Like most of the Mountain West, Colorado experienced an explosion in housing prices during COVID-19. Housing affordability in the state went from bad to worse.
In response, the Colorado Legislature last year considered a major housing reform bill, championed by Gov. Jared Polis, that would have allowed smaller, multi-unit developments in single-family neighborhoods, and required larger cities to eliminate barriers to apartments near transit, amongst other reforms. It ultimately died in the state Senate.
Undeterred, Polis and state housing reformers are reviving many of these same reforms, and a few more, in a series of separate bills.
In a phone interview with Reason last week, Polis talked about his approach to housing affordability, why last year's omnibus reform bill failed, whether this year's bills will get over the finish line, and whether we should abolish zoning entirely.
Q: In his State of the Union address, President Joe Biden briefly mentioned high housing costs. His proposals for bringing them down mostly included tax credits for homebuyers. What should be the federal role in housing affordability?
A: The federal piece is very limited. In Colorado, the biggest barrier to housing is simply the permitting associated with being allowed to build it and other costly government-imposed restrictions from the local and state levels. We're always happy to have any help federally, but fundamentally, the core of the issue is local and state.
I would add that the single biggest federal dimension is interest rates. To reduce interest rates, the federal government has several levers. One is monetary policy. One is proactive trade policy and free trade deals with more countries to reduce upward pressures on consumer costs. The third is establishing a bipartisan fiscal commission around the fiscal stability of the country. Because even sending that market signal that they're serious about fiscal reform will bring down interest rates. Whether they succeed or not is another story.
Obviously, we welcome any additional policies that on the edges help. But fundamentally, this is an issue of allowing more housing to be built near job centers and where people want to live.
Q: If you turn the clock back a decade, the only people talking about zoning reform were some weirdos in the San Francisco Bay Area. Now, zoning reform is a major issue everywhere. How did you become invested in this issue? Does the salience surprise you?
A: On whether the salience of it now surprises me, it's really become more of a crisis because of the increasing cost of housing. That's why I think you saw this issue first raised in areas that had high housing costs 10 to 15 years ago. And because Colorado is such a great place to live, we're getting there. The average home price is now $600,000 in the Denver metro area. It could be $1 million in five or ten years if we don't allow more housing to be built to keep up with the demand.
Q: Last year, Colorado had a big housing bill taking on many dimensions of zoning and permitting reform. It didn't make it over the finish line. What are some lessons you learned from last year's failed effort?
A: Sometimes an omnibus is easier to get through. Sometimes a number of separate bills are easier to get through because they allow for separate, distinct, and overlapping coalitions.
The omnibus bill would have been a big step forward for affordability in our state. It passed our State House and ultimately died on the calendar in the State Senate.
Now, we have worked with legislators of both parties. We have a number of bills that will end government-imposed parking requirements, end government-imposed occupancy limits [which restrict how many unrelated people can live together], allow accessory dwelling units by right, establish the ability to build more housing in transit-oriented communities near bus and rail, and really look at the ability to remove red tape and bureaucracy associated with housing being built.
It's a comprehensive approach, a number of different bills. They all have broad support.
Q: If you could snap your fingers and have one bill appear on your desk right now, is there one in particular you're most excited about?
A: No, we need all. You need all the above. There's no one silver bullet on housing. There are so many different kinds of barriers that exist. For instance, we found that the government has used parking requirements above and beyond what the market wants. Those add to the cost of housing and discourage housing construction. Parking requirements add $10,000 to $30,000 to the cost of a unit.
Accessory dwelling units are another example. There are places you can build them, of course, in our state. But you might have to fight City Hall to do it. And you might have to not only have the energy to do it but also tens of thousands [of dollars] of legal fees to do it, and years of delays. We want to make that easier as a basic property right.
Of course, those are inherently the most affordable types of units for rent in the future. We also want to make it easier to subdivide [lots] and sell so people can buy equity in the most inherently affordable kind of housing where the infrastructure, utilities, and water already exists.
Q: You mentioned property rights there, which obviously for us at Reason is a good selling point. How effective do you find that argument in Colorado—that zoning reform is about giving property owners more rights over their land?
A: First and foremost, it's about the pain point with the public, which is housing costs. It's a solution to housing costs that embraces our individual property rights. It's very effective on principle with those who agree with personal property rights.
The fact that it's meeting a real need that people from the left to right, the center, no matter where they are politically, want to do something about high housing costs is really what makes it even more salient.
Q: Colorado is considering a bill that would require local governments to allow more dense housing near transit. States like California have passed a lot of legislation telling local governments to allow more density. They're constantly having to go back and fight with the local governments to follow state law. Are you worried something like that will happen in Colorado? How do you bring local governments on board?
A: First of all, the piece of transit we're addressing is inherently inter-jurisdictional. In our Denver metropolitan area, we might have 30 different jurisdictions, even more. You might live in one and travel across six others to get to work and stop in another.
We have many different small to medium-sized towns in the suburbs around Denver. We have six different counties in the metropolitan area. To be able to have an inter-jurisdictional transit system that works, you need to have a development overlay that allows for housing and development in [areas] near transit availability.
Q: Should we abolish zoning completely?
A: I would say no.
There's a legitimate individual property claim if your neighbor's property interferes with yours. We take the classic example of your neighbor trying to build a 50-story skyrise in your single-family neighborhood and putting your house and property in the shade all day and obstructing your view completely.
I would say that's a legitimate property claim about how your neighbor's activities affect you. When you get to these things like accessory dwellings, duplexes, and triplexes, I don't think you have a legitimate claim as an adjacent property owner that somehow what they're doing affects your property.
But these things are all really important to discuss. I think the vast majority of people—obviously, your readership, but really on the left and the right, everybody—would agree that at some point what you do affects your neighbors and there are other things that you can do that clearly don't affect your neighbors and are your property right.
Where you draw that line is the philosophical question that people are trying to solve. I think we've defined [the line] too far in the direction of your nosy neighbors rather than your own property rights.
Q: Is there anything else I should have asked, or anything else you'd want to say?
A: I'm very optimistic that this constellation of several bills [in the Colorado Legislature] will help significantly reduce costs and remove barriers to home construction in our state. The fact that demand is high means our state's doing well. People want to live here, but the artificial constraints on supply are the reason that the costs have gone up and we're seeking to chip away at those and make housing more affordable.
This interview has been condensed and edited for style and clarity.
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