Colorado Democrats are split on President Biden’s embrace of rent caps

President Joe Biden’s proposal this week to cap rent increases in larger apartment buildings across America has elevated an idea that’s long been embraced by progressive housing advocates in Colorado — but, in a split among Democrats, is opposed by Gov. Jared Polis.

What’s more, at the local level, rent-stabilization policies are essentially illegal under Colorado law.

Unveiled by Biden as he’s sought to ward off calls to step aside in the presidential race, the plan would cap annual rent increases at 5% for properties with more than 50 units. That would cover more than 20 million units nationwide, or roughly half of all rentals in the U.S.

The plan would put valuable tax write-offs at risk as a way of getting landlords on board. A landlord who didn’t follow the cap would lose access to a tax deduction allowing them to write off depreciation as properties age. Though exact numbers would vary, several housing experts told The Denver Post that the write-off is substantial.

The proposal, which faces long odds to becoming law, would also exempt new properties in an apparent bid to blunt the common criticism that rent caps stifle development.

Biden’s plan comes as rental and home prices have surged in Colorado over the past several years. Simultaneously, evictions have increased sharply: A record number were filed in Denver last year, and data shows the city is on pace to smash that record again in 2024.

The high cost of housing is a top concern of Coloradans, polls have consistently shown, and state lawmakers have proposed sweeping housing reforms in recent years.

But the near-supermajority of Democrats in the state Capitol have at times sparred over how best to address the crisis.

“We were very happy to see President Biden’s announcement because this would prevent corporate landlords from engaging in what’s happening right now, which is the continuous and unchecked gouging of rent prices, forcing renters to either pay for the roof over their heads or feed their families or get critical medications,” said Carmen Medrano, the co-chair of Colorado Homes for All. The housing coalition has backed legislation to allow local governments to enact rent caps.

Colorado law now prohibits cities from passing rent stabilization or rent control policies. Recent legislative attempts to drop that prohibition have been unsuccessful amid opposition from Polis and other Democrats.

But Biden embracing the policy is a shot in the arm for advocates who have argued that rent caps are vital to protect vulnerable tenants. Medrano pointed to a 2023 survey that showed 60% support among Coloradans for rent control policies in their local communities.

What Polis and other opponents say

Still, the cap faces an uphill climb: Biden is fighting for his political life amid concerns from voters and senior members of the Democratic Party about his ability to campaign and to beat Republican Donald Trump in November.

Even if the president stays in the race and wins, the November election also will determine which party controls each chamber of Congress. Anything short of a Democratic trifecta in the White House and in Congress would likely spell doom for rent cap legislation, assuming that there would be sufficient support even among elected Democrats.

Given that Democrats in Colorado have repeatedly clashed over the issue, that’s not a certainty, either.

Biden’s proposal this week was met with opposition from the landlord lobby and from Polis. On the social media platform X, he argued Biden’s rent cap would stifle development and increase costs.

In recent legislative sessions, Polis has pursued a supply-side approach that seeks to eliminate local barriers to development. While he and Democrats had success on that front this year, those reforms — and the denser apartment development they promise — will take years to bear fruit.

Polis spokeswoman Shelby Wieman declined an interview request about Biden’s rent caps proposal. In a statement, she wrote that Polis “knows this will take congressional action, which is unlikely to occur, and looks forward to the many discussions ahead on the ways to save Americans money on housing. The President’s interest in this issue is a good first step.”

Rent caps have received more attention in recent years as housing prices have rocketed nationwide. Oregon now caps annual rent increases at 7%, plus an inflation factor (coming out at 10% this year). St. Paul, Minnesota, passed a 3% cap in 2021, but policymakers rushed to add exemptions shortly afterward as development cratered.

The debate around the policy’s efficacy has continued, too. The Biden administration pointed to a New York University white paper that argues that “broad-based” regulations and relatively high caps would be effective if paired with subsidies for lower-income earners. Opponents have repeatedly maintained that rent caps are broadly counterproductive, and a 2018 Brookings Institution report argued they’re helpful to tenants in the short term — but harmful in the long run.

Drew Hamrick, a senior vice president with the Colorado Apartment Association, derided rent caps as failed policies. He said they benefit tenants who are lucky enough to get into a price-controlled unit, but otherwise they stifle development and limit on-site improvements.

“Fully at the mercy of corporate landlords”

Still, those concerns may be alleviated by a nationwide — rather than city-by-city — approach, Hamrick and others said.

While one city’s enacting of rent caps may spur developers to look elsewhere, a nationwide approach would help neutralize landlords’ ability to search for greener pastures. The Biden administration’s proposed exemption on new builds theoretically blunts fears that property owners would get out of building apartments altogether.

“The fact that it would have a nationwide impact eliminates that,” Hamrick said. “But it still has the chilling effect on investment overall. What you worry about is that these retirement plans and insurance companies that basically fund the construction of housing in the U.S. start to find better places to park their money than real estate investment because there are artificial caps.”