Colorado’s long-standing challenges with for-sale condo construction may be nearing a turning point as House Bill 1272 advances through the state legislature. This week, the Senate gave the green light to the measure, designed to jumpstart multifamily housing development and bring affordable ownership options back to the market.

Lawmakers wrapped up their review of the bill with a series of amendments, including key clarifications to the proposed multifamily construction incentive program. Under this optional program, homebuilders who participate would be required to provide warranties for various parts of a home—covering defects for one year on general workmanship and materials, two years for systems like plumbing and electrical, and six years for major structural issues.

To qualify for certain legal protections, builders must also obtain third-party inspections during the construction phase, culminating in the issuance of a certificate of occupancy. An amendment added this week specifies that those inspections must be conducted under the authority of the insurer issuing the liability coverage—an issue of concern raised by both homeowner groups and builders.

The legislation now heads back to the House, where lawmakers must approve the Senate’s modifications. Senate President James Coleman, D-Denver, one of the bill’s prime sponsors, said Wednesday the amendments have backing from the House sponsors.

"There's a consensus that this version maintains the bill's integrity while addressing stakeholder concerns," Coleman told reporters.

Despite the bill’s broad bipartisan support—it passed the Senate with a 31-4 vote—some lawmakers said more work remains.

Senate Minority Leader Paul Lundeen, R-Monument, voiced cautious optimism. “The measure is a good first step,” he said, “but does not go far enough.” He added that he intends to continue pushing for broader reforms.

The legislation is part of a broader push to address the sharp decline in for-sale condo development in Colorado—a problem that has persisted for over 15 years. Affordable condos, typically priced around $400,000 or less, have become increasingly rare, despite being essential for first-time buyers, families, and downsizing seniors.

According to a 2023 report by the Common Sense Institute, for every new condo built in Colorado since 2018, 14 new apartments have gone up. That marks a stark contrast from pre-2009 trends, when the ratio was nearly one-to-one. The report also noted a significant drop in the number of active condo developers—from 146 to just 23 over the past decade and a half.

Industry leaders have long cited the burden of construction defect lawsuits and the high cost of liability insurance—sometimes reaching $40,000 per unit—as reasons for backing away from condo projects.

The legislation doesn’t guarantee a return of the more affordable liability insurance policies that existed before a 2010 change in state law, but supporters hope it will at least signal a more balanced legal environment moving forward.

Gov. Jared Polis, who supported the bill when it was first introduced, is expected to sign it once it clears the final legislative hurdle.

“Colorado is making historic progress to break down artificial barriers that block housing Coloradans can afford and unnecessarily increase costs,” Polis said in a statement. “There’s no silver bullet, but this bill will help increase the supply of homes in Colorado, lower costs and increase attainable ownership opportunities for Coloradans.”

Originally reported by Colorado Politics.