Colorado Gov. Jared Polis has signed House Bill 26-1065 (HB26-1065) on May 27, establishing a new state-level financing tool that local governments and transit agencies can use to fund infrastructure and housing projects near transit stations across the state.
HB26-1065 creates the Transit Investment Area Act, which authorizes a form of tax increment financing (TIF) built on state sales tax revenue rather than the local property tax increment that traditional renewal projects rely on. In practice, that lets a share of the new state sales tax revenue generated around a transit project flow back into the project itself.
Officials have framed the new act as a way to spur housing projects and infrastructure improvements around transit and rail stations in particular, while increasing ridership at those stations at the same time.
The new bill also comes with deliberate limits on how far the program can reach. The Colorado Economic Development Commission may approve no more than three transit investment projects in any calendar year and no more than six in total.
It also cannot greenlight projects that would dedicate more than $75 million in state TIF funds across all approved projects in a given fiscal year. Lawmakers have signaled that this cap is a starting point rather than a ceiling, noting their intent is to authorize more projects down the road as state resources allow.
Getting a project off the ground will follow a set timeline. Before any applications come in, the Colorado Office of Economic Development must publish a map of the state’s transit and housing investment zones by Oct. 30, 2026, working alongside the Department of Local Affairs and the Department of Transportation. Local governments can then begin applying on Jan. 1, 2027, either on their own or in partnership with a transit agency that serves the proposed area.
Each application is then reviewed by an independent analyst, hired by the office through a competitive bidding process, who estimates how much sales tax revenue a project could reasonably pledge. The commission then sets the final figures after a public hearing.
Eligible applicants include a single local government, a group of neighboring local governments or a local government teamed up with a qualifying transit agency, such as a local or regional transit district. To receive the money, an applicant needs a qualified entity to manage it, either a newly created transit investment authority or an existing body such as a metropolitan district.
The bill names a range of improvements eligible for funding, including:
- Roads, streets and state highways
- Rights-of-way
- Lighting
- Direction and location signage
- Land acquisition
- Trails and paths
- Public safety facilities
- Landscaping
- Public plazas and pedestrian spaces
- Transportation facilities
- Bicycle and pedestrian infrastructure
- Surface and structured parking facilities
Alongside the financing tool, the new law also creates a separate tax credit meant to aid affordable housing built within the transit and housing investment zones. The Colorado Housing and Finance Authority can award up to about $8.3 million in these credits each year from 2027 through 2033, with the program set to expire at the end of 2063. The credit is modeled on the federal Low-Income Housing Tax Credit and is open to a broad set of investors.
As the bill notes, Colorado has poured more than $6 billion into 85 miles of new Front Range rail lines to date, yet ridership still trails when compared to other states. This is a shortfall lawmakers attribute, in part, to a lack of housing near those lines. According to state estimates drawn from 2020 census data, more than 90% of rail stations and 84% of bus rapid transit and frequent bus corridors along the Front Range area fall below the housing density considered necessary to support frequent service.
While much of the discussion surrounding the bill has centered on the Front Range area, the program is built to reach the whole state. A transit and housing investment zone is defined as covering the area within two miles of a transit or rail station. A project applying for funds can extend up to three miles from a station where mountains, water or other natural features make a community harder to connect.
The act also directs that the financing be made available statewide and applied with an eye toward geographic diversity, leaving the door open for communities well beyond the metro corridors to compete for a limited number of slots.
Photo by Ahmed Mulla from Pexels
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