A bill is making its way through the Colorado Legislature that would allow cities to cap yearly rent increases. Do you think Boulder renters will benefit from this effort? Why or why not?

Friday, April 7, 2023

Ryan Bonick: Rent control works. It’s not enough.

Colorado is finally considering relaxing its state-level ban on rent control, after passing a law in 1981 to pre-empt a Boulder citizen initiativeProcess through which a citizen can enact legislation, via a petition and significant community endo... that would have created rent limitations in the city. Should we celebrate? Flee in fear?

Most people in Boulder can agree that housing is too expensive, especially renters like myself. The average rent for an apartment in Boulder is $2,335, far out of range for many essential workers who we all claimed to treasure during the Covid-19 pandemic, including teachers, service workers and nurses. 59% of renters in Boulder are either cost-burdened (spending  more than 30% of their gross income on housing) or severely cost-burdened, spending more than 50% of their income on housing. 

Rent control will fix this by capping rent increases to, in Colorado’s case, 3% plus inflation. This helps benefit existing residents, who can be reassured that their rent year-over-year will not skyrocket beyond their means. A 2019 study from Stanford showed that rent control in San Francisco reduced displacement of existing residents.

Opponents say that rent control reduces construction of new housing, resulting in higher rent costs for new and moving renters. One common carveout for rent control bills thus tends to be excluding new construction from being subject to rent control during the first ten or fifteen years. A study by Berkeley’s Planning Department found that their town’s strict rent control, which excluded new construction, resulted in no less new construction than neighboring cities without rent control. More interestingly, the Berkeley study attributes the general decline in construction and subsequent rise in rent costs to the downzoning of the city in 1973 and other growth cap laws. Sound familiar?

Frankly, I don’t think this bill is strong enough. 3% above inflation (like last year’s 8% inflation rate) can still be a more than 10% rent increase. But it will stop extreme increases like the 40%+ increases cited during testimonies for repealing the rent control ban. For that alone, I support it.

I am generally supportive of rent control, especially as a short-term solution to skyrocketing housing costs to prevent people from being displaced. However, I want to see additional changes passed in tandem that target the root causes of those skyrocketing rents. 

Thankfully, the state is also working on that, with the governor supporting a state-level land-use bill that enables denser housing options like duplexes, triplexes, and accessory dwelling units, which will help Boulder create more housing supply without encroaching the green zone.

Ryan Bonick was born and raised in the Midwest before moving out to Boulder for work in 2018 and falling in love with the outdoors. When not having panic attacks about the future under climate change, he spends his days biking, rock climbing and reading outside, and his nights dancing to house music. More about Ryan

Teddy Weverka: Rent control would smooth out increases, not stop them

Boulder rents continue to rise as demand outpaces supply. In 1989, I rented the least-expensive one-level Martin Acres home I could find for $700 a month. Today, the cheapest one advertised on Zillow is $2,700/month. That is an increase of 50% more than the Consumer Price Index in 34 years.  This free-market increase is about 1% per year above the CPI (compounded).  

Colorado House Bill 23-1115 would allow cities to enact rent control, limiting how much landlords may increase rent. Under this bill, cities may not set that limit lower than a floor of the CPI plus an additional 3%. 

The free market has not given us rent increases anywhere near this rate. Over the long term, market rate rent increases have been the CPI plus 1%, and this bill won’t let cities set limits anywhere near that number. The floor is high enough that it will not decrease rent prices in the long run. Its only effect will be to limit short term rent spikes.

Existing home costs are driven by competition with new housing, limited supply and increasing demand. New home costs are driven by increasing construction costs, limited land supply and, in Boulder, the burden of subsidizing low-income housing. These costs have risen rapidly.  Demand has risen as well, in part due to the rapid increases in CU Boulder enrollment.

Rent rises with the cost of new and existing houses. Most builders sell housing to a secondary market; those landlords require a return to justify their investment. The secondary market is necessary to incentivize construction.  

These forces push up rents. This bill does not address these forces.

Without rent control, long-term rent increases average 1% above CPI. Some years they have been higher. Between 2013 to 2016, Boulder rents increased about 10% per year. Home prices rose at similar rates. 

Rent control at 3% above CPI would have stifled these 10% per year rent increases. But since costs continue to rise, those rent increases would have merely been pushed into later years until the 3% annual increase catches up with what the free market increases would deliver. The savings to renters would have been temporary. 

Rent control at 3% above CPI will not significantly limit long-term rents, but merely smooth out short-term increases. Perhaps that is the goal of this bill. It might help tenants remain in a rental as they figure out how to budget for more smoothly increasing housing costs. It reminds me of the story about how to cook a frog.

It is worth passing this bill to smooth out rent increases, but this is not real rent control. Real rent control would allow cities to cap rent increases to the CPI plus 1% — or lower.

