The reform of Colorado’s construction-defect law took an important step when the Senate Business, Labor and Technology Committee passed Senate Bill 177 (“SB-177”) on a 6-2 vote.

Prior to voting on SB-177, the Committee heard nearly eight hours of testimony, most notably from Denver Mayor Michael Hancock, who testified in favor of SB-177. Many attribute the historically low rate of condo construction in Colorado—a mere 3% of housing starts today vis-à-vis more than 20% in 2005—to Colorado’s current construction-defect law regime. Count Mayor Hancock among them. He testified that multi-family construction has been curtailed because of developers’ fears of construction-defect litigation and that Colorado’s current law operates as an “artificial barrier to for-sale multi-family housing being built in Denver.” SB-177’s main purpose is “to try and get homeowners and builders to achieve resolution in a dispute before it falls too deeply into the legal system.”

One consequence of the lack of multi-family construction is a shortage of more affordable housing options in Colorado. Mayor Hancock is acutely aware of this issue, stating that “any vibrant, successful city will depend on a true mix of housing types to accommodate the needs of various populations. This includes attainably priced for-sale, multifamily homes that appeal to our growing population of young Millennials, first-time home buyers and older residents looking to downsize their homes.” According to Mayor Hancock, the dearth of multi-family housing options is “pushing our city into a high-cost category and beginning to price out too many of our hard-working residents.”

But the problem goes beyond housing for Mayor Hancock. In his view, by limiting housing options, Colorado’s construction-defect law is also undermining a number of Denver’s goals, including promoting multi-modal transportation options, encouraging density and environmental sustainability, offering a mix of retail uses and diversity of housing types; and connecting residents with opportunities for jobs, healthcare and education. Mayor Hancock believes SB-177 will help increase housing options and advance these goals because it “offers a substantive solution to a pressing impediment to construction of for-sale affordable multifamily housing. It offers a substantive solution to help keep Denver a city of opportunity for all.”

SB-177 now moves to the full Senate. SB-177 is sponsored by Rep. Mark Scheffel, R-Parker, Sen. Jessie Ulibarri, D-Westminster, Rep. Brian DelGrosso, R-Loveland and Rep. Jonathan Singer, D-Longmont.