In 2015, Denver attorney Caitlin Finn started to notice more and more housing-related problems popping up during her pro bono legal clinics for low-income clients. “People were being evicted,” she said.
Millennials flocking into Denver’s bustling tech industry were putting pressure on the housing market; that year, rents increased 6.7 percent, while wages grew only 0.3 percent. The pattern persisted in the years that followed, and as evictions and homelessness continued to surge, activists defending the city’s tenants coalesced around a group they called the Renters’ Rights Roundtable.
They started small, pushing the Colorado legislature for measures to address evictions, habitability, tenants’ right to have a copy of their lease, and application fees. But as the problem worsened, some leaders pushed for a more dramatic solution. Then, on April 1, State Sen. Julie Gonzales, a Denver Democrat, introduced a bill to lift a 38-year statewide ban on rent control, arguing it was necessary to address the state’s affordable housing crisis.
“Unless we have tools to be able to use,” said Denver Councilman Paul López, in an April 15 public hearing on the rent control bill, “then we are going to see folks who are going to be leaving our city. These are our safety personnel, our first responders, our teachers, the folks who maintain and build our city.”
Until the housing affordability crisis, rent control was an idea all but left for dead; only four states – New York, New Jersey, Maryland and California – had it. Now, lawmakers across the country are once again considering rent control, and some mainstream economists are even beginning to favor it as the lesser of two evils.
“Like with minimum wages, there are contexts where rent control is a policy option,” said Dr. Gary Painter, an economist at the University of Southern California’s Sol Price Center for Social Innovation and the Homelessness Policy Research Institute.
From the late ’70s to the mid-’90s, 36 states banned rent control because of pressure from conservative lawmakers and real estate interests, the exodus from central cities, and economic theory about price control.
Traditionally, economists have argued that the solution to rising rents is more construction, not rent control. The central argument is that when rents begin to rise, the market will tend to adjust itself: Higher rents will motivate real estate developers to build more housing; more construction will increase the supply of housing; and the greater supply will reduce rental costs. In contrast, they say, rent control discourages new construction, leading to an even greater shortage of rental property. This shortage pushes up the rents of unregulated units and creates an incentive for landlords to convert rent-controlled units into condos or coops, further decreasing the supply of affordable housing.
But in cities like Denver, which have not had rent control since the early 1980s, rent increases have not stimulated construction of affordable housing. On the contrary, in working-class neighborhoods, the population is being displaced through rent hikes, often with nowhere to go, as those areas are transformed for tenants belonging to higher-income groups.
“The argument that the market can solve the affordability problem neglects that, as you go to higher densities, the construction costs increase,” said Dr. Stephen Barton, an urban planner and former housing director for Berkeley, Calif., and co-author of “Opening the Door for Rent Control,” a policy brief published by the Haas Institute of the University of California, Berkeley. “So the only tenants who can move to new buildings are tenants who have relatively high incomes.”
This pattern is not unique to Denver. Rent has been increasing faster than wages throughout the United States since 2011, and in cities experiencing economic growth, rent increases have stimulated the construction of high income housing, not housing for the working class, and they have displaced the working class.
Legislators in various states have reacted with rent control initiatives. On Feb. 7, a bill to reverse a 1997 rent-control preemption law was introduced in the Illinois State Legislature. And on Feb. 28, Oregon Gov. Kate Brown signed legislation that ended a four-decade ban on rent control and added a statewide cap of 7% plus inflation on yearly rent increases. Similar efforts that failed in California and Washington state in 2018 are likely to be reintroduced soon. And in New York, tenant advocates have joined progressive Democrats in a push for a statewide rent-control law that would peg all rent increases to inflation, as defined by the Consumer Price Index, plus a fixed percentage.
In 2008, after a divorce, Elisabeth Zacarías, 45, bought a mobile home and moved with her two children to a mobile home park in Aurora, a Denver suburb. Seven years later, she was still paying for her home when the $600-a-month rent for her lot began increasing by $50 to $80 every quarter.
