Opinion: Property tax relief should be linked to local land-use reform

Good things do not come in small packages for Colorado homeowners checking their mail this month. Property tax assessments with eye-watering increases of 30% or more are threatening many Coloradans already struggling with inflated prices for just about everything else. But Colorado’s property tax crisis, Colorado’s housing crisis, and Colorado’s homelessness crisis all share the same root cause: a lack of housing supply caused by the abuse of local control over land use.

The Pew Charitable Trusts’ housing policy initiative compared Colorado’s housing market to the rest of the country and found that “strict land-use policies appear to be contributing to Colorado’s housing shortage.” Property owners have aggressively lobbied for decades to protect local control of land use that allows them to use zoning, permitting, and building codes to prevent new developments that they argued would adversely impact their property values. They have amply reaped what they sowed.

As with local control of public education and policing, local control of land use decisions has its roots in racist policies intended to control immigrants and people of color. Anti-growth homeowners continue to use local control to block in-fill development and keep property values high by keeping people out.

Instead of affordable housing built along transit corridors to let essential workers work close to their jobs and support growing families close to already-staffed schools, Colorado has managed decades of population growth by plowing under open spaces for car-centric exurban sprawl that chokes our air, empties our reservoirs, ratchets up infrastructure costs, and hollows our civic institutions.

Renters, in particular, are bearing the brunt of Colorado’s broken housing market. According to U.S. Census data, while the median mortgage payment increased 26% from 2011 to 2021, the median rent increased 66% over the same time. The percentage of homeowners spending more than 30% of their income on mortgages decreased from 35% in 2011 to 29% in 2021, but the percentage of renters spending more than 30% on rent increased from 51.5% to 53.3% in 2021.

Rather than seeing the property tax and housing affordability crises as different symptoms of the same disease, Colorado’s legislators, bizarrely, are treating them with separate policy Band-Aids. These policies would bail out homeowners while ignoring renters and starving TABOR-capped public services.

In 2022, Colorado’s legislators cut property tax assessments by $700 million and used $200 million to compensate tax districts for the corresponding shortfalls to protect essential public services primarily funded by property taxes. In 2023, Democrats want voters to approve a ballot initiative bundling more exemptions and caps on property taxes to flatten the curve in property tax growth. Renters shouldn’t hold their breath to get some trickle-down help: landlords have every incentive to pocket this relief.

Gov. Polis staked out a bold agenda to address the housing crisis in his 2023 State of the State that culminated in Senate Bill 23-213. The original version of this bill would have pre-empted local control of land use in urban areas to permit more housing development, cap parking requirements, and end occupancy limits. In addition to being good policy, the bill is also good politics: 66% of Colorado voters support the construction of more duplexes and townhomes.

After howls of protest from municipal leaders and homeowners, most of SB23-213’s meaningful reforms were gutted in committee, and a shell of the bill passed out of the Senate. House committees deserve credit for putting some teeth back in the bill by permitting ADUs and density along transit corridors before the bill goes to the House floor, and then — assuming it passes — to a conference committee.

The saga of SB23-213 illustrates the preposterousness of expecting local control to fix the problems that decades of local control created. A more credible and longer-term solution could address property taxes and land use in combination, while respecting the sanctity of local control: tax districts’ eligibility for property tax relief should be tied to land use reforms and enforceable commitments to build affordable housing.

If a community wants to continue to be part of the problem and prioritize inflating property values by opposing new development, they should be at the end of the line for eligibility for property tax relief. Conversely, if a community wants to be part of the solution and changes its zoning, permitting, and funding to support affordable and in-fill housing development, they should be rewarded with additional property tax relief.

When personally faced with the consequences of blocking affordable in-fill development, many anti-growth homeowners believe they are entitled to an exception to the rules. They want to preserve the soaring property values for which they lobbied so aggressively while also receiving bailouts from paying their fair share taxes on their now valuable property.

These homeowners cannot have it both ways: if communities want to shrug off building affordable housing to “protect” their property values, they should not be entitled to relief from the inflated property tax assessments they created for themselves—and everyone else.

Brian C. Keegan, Ph.D., of Bouder, is a computational social scientist and assistant professor of information science at the University of Colorado Boulder.