Property Managers: Colorado’s Furnace Regulations Are Now In Effect. Pre-Regulation Inventory Is Still Available.

The 60-Second Summary

Colorado House Bill 23-1161 is now in effect as of January 1, 2026. Furnace replacement costs have increased by up to 200%, but there’s still a window to act.

Distributors stocked up on pre-regulation equipment before the deadline. While that inventory lasts, you can still get standard equipment at pre-regulation pricing. For property managers overseeing multiple units, this is a significant opportunity, but it won’t last forever.

This isn’t about panic. It’s about math, and acting while you still have options.

Source: Colorado General Assembly – HB23-1161

What’s Changed

As of January 1, 2026, all newly manufactured furnaces must meet one of two requirements:

1. Ultra Low NOx (ULN) certification – Emissions below 14 ng/joule
2. Energy Star certification – 96%+ AFUE, currently listed on the Energy Star website

Equipment manufactured before December 31, 2025 remains compliant at pre-regulation pricing, while inventory lasts.

The Cost Reality

Equipment cost comparison (equipment only):

Total installed costs (with labor and materials):

These aren’t projections – this is based on manufacturer pricing shared with Colorado contractors.

Why Property Managers Face Greater Exposure

Volume Multiplies Risk

A homeowner with one furnace faces one potential cost increase. You’re looking at:

• Multiple buildings
• Multiple units per building
• Multiple systems approaching end-of-life simultaneously

If 15 furnaces across your portfolio need replacement after pre-regulation inventory runs out, the cost difference could exceed $75,000-$150,000.

Tenant Expectations Don’t Change

When a furnace fails, tenants don’t care about regulatory cost increases. They care about heat. Emergency replacements after pre-regulation inventory is gone will cost more, take longer, and create tenant complaints either way.

Budget Cycles Don’t Align with Deadlines

Many property management companies set budgets in Q4 for the following year. If 2026 budgets don’t account for the cost increase, you’ll either face:

• Budget overruns on emergency replacements
• Deferred maintenance that frustrates tenants
• Unplanned capital expenditures

The Strategic Calculation

Here’s the decision framework we’re recommending to our property management partners:

Act Now While Inventory Lasts If:

• Equipment is 15+ years old – You’re likely within 2-5 years of replacement anyway
• Multiple repairs in last 3 years – Signs of declining reliability
• Tenant comfort complaints – Inconsistent heating, temperature swings
• Properties scheduled for sale – Buyers will factor in equipment age

Hold and Monitor If:

• Equipment is under 10 years old – Still has significant life remaining
• No major repairs or reliability issues – Running efficiently
• Recent efficiency upgrades – May qualify for Energy Star path when replacement is needed

Evaluate Carefully If:

• Equipment is 10-15 years old – Case-by-case assessment based on condition
• Mixed portfolio – Some urgent, some not

Your Action Plan

What About Properties That Don’t Need Replacement Yet?

Not everything in your portfolio needs immediate attention. For systems that are running well:

Document Current Status

• Equipment age and model
• Efficiency ratings
• Recent maintenance records

Budget for 2026+ Reality

• Plan for higher replacement costs in future budgets
• Consider the Energy Star path (moderate increase vs. ULN premium)
• Monitor Energy Star certification requirements – equipment must be currently listed, not just meet efficiency standards

Communicate with Ownership

Property owners need to understand:

• Current equipment status
• Future cost implications
• Your recommended timeline

Source: Energy Star Certified Products Database

Common Questions from Property Managers

“Can we stockpile pre-regulation equipment?”

Technically, yes. But:

• Storage requirements matter (temperature, humidity)
• Warranties may be affected
• You’re tying up capital in inventory

For most portfolios, scheduled replacement while inventory is available is more practical than stockpiling.

“What about electric alternatives?”

Heat pumps aren’t affected by ULN regulations (no NOx emissions). If properties are good candidates for electrification, this regulation doesn’t change your timeline – but it might make the comparison more favorable.

“How do we explain this to property owners?”

Lead with the financial exposure:

“The ULN regulations are now in effect, but pre-regulation inventory is still available. Replacing [X number] of aging systems while this inventory lasts saves approximately $[Y] compared to waiting. Here’s our recommended priority list based on equipment age and condition.”

“Is this real or contractor sales tactics?”

This is law. HB23-1161 is public record. The cost increases are based on manufacturer pricing – we’re not the ones setting equipment prices.

The Bottom Line for Your Portfolio

The numbers speak for themselves.

How IMS Is Supporting Property Managers

We’ve been working with property management companies across Northern Colorado since 1973. Here’s what we’re doing while pre-regulation inventory lasts:

1. Portfolio audits – We’ll review your equipment inventory and identify priorities
2. Cost analysis – Pre-regulation pricing vs. post-inventory costs for your specific systems
3. Scheduling priority – Property managers working with us get scheduling preference
4. Flexible timing – We coordinate installations around tenant schedules
5. Documentation – Complete records for ownership reporting

Our Commitment

We’ll tell you the truth about your portfolio. If equipment should keep running, we’ll say so. If replacement makes financial sense while inventory lasts, we’ll show you the math.

Official Sources & Documentation