The Denver City Council Business Committee approved a rental licensing policy program Wednesday that would require landlords to pay for long-term licenses to rent out their properties.
By requiring the long-term licenses, the “Healthy Residential Rentals for All” program intends to improve the conditions of rental properties, help the city track its housing stock and establish better communications between tenants and landlords.
The program, sponsored by Council President Stacie Gilmore, has been in the works since early 2019. It will need to pass a full City Council vote on May 3 to be approved.
“We’re looking at historic numbers of people facing housing instability,” Gilmore said. “This rental license program will create the largest single license pools with over 54,000 eligible rental licensees.”
“At the end of the day, this is 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 having functional facilities, proper lighting and heating, sanitary dwellings, no pests and supplied utilities such as water and gas.
Gilmore said this would help address Denver’s issue of public health and safety concerns in rentals, adding that the program was inspired by a Green Valley Ranch family’s experience being stuck in a rental property with black mold and exposed electrical wires.
“It took months to get that property remediated,” Gilmore said. “I know that is not the norm, but it raised questions about how can we ensure that rental properties in our city are meeting our minimal housing standards?”
In apartment complexes, only 10% of units would need to be inspected, selected at random by the inspector.
Landlords would need to hire certified private home inspectors themselves, costing around $150 for single-unit properties and $45 for each additional unit. The city would establish a pipeline for more inspectors to become certified, though there are already over 6,000 certified home inspectors in the metro area.
Landlords who repeatedly fail to meet minimum housing standards would face a fine of up to $1,000 per infraction and risk having their license suspended or revoked – in which case tenants would still be able to stay through the end of their lease.
The program also features several renter protections, including requirements that landlords provide tenants with a copy of a written lease and a notice of tenant rights and resources within seven days of all new tenancies.
Landlords would also be required to provide tenant rights and resources 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.
“We have legal assistance that folks are not using because they don’t know that it’s there,” said Councilwoman Robin Kniech, who co-sponsored the policy. “(The program) is really key for us to make the systems we’re already investing in work better.”
Through the licensing process, the city would also gather basic contact information and data for Denver 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.
“Knowing our housing stock is critical,” Gilmore said. “We need much better data to make good policy decisions in our city."
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.
Six residents called in during the meeting. Callers from the Neighborhood Development Collaborative, Colorado Coalition for the Homeless, Enterprise Community Partners and Healthier Colorado supported the program, while callers from the Denver Metro Association of Realtors and Colorado Apartment Association opposed it.
Mary Coddington, with the Neighborhood Development Collaborative, pointed to the importance of regular inspections and the benefit that a record of rental housing stock and landlord contact information would have for connecting tenants to supportive programs and resources.
“It’s exciting to see the city stepping up to ensure safe and healthy housing for all Denver residents,” Coddington said.
According to Gilmore, 60% of the United States, including multiple cities in Colorado, already have similar rental licenses in place. One such program has been in place in Boulder since the 1970s.
Peter Wall, government affairs director for the Denver Metro Association of Realtors, opposed the program, saying the organization is concerned about the affordability of the policy requirements like fees and inspections.
“Naturally, those costs are going to get passed through to the tenant,” Wall said. “We have a concern for mom-and-pop landlords.”
For long-term units, 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.
Andrew Hamrick with the Colorado Apartment Association called in Wednesday, requesting that licenses be issued per landlord rather than per parcel to cut down on the costs of acquiring licenses for landlords with numerous parcels.
In contrast, Councilwoman Candi CdeBaca said the fee structure was “letting corporate landlords off the hook” and requested they be charged more.
Gilmore said the fee structure was created with the goal of compliance in mind, since the policy aims to ensure that minimum housing standards are followed. “We didn’t want to create some sort of system where (landlords) are trying to fly over the radar or not comply.”
Some people have also raised concerns that the program would be too expensive to implement, to which Gilmore disagrees, calling it “a pretty break-even model” with fees covering administrative costs.
The initial budget costs to get the policy started is estimated at $434,161. After that, Gilmore expects to make a profit off of the program in 2022, 2023 and 2024.
According to estimate revenues and costs from the Denver Department of Excise and License, after subtracting total costs to administer the program the city will take in $1.564 million in 2022, $1.257 million in 2023 and $190,607 in 2024 from fee revenues.
Other issues raised during the meeting included Councilwoman Debbie Ortega’s concern that long-term rentals will convert to short-term to get out of required inspections and Councilman Kevin Flynn’s concern that older homes would have trouble passing the inspections.
“We need to start somewhere,” Gilmore said. “I don’t want the desire for perfect to get in the way of good and this is good policy.”
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 and commercial lodging are exempt from the license requirement. Rental properties that are owned/operated by the government, income restricted and owned/operated by a nonprofit or income restricted for at least 80% of units are exempt from all fees.
The city is holding two virtual community meetings to discuss the policy on April 22 at 5:30 p.m. and April 4 at 10 a.m. To register, visit denvergov.org/longtermrental.