Teddy Weverka lives in Boulder where he enjoys practicing science and photography and keeping backyard chickens. More about Teddy

Jane Hummer: Want real change? Tie rent control to land use reform

Rent control is a short-term solution to one aspect of the much larger problem of insufficient housing supply to meet the demand in Colorado. It’s worth pursuing, but only as part of a broader approach to housing affordability. 

The vast majority of rent control’s benefits will accrue to a single group: people who currently live in a rental home that they want to stay in. Helping people stay in their homes is an important and laudable goal. We also need to be forward-looking and acknowledge that the housing crisis is even more acute for people who need to find new rentals in communities that simply aren’t building enough housing. 

Rent control will not increase the supply of available rental units and in the long run may actually decrease the number of affordable rental units available if landlords decide to redevelop their properties into more luxurious dwellings or convert rentals to condos. A study on the effects of San Francisco’s rent control laws found that rent control caused an overall reduction in the number of rental units, a shift towards rentals aimed at higher income levels, and increased market-rate rents in the long run.

Despite these long term risks, current renters have a legitimate and immediate need for relief from rent hikes that often far exceed inflation and any increases in landlords’ costs of ownership such as property taxes. This rent control bill will help them greatly, and I support it for that reason. I’m just preemptively agitated that if this bill passes, anti-development forces will use it as an excuse to do nothing else to address our affordable housing crisis. 

Colorado voters recently passed a new affordable housing proposition, Prop 123, which distributes funds to communities that commit to building more affordable housing. My fear is that many anti-development voices will simply say “We have rent control now, we don’t need more housing,” an argument which may be compelling to policymakers who want to appear to care about housing affordability but oppose any new development or increased density. 

Even worse, I’m concerned that this bill may dampen legislators’ enthusiasm for the land use reform bill that will legalize a greater variety of housing in formerly single family home zones if passed. These two efforts will have a much greater effect on housing affordability for both renters and owners across the state than any rent control bill could ever have.

I would support this bill more enthusiastically if it was set to expire in a reasonably short period of time (e.g., 4-6 years), thus putting pressure on legislators and local policymakers to pursue long-term approaches that will more directly address the root causes of our crisis and avoid some of the risks and downsides of rent control. I also encourage legislators to add a requirement that any community that wishes to enact rent control measures must also participate in the Prop 123 affordable housing effort. 

Tying these two efforts together would demonstrate that our leaders appropriately view rent control as a short-term approach as part of a much-needed comprehensive housing affordability strategy for the state.

Jane Hummer is currently enjoying life as a full time stay-at-home dog mom whilst pursuing a career change. More about Jane

Fred Hobbs: Rent control will provide a solid foundation for future generations

Every house is built on a foundation, and every life is built on a foundation. In both cases, if the foundation is faulty, everything else that is being built upon it risks falling apart.

For many of Colorado’s young adults, the foundation they are using to try and build their lives is rotting from the bottom due to out of control rental costs. Colorado House Bill 23-1115, which is aimed at allowing local governments to enact rent control measures, could help shore up that failing foundation.

To discuss how HB1115 can help build a more solid foundation to our coming generation of leaders, let’s start by discussing the 30% rule — the financial rule of thumb that a household should spend no more than 30% of its income on housing costs. Households are deemed cost burdened if they surpass that percentage.

According to a recent report from New Era Colorado, in Colorado’s 10 counties with the most young renters, a staggering 40% of Coloradans aged 18-34 fall into this cost burdened category. Dwelling in that category has dangerous real life consequences, forcing young adults to make impossible choices between paying rent and getting medical attention, or buying groceries, or exploring post-high school educational opportunities. As they enter their prime work, family-forming, and wealth-building years, poor finances are thwarting their ability to build any sort of stable footing in life.

The costs aren’t just individual. Without a significant improvement in the fortunes of young Coloradans and young adults across the country, as Reid Cramer wrote in an examination of the millennial wealth gap “… an entire generation will miss out on the chance to reach their full potential, imperiling our democracy in the process.”

Common sense rent control won’t solve all of the financial problems facing our next generation of business and civic leaders. It will help provide solid grounding for that cohort, which they can then use to work toward gaining the economic stability preceding generations took for granted.

Prohibiting localities in Colorado from enacting well thought out rent control policies makes no sense for any community that wants to ensure that all of its citizens can embrace their full potential. HB1115 provides the foundation that can help make that full potential a reality, and deserves the support of all legislators who want to see Colorado continue to grow and thrive.

Fred Hobbs is Director of Public Relations at Imagine!, an organization that serves people with intellectual and developmental disabilities. He is also a Colorado native who cares deeply about the future of his state. More about Fred

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