A new rental licensing policy that would require landlords to pay for long-term licenses to rent out their properties unanimously passed its first full Denver City Council vote Monday, moving on to final consideration.
By requiring the long-term licenses, the “Healthy Residential Rentals for All” policy intends to improve the conditions of rental properties, help the city track its housing stock and establish better communications between tenants and landlords.
“This is something my office and I have been working on for two years to address tenants' rights and protections,” said Council President Stacie Gilmore, who sponsored the policy, calling it “a tool to keep folks housed in our city.”
To get a license, rental properties would need to pass an inspection to assure they adhere to Denver’s minimum housing standards – including functional facilities, proper lighting and heating, sanitary dwellings, no pests and utilities such as water and gas – to address health and safety concerns.
While the proposal received unanimous council support Monday, it has not been without controversy. Many landlord associations have spoken out against the policy, concerned about the fees they will have to pay if it is implemented.
The Denver Metro Association of Realtors, with more than 7,000 members, is opposed to the licensing proposal, even emailing its members to ask them to voice opposition to City Council members.
“We’re not opposed to making sure property owners are taking care of their rental properties; that’s not the issue,” said Mike Papantonakis, association chairman.
Papantonakis argued that there are already laws on the books, like the Colorado Warranty of Habitability, to make sure renters have a recourse if property owners are negligent, and the proposed measure would increase costs for property owners and likely result in increased rents.
“The majority of rental properties are owned by the ‘mom-and-pop’ owners that might have one or two rental units,” Papantonakis said. “Adding costs are going to hurt the property owners, and the tenants. … It just looks like the city is trying to get another revenue stream.”
Under the proposal, the one-time license application fees would be $50 and license fees would range from $50 for single-unit properties to $500 for multi-family properties with more than 250 units. Landlords would require licenses for each rental parcel, not each unit.
The licenses would have to be renewed every four years. Inspections would also be required every four years or if there’s a change in ownership.
Landlords would need to hire certified private home inspectors, costing around $150 for single-unit properties and $45 for each additional unit. In apartment complexes, only 10% of units would need to be inspected, selected at random by the inspector.
Gilmore and Councilwoman Robin Kniech spoke out against the idea that the policy would be a major financial burden on landlords or lead to increased rent.
“(For a single unit) we’re talking about $200 spread over four years … about $4 a month. That is not an exorbitant cost,” Kniech said. “I’m not sure everyone writing us understands how modest the fees are in the current proposal.”
Kniech also addressed the assertion that the required inspections would lead to extreme costs in repairs to meet guidelines, pointing out that the inspections only require minimum housing standards that are already required by law.
“They are not new costs that this ordinance is adding. This is not, ‘Is every piece of your building code up to date?’ This is, ‘Is there heat? Is there electricity and lighting? Is there hot water?’ ” Kniech said. “If those things are not in place, you have no business operating a rental unit in our city.”
In contrast to the concerns of landlord associations, Councilwoman Candi CdeBaca argued Monday that the fees should be higher for landlords of large, multi-unit properties, saying the current plan disproportionately penalizes mom-and-pops.
CdeBaca said she plans to introduce amendments to the policy next week that would make the license fees for all landlords $50 per unit instead of topping out at $500.
This amendment would also change the licenses to require fees for each unit instead of each parcel, increasing eligible licensees from around 54,000 parcels to around 200,000 units.
“We’re harming the people that are least equipped to do the work of compliance and also not recognizing that it is the corporate landlords that are the most responsible for our eviction crisis,” CdeBaca said. “To let corporate landlords off the hook would be highly problematic for me.”
Gilmore disagreed with this amendment, saying the fee structure was created intentionally low to avoid raising rents and encourage compliance, since the policy aims to ensure that minimum housing standards are followed.
Kniech also argued against the amendment to increase fees, saying it likely wouldn’t be legally justified.
“In a fee situation, we cannot be charging based on our values,” Kniech said. “It has to relate to the actual processing time and work that city staff are doing. If it’s not 250 times the work for the staff, then how do you justify having 250 times the fee?”
During the meeting, Councilman Kevin Flynn raised concerns about the required inspections, saying he was worried that older homes wouldn’t be able to meet current codes.
To that, Gilmore reiterated that the rental units would only need to meet minimal requirements codes, not new build codes.
Gilmore also said she will keep older homes in mind when working to establish the inspection checklist, which is scheduled to be developed this summer if the policy is approved. The city will hold various outreach events with renters and landlords during the development process.
“We are not looking to displace people,” Gilmore said. “We want to be sure that wherever they’re living are meeting these minimal housing standards.”
The policy also features renter protections, including requirements that landlords provide tenants with a written lease and a notice of tenant rights and resources within seven days of all new tenancies and with any rent demand.
The rights and resources would be provided by the city and include information about minimum housing standards, how to file a complaint, legal rights when receiving an eviction notice and how to get rental assistance and legal representation.
Through the licensing process, the city would also gather contact information and data for landlords and rental properties. Currently, city officials do not know how many rental properties there are in Denver. Estimates for the number of rentals range from 37% to 50% of Denver’s housing stock, Gilmore said.
This data would be used to track affordable housing options, in addition to lending information to the city’s tracking of energy efficiency objectives and how many rentals are available to people with disabilities.
If passed, the policy would be implemented in three phases:
- Jan. 1, 2022: Early licensing open for all rental dwelling units.
- Jan. 1, 2023: Licenses required for any rental property consisting of two or more dwelling units. Early licensing required for single dwelling units.
- Jan. 1, 2024: Licenses required for any rental property consisting of a single dwelling unit.
Any landlord who goes through the licensing process early would get 50% off of the application fee.
On-campus college housing, boarding homes, short-term rentals, commercial lodging and those who rent a room out of the house they live in are exempt from the license requirement. Rental properties that are owned/operated by the government or income restricted are exempt from all fees.
The policy will have to pass a final full City Council vote next Monday.