## Facts

- The Town of Telluride, a Colorado home-rule municipality, enacted Ordinance 1011 imposing “affordable housing” obligations on most new developments.
- The ordinance required developers to provide affordable housing for 40% of the employees generated by new development, using a 350-square-feet-per-employee metric.
- Compliance options included (1) constructing deed-restricted affordable units, (2) deed-restricting existing market-rate units, (3) paying an in-lieu fee, or (4) conveying land valued at the in-lieu fee amount.
- The Town adopted Affordable Housing Guidelines implementing the ordinance through deed restrictions that set maximum rents per square foot, capped annual rent increases (generally 2.5% absent approval), restricted eligible buyers/tenants, and capped resale prices and their rate of increase.
- Lot Thirty-Four Venture, L.L.C., a developer subject to the ordinance, challenged the ordinance and guidelines as unlawful rent control under Colorado’s rent-control prohibition, § 38-12-301.
- The district court upheld the ordinance on summary judgment for the Town; the court of appeals reversed, finding the ordinance constituted prohibited rent control.

## Issues

1. Whether Ordinance 1011 and its implementing guidelines constitute “rent control” prohibited by § 38-12-301.
2. Whether a home-rule municipality may regulate rents as a matter of local concern notwithstanding § 38-12-301.
3. Whether the ordinance is preempted because rent control is a mixed state and local concern and the ordinance conflicts with state law.

## Decision

- The Colorado Supreme Court affirmed the court of appeals and invalidated the ordinance to the extent it regulated rents and prices on private residential property.
- The court held Ordinance 1011 fell within the commonly understood meaning of “rent control” because it required rent caps and limits on rent increases through mandatory deed restrictions tied to development approval.
- The court held rent control is a mixed matter of state and local concern; where a local enactment conflicts with state law, the state statute prevails.
- Because § 38-12-301 broadly prohibits local measures “controlling rents” on private residential property, and the ordinance did so, the ordinance was preempted and unenforceable.

## Legal Principles

- A statutory prohibition on local rent control is applied according to the term’s commonly understood meaning, not a narrow technical definition.
- A local scheme that fixes maximum rents, limits rent increases, and controls transfer/resale pricing for private residential property constitutes “rent control” even if adopted within a land-use or affordable-housing program.
- Under Colorado home-rule doctrine, matters are classified as local, statewide, or mixed; for mixed concerns, conflicting local ordinances yield to state statutes.
- When the General Assembly declares rent control on private residential property a matter of statewide concern and prohibits local rent control, a conflicting home-rule ordinance is preempted.

## Conclusion

The Colorado Supreme Court held that Telluride’s affordable-housing ordinance operated as rent control through mandatory rent and price restrictions on private residential property, and that state law banning local rent control preempted the ordinance despite the Town’s home-rule authority.


Town of Telluride v. Lot Thirty-Four Venture, L.L.C., 3 P.3d 30 (Colo. 2000)