, and adaptability rules. Recorded deed restrictions must keep developments qualified for at least 15 tax years; pass-through owners can allocate credits, and eligible government entities can transfer them with investment and notice requirements.

Housing credit holders gain carryforward options

Taxpayers with an allocated housing development credit can apply it against Colorado income tax during the credit period. Unused amounts carry forward for the next three tax years and must be used in the earliest years possible. The credit is not refundable. Eligible insurance premium taxpayers exempt from income tax can instead claim it against specified premium taxes, including quarterly estimated payments. The same credit amount, allocation, claim-year, and recapture rules apply.

Sales tax growth funds transit projects

The law redirects existing sales taxes, without adding a household tax; the state keeps base-year revenue, baseline growth, and remaining excess. Project funding equals in-person sales tax above the growth-adjusted base, plus 20% for deliveries from outside the area. The Commission sets yearly and total caps using independent analysis; funding cannot exceed estimated eligible costs unless extra eligible costs are committed. Tourism-zone overlap has a lower cap, and specified temporary tax-rate cuts do not change the calculation. Revenue must start distributions within 90 days of approval, remit monthly after direct collection costs, and keep unremitted money separate; project revenue and earnings belong to the financing entity, and outside-area revenue may cover shortfalls.

Sponsors & Cosponsors

Cosponsors

Alex Valdez
Democratic • House
Eliza Hamrick
Democratic • House
Gretchen Rydin
Democratic • House
Jennifer Bacon
Democratic • House
Jacque Phillips
Democratic • House
Karen McCormick
Democratic • House
Kenny Nguyen
Democratic • House
Katie Stewart
Democratic • House
Lesley Smith
Democratic • House
Michael Carter
Democratic • House
Monica Duran
Democratic • House
Meg Froelich
Democratic • House
Meghan Lukens
Democratic • House
Manny Rutinel
Democratic • House
Naquetta Ricks
Democratic • House
Regina English
Democratic • House
Sheila Lieder
Democratic • House
Judy Amabile
Democratic • Senate
Jeff Bridges
Democratic • Senate
James Coleman
Democratic • Senate
Julie Gonzales
Democratic • Senate
Katie Wallace
Democratic • Senate
Lisa Cutter
Democratic • Senate
Lindsey Daugherty
Democratic • Senate
William Lindstedt
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 184 • No: 91

House vote • 5/13/2026

Senate amendments: Concur

Yes: 45 • No: 20

House vote • 5/13/2026

Senate amendments: Repass

Yes: 44 • No: 21

Senate vote • 5/12/2026

Third reading: Bill

Yes: 22 • No: 13

Senate vote • 5/11/2026

Adopt amendment J.002

Yes: 4 • No: 3

Senate vote • 5/11/2026

Refer House Bill 26-1065, as amended, to the Committee of the Whole.

Yes: 4 • No: 3

Senate vote • 5/7/2026

Refer House Bill 26-1065, as amended, to the Committee on Appropriations.

Yes: 5 • No: 4

House vote • 5/4/2026