How Did We Get Here?
Colorado residential investment property owners and property managers now have a slew of new rental laws to follow, including no-fault evictions, screening limitations, price stabilization in disasters, and warranty of habitability. Colorado is the sixth state with rules preventing landlords from ending leases without cause. In May, local governments gained a right of first refusal on affordable housing sales and a first offer on market-rate housing. Governor Polis signed most of these new regulations into law over the last two years. DenCO Property Management (DenCO) has posted blogs about the 2023 and 2024 Colorado legislative sessions and their impact on rental property investments. For more details, please click here to go to the DenCO blog page.
According to Drew Hamrick, the Colorado Apartment Association’s general counsel, in his recent article in SmartCitiesDive, the legislative push has two reasons: the Democratic majority in the Colorado General Assembly and advocacy of pro-renter groups.
Rocky Mountain High
Colorado, for decades, has been a magnet for well-educated young people looking for a place to start their careers and enjoy the outdoors. For long-time residents, the legalization of marijuana seemed to turbocharge the migration of the state ten years ago. For years, Denver’s traffic seemed manageable, then it was not, after tens of thousands of people moved here, and they all had cars. Young college-educated people tend to be liberal, with progressive viewpoints forming dominant majorities along the Front Range, transforming Colorado into a reliably blue state politically. Colorado’s politics are now urban-oriented, moving away from our pioneer and mountain roots that John Denver used to sing about in the 1970s. Democrats made significant gains in Colorado six years ago when they won offices of governor, secretary of state, attorney general, and the majority of the state Senate in 2018, which gave them total dominance of state government for the first time since 1938.
The Democrats hold 46 of the 65 seats in the Colorado House of Representatives, creating a supermajority. The situation is similar in the Colorado Senate, where Democrats hold 23 seats of the 35-member body, one seat away from a supermajority. Colorado’s Democrats have been the exclusive primary sponsors of tenant rights and housing bills, which generally favor the renter side of the landlord-tenant relationship.
Advocacy
A small group of wealthy Colorado liberals called the “Gang of Four” spurred the transformation to Democrat control of government by pouring millions into local elections starting in 2004. Their first effort was to defeat Republican senatorial candidate Bob Schaffer and Representative Marilyn Musgrave. Two of the four, Tim Gill (Quark) and Rutt Bridges (MicroMAX and ProMAX), made millions in computer software. Jared Polis became wealthy by building and selling Internet companies. The fourth, Pat Stryker, is the heir to the medical products fortune started by her grandfather Homer Stryker, M.D, founder of Stryker Corporation.
The successful strategy became known as the “Colorado Model,” an ambitious plan to build permanent Democratic majorities nationwide. A book titled “The Blueprint: How the Democrats Won Colorado (and Why Republicans Everywhere Should Care)” is an inside look at the tremendously successful political phenomenon. One of the main tactics in the Colorado Model is to fund advocacy groups that push progressive policies like green energy, animal rights, veganism, open borders, lead-from-behind appeasement, gun control, transgender and tenant rights, and affordable housing. The research and white papers generated by these groups are picked up by the press and social media, creating an echo chamber that amplifies their political agenda. It is all about creating political leverage, and it works. The big joke in Colorado now is that Republicans are not rich enough to be Democrats.
Colorado Center on Law and Policy (CCLP) and the Community Economic Defense Project (CEDP) are two groups expanding tenant rights here. They are proud of their achievements over the last two years and dropped many press releases to get in the news. There are plenty more of these non-profits with alphabet soup acronyms active in tenant rights, homeless, and affordable housing causes. These groups do not create wealth or expand Colorado’s economy. In most cases, their works do the exact opposite. Their mission statements are as follows:
CCLP: “CCLP is dedicated to combating poverty and fostering economic equity in Colorado. We focus on systems-level change, supporting long-term, sustainable upward mobility for our communities, beyond simply meeting basic needs. Our vision: A Colorado where everyone has what they need to succeed.”
CEDP: “We partner with low-income and working people to build economic and racial equity. We do this by confronting economic abuse and investing in community wealth. We use an ever-evolving set of legal, economic and advocacy tools to challenge and dismantle unjust systems, building quickly towards a world where all people have what they need to live and thrive.”
Their mission statements reflect the words of then presidential candidate Barack Obama, who stated in 2008 that he wanted to “fundamentally transform” America. However, Coloradans generally want something other than fundamental transformation. They do not mind changes, some small and large, but let’s be reasonable. Who among us—besides sophomores at CU, Boulder taking Marxism 4250—wants to transform the government of Colorado fundamentally?
Generally, these progressive advocacy groups want to expand tenant rights and increase access to affordable housing. Looking at their leadership and boards on their websites, they are generally beautifully educated, affluent, and accomplished people. From their website copy, these people truly believe they stand closer to the angels, but they are advocates and want to tell people how to live their lives because they know better. With almost super Democrat majorities in both Colorado houses, they got most of what they wanted. Even though real estate property rights are diminished, the legislative process watered down or removed the most extreme provisions. So, the system worked.
Property Rights
Property owners and investors in Colorado are not like frogs in a pot of water on a hot stove burner. They will notice when Colorado becomes an anti-landlord state. Real estate investors will jump the pan and move to low-tax states such as Tennessee, Texas, and Florida, where property rights are respected. The migration might already be happening. In 2022, Colorado’s population outflow exceeded its inflow for the first time in memory. Only Progressives in total power enacting anti-business and anti-property rights policies and laws can ruin a paradise. Just look at California.
Complexity of Doing Business
While these changes make Colorado more tenant-friendly than before, it is still generally landlord-friendly compared to highly regulated states like California or New York. Colorado property managers retain substantial control over lease terms and can still evict and screen tenants. DenCO is worried that many of these regulations will increase the cost of doing business. For example, The City of Denver requires all landlords to obtain a “residential rental property license” before they can legally rent out any residential property within the city limits, which is part of the city’s effort to enforce minimum housing standards for rental units. Ironically, tenants will eventually pay more rent to cover these additional operational costs. Also, small rental property investors and management companies may be unable to compete in highly regulated industries, leading to consolidation, less responsiveness to tenant and owner needs, and higher costs.
After the Constitutional Convention ended on September 17, 1787, Benjamin Franklin was asked by a woman bystander, “Well, Doctor, what have we got, a republic or monarchy?” Franklin famously replied, “A republic, if you can keep it.” Real estate professionals and investors, the best way to push back on one-party rule policies is to get politically involved and vote to bring balance back to Colorado’s politics.
DenCO believes its job is to keep its owners informed about local and state rental regulations and to keep all properties compliant under its control. DenCO manages over 175 rentals in the DU, Washington Park, and other neighborhoods in the Denver area and has been in business since 1999. Call us at 303-722-9688 or click here to complete a Contact Us form.
Recent Comments