By Nancy J. Burke, VP of Government Affairs, COLORADO APARTMENT ASSOCIATION

Not even a week after the 2010 Colorado legislative session commenced, a bill that would allow municipalities to assess rent was introduced and assigned to the Local Government Committee. The bill (HB1017) came out of the Economic Opportunity Poverty Reduction Task Force Committee.

Should Colorado look to the failed housing policy of rent control? Setting price controls through rent has reduced supply and private investment in affordable housing. It also has a negative effect on school funding. Rent control lowers property values, which in turn lowers taxes received by the state to fund schools. Forty-six states have no rent control policies and thirty-five of those have statutes which make rent control illegal. In fact, the liberal state of Massachusetts voted to repeal rent control because it was not providing housing to those truly in need.

Current state law prohibits counties and municipalities from enacting any ordinance that would control rent on private residential property. The law was enacted in 1981 because of statewide concern that if rent controls could be imposed on properties, investment in rental housing in Colorado would significantly decrease. Thus, the adoption of such controls by local governments or the state would have an adverse impact on the rental housing market. This legislative history is well known in Lot Thirty-Four Venture v. Town of Telluride, a case decided in 2000 in which the Colorado Supreme court held that a Telluride ordinance constituted a form of rent control in violation of the statute.

Since then, local government groups and housing advocates have made numerous attempts to amend the statute. Each time these attempts were quelled.

House Bill 1017 attempts to unnecessarily “clarify” the rent control statute. It permits a property owner and municipality (or county or housing authority) to enter into a “contract” that controls rent on private property. We continue to see more localities impose requirements on developers and owners to agree to rent control or affordable housing requirements as a condition placed upon the developer to obtain project approval.

Currently, Colorado statute provides that a governmental entity can control any property “in which it has an interest” through a housing authority or similar agency. This bill attempts to broaden that “interest” so that the local government can impose a rent control restriction through a deed restriction or covenant. This would allow local governments, when approving a project, to force the owner or developer to sign a deed restriction with a rent control provision giving the government the power to enforce that restriction. If so, that deed restriction would be exempt from the rent control prohibition. The deed restriction or covenant runs with the land (it is recorded on the property) and can never be altered without the written express consent of the government agency and an owner. This forever restricts the property.

In short, HB 1017 adversely affects private property rights because these rent controls are imposed by governmental entities with leverage on the owner/developer. This bill takes away the statewide prohibition of rent control.

Further, there is NO need for this legislation. Land Use Restrictive Agreements (LURA) are available and in use today. They require just compensation to the developer in exchange for affordable units to be rented to residents with AMI below a certain level. These contracts are working.

The Colorado Apartment Association has taken a position of opposition and is actively lobbying against the bill. For more information contact Nancy Burke, Vice President of Government Affairs, Colorado Apartment Association at nburke@aamdhq.org or 303-548-3193.