Denver Post file Senate Bill 19-225 attempts to lift a statewide prohibition against local governments implementing rent-control policies as frustrated renters expect more from lawmakers.
Escalating housing costs have left more renters in the state desperate for relief, to the point that some are ready to resort to one the most controversial options available — rent control.
But to get that power in their hands, the Colorado legislature needs to take the first step. That’s what Senate Bill 19-225 attempts to do by lifting a statewide prohibition against local governments implementing rent-control policies.
The ban, passed in 1981 with bipartisan support and approval from Democratic Gov. Dick Lamm, came after Boulder County residents petitioned to put a rent-related measure on the local ballot. It put Colorado firmly in the camp of 37 states that prohibit such policies.
“We are working with our local communities to explore what is possible, to understand what their needs are and what their best solutions would be,” said Celesté Martinez, organizing director for United for a New Economy (UNE) in Adams County.
UNE worked with 9to5 Colorado and Colorado Homes for All to bring the bill forward. The groups see rising housing costs, along with low wages, as the two most pressing problems facing the struggling communities they work with.
The four-page bill, introduced at the start of the month, doesn’t offer specific rules on what can and can’t be done when it comes to rent control or rent stabilization. Rather, the bill gives counties and municipalities the discretion to come up with their own solutions.
Martinez said local politicians who have stepped forward in support include Adams County Commissioner Emma Pinter, Aurora Ward I council member Crystal Murillo, and Denver City Council members Robin Kniech and Paul López.
The Democratic sweep last November in Colorado has emboldened progressive groups to take on issues which were repeatedly blocked in the past or which they didn’t even attempt. This is among them.
And it is more than symbolic that one of the bill’s sponsors hails from Boulder County, where the initial effort that resulted in the ban got started. Sen. Mike Foote, D-Lafayette, also chairs the state Senate’s State, Veterans & Military Affairs committee, which will take up the bill Monday.
Backers argue rent-control measures would limit rent increases as the market catches up with population growth. Tenants would be protected from budget-busting rent hikes, allowing them and landlords to plan better. And communities would be kept intact.
Opponents argue it would have the opposite effect, reducing supply and pushing up housing costs in the long run. Longtime renters might be protected, but only until they have to move. And young people entering the market would face much higher rents than would otherwise be the case.
“We do need more affordable housing,” acknowledges Teo Nicolais, who represents the Apartment Association of Metro Denver in its charge against the measure. “There are different ways to accomplish it. Rent control is the worst approach.”
Each side has studies supporting their view: proponents from the University of California Berkeley and opponents from Stanford. Both agree that housing costs are consuming an inordinate amount of household budgets. They disagree sharply on how to resolve the problem.
The case for rent control
When Melissa Wright moved from Wisconsin to metro Denver nearly five years ago, the rent on her first two-bedroom apartment ran $1,170 a month. When a mold problem forced her to move earlier this year, her rent was $1,500.
“It cost me my health and a thousand dollars to move,” she said. “But we have no recourse. You are at the mercy of the landlord.”
To afford a place on her salary as a high school math teacher, Wright went the other way and took on a three-bedroom unit in Aurora that charged $2,050 a month. She brought in a roommate and asked her daughter, 20, to pitch in.
“Every year before I sign another year (of a) teaching contract, I ask, is this the right place for me because of how expensive it is?” she said.
The Joint Center for Housing Studies at Harvard University estimated that nearly a quarter of renters in metro Denver in 2017 were paying half or more of their income on rent, the definition of severely burdened.
While Denver still isn’t among the most expensive cities to rent, apartment rents have gone from being 17 percent below the U.S. average in 2010 to 8 percent above, according to RealPage.
A study from Apartment List found that to rent the median-priced two-bedroom apartment in metro Denver, a renter would need an annual income of $53,720 or $26 an hour to avoid becoming cost burdened.
Denver’s median income is above that. But just more than a third of renters make less than $35,000 a year, according to the U.S. Census Bureau. For a single-income household at or above the state minimum wage, there are almost no affordable-housing options.
Developers have worked feverishly building a record number of apartment units this decade. But rent-control backers note about eight in 10 of the new units built last year were high-end or luxury, which now represent a third of the inventory. Despite persistent price signals that more units are needed for middle-income and low-income renters in places such as Adams County, developers have largely not responded, Martinez said.
The case against rent control
On the surface, rent control seems like an easy-to-implement fix for escalating rents. Limit the increases and protect tenants. But Nicolais likens it to turning on the air conditioning to address the warming climate. It doesn’t get to the core of the problem, which is a lack of supply.
He said the Stanford study found that rent-control policies in San Francisco actually resulted in a sharp reduction in the supply of non-apartment rental units. Landlords of homes and condos simply sold their properties to owner occupants, which worsened the situation.
Martinez counters that apartment growth in Los Angeles and San Francisco continued to rise with rent controls and that the policies don’t target new development. Nor are rent controls about profit appropriation. The U.S. Supreme Court has ruled that landlords must be allowed a return.
“Landlords still profit with rent control. They will have enough to maintain their buildings,” she said.
Citing liberal economist Paul Krugman, Nicolais notes that rent-control measures pit landlords against tenants. When supply is constrained and rents capped, landlords lose the incentive to invest in a property. Their incentive becomes to make a property miserable enough to force someone who is rent-controlled out.
The better way to align tenants and landlords is to create so much supply that landlords compete for customers and strive to keep them, the argument goes. Competition is what will limit rent increases, and local governments have a role in fostering that, Nicolais said.
The Colorado Apartment Association, in a poll it commissioned, found that Colorado residents favor public-private partnerships and the reduction of government barriers to construction over rent control, which only 19 percent favored.
There is also the question of timing. Economic forces may yet bring rents back into balance over time like they did last decade when rents were effectively flat. Higher housing costs will dissuade people from moving here. Builders are going full throttle, planning to power through any coming recession as they try to restore supply. Wages, after years of stagnation, are finally starting to rise.
The problem, backers of the bill argue, is that the rent is due at the end of the month, not someday. And too many renters are being stretched beyond the breaking point.