Many of her neighbors couldn’t keep up with the rent hikes and were evicted. In the process, they lost their mobile homes, either because they couldn’t afford to move them or because the units were so old they were no longer allowed in other parks. “After paying $50,000 with interest and all for my mobile home, I had to sell it for $13,000,” Zacarias said.
Real estate development triggered Zacarías’ displacement from the mobile home park. In the last 10 years, a light railway has been under construction in the Denver metro area, and its lines cut through low-income neighborhoods, including Zacarías’. Developers follow the lines because “as soon as they start running, everyone wants to move around them,” said Andrea Chiriboga-Flor, co-director of the Colorado chapter of 9to5. 9to5, a nonprofit dedicated to working-women, became involved in the Denver housing crisis through client demand.
The owner of Zacarías’ mobile home park used rent hikes as a strategy to get rid of tenants. But his ultimate objective was to rezone the lot and sell it for commercial use.
After leaving the mobile home park, Zacarías spent five months crammed in a room at her brother’s house with her new husband, daughter and 3-year-old granddaughter because she couldn’t find a place to rent. “I was desperate to give my granddaughter stability,” she said.
Children need stability to do well in school. There has been a growing literature in the past 10 years on the harm of displacement to people’s physical and mental health. “Rent control legislation puts a limit on rent increases and slows down the displacement. It gives people a little more time to look around for a new home,” said Barton.
Zacarías finally took the home where she now lives with her husband; her elderly parents, who are sick and have no Social Security; her daughter, and her granddaughter. She pays $2,500 a month — 80 percent of her household income. (She and her husband work as assistant painters for $11 an hour.)
“I owe $800 in electricity bills,” she said. “If we pay the rent, we don’t pay electricity, or we don’t pay the water bill. We pay electricity late to be able to pay our rent, because if we don’t pay the rent, well, we get evicted. It’s expensive, but I have no option here in Denver.”
Tenants whose rent takes up such a high proportion of household income are in a risky situation. “If something goes wrong, like a health crisis or a broken car or losing a job, that small thing will get them scrambling and unable to pay their rent,” Finn said.
Experts agree that rent control is neither a panacea nor something that can be applied universally. It is specifically useful where housing demand is increasing faster than supply in a particular area; that is, in situations where landlords have a lot of market power. “In those situations, landlords can harass tenants or raise their rents because there is not much choice. Rent control takes away one of the levers from landlords,” said Painter, who in an op-ed in The Los Angeles Times argued in favor of rent control legislation in California.
But rent control should not be done in isolation, said Charles McNally of the Furman Center, a real estate and urban policy research center at New York University. It should be combined with policies that stimulate construction of affordable housing.
Denver landlords vigorously opposed the rent control bill during the April 15 hearing at the Colorado legislature, arguing that rent control legislation would only make things worse. “Research shows that rent control leads to a 15 percent decrease in supply,” said Teo Nicolais, vice president of the Colorado Apartment Association, Metro Denver.
Public-private partnerships facilitating the construction of affordable housing along transit corridors and close to jobs is Nicolais’ favored solution.
In an April 17 press release, the Colorado Apartment Association put out alternative legislation to what tenant advocates have been proposing. It focuses on publicly subsidized private construction –– an admission that the market is not responding naturally to the demand for affordable housing.
The legislation includes establishing a fund for affordable housing initiatives; creating flexible funding opportunities and incentives for developers; expanding the state low-income housing tax credit; and creating a pilot program to use tax credits to support employer-assisted housing.
Proponents of rent control, like Barton, agree that there is no substitute for increasing the supply of housing affordable at all income levels. “But given how expensive it is and how much time it takes,” he said, “in the meantime, what are you going to do?”
The rent control bill passed the committee but died in the Senate on May 3, along with 100 other bills.
Still, Chiriboga-Flor, a leader of the effort that pushed the rent control bill into the Senate, has reason to be optimistic. Some bills that Renters’ Rights Roundtable has pushed since 2016 have been passed, and Democrats control both houses of the legislature. Her organization, 9to5, is a part of Homes for All, a national tenants movement. “We will try again next year,” she said.