Coloradans with low incomes could qualify for much more rental housing under a new bill making its way through the state legislature.
Most landlords require tenants to earn at least three times the amount they charge for rent. In 2022, the average monthly cost of a one-bedroom apartment in Colorado was $1,364. That means tenants must make at least $49,104 to qualify. The individual median income for Coloradans is just under $37,000, according to the most recent Census data from 2020.
If passed, Senate Bill 184 would cap minimum income requirements for tenants to twice the cost of rent. It would also cap security deposits to the cost of two months' rent, among other changes.
"When places are requiring three, four, five times the rent, it's becoming almost impossible to qualify," said bill sponsor Sen. Faith Winter, D-Westminster. "Something has to be done. That's what we're doing with this bill, making sure responsible folks who pay their rent can qualify for housing."
Winter said the issue is what inspired her to run for office in the first place.
While working at a homeless shelter, Winter said she met with landlords to try to find housing for her clients who had stable income, were sober and were often single parents. While these clients could afford to pay, Winter said they were constantly rejected solely because their income wasn't three times the cost of rent.
Proponents of the bill said it would close a loophole landlords use to discriminate against people who use housing vouchers. While landlords can't deny tenants for using housing vouchers, they can still require the tenant to earn a certain amount. Proponents said this is also particularly difficult for those who live on fixed incomes, such as older adults, veterans and people with disabilities.
Critics opposed what they view as excessive restrictions on landlords, and some argued that the bill's new requirements would lead to more defaults and evictions.
The bill clarifies that tenants can raise discrimination as a defense in eviction proceedings, and it prohibits landlords from considering credit scores when evaluating potential tenants who use housing vouchers.
"Overly burdensome income requirements effectively shut people out of the rental market," said Aubrey Wilde with the Colorado Coalition for the Homeless. "The unreasonable financial standards are the primary barrier to housing access for Colorado Coalition for the Homeless clients, with subsidies and without."
The Senate Local Government and Housing Committee advanced the bill on Tuesday.
While the bill faced significant opposition when first introduced, most opponents conceded, thanks to numerous changes made to the bill on Tuesday. The changes included raising the income cap to two times rent, instead of the original 1.25 times rent, and raising the deposit cap to two months' rent instead of the original one month's rent.
Winter also fully removed several provisions of the original bill that would have, in part, required landlords to accept the first eligible tenant who applies; allowed tenants to pay deposits in monthly installments; and, prohibited landlords from considering a tenant's financial status if they have paid their rent on time for the last three months or if they have a financially qualified co-signer.
The Colorado Bankers Association, Colorado Association of Realtors and Rocky Mountain Home Association switched their positions on the bill from "oppose" to "amend" because of these changes.
However, the Colorado Apartment Association said there is still one remaining issue.
Andrew Hamrick with the association said limiting income requirements to twice the cost of rent will lead to more defaults and evictions.
"If you make $100,000, it mandates accepting rent of $50,000 a year. That is too high. That's a recipe for failure and default," Hamrick said. "We do not want to sign up people for financial failure. ... This is just going to extend misery to everyone."
The general rule of thumb for budgeting rent is to spend a maximum of 30% of one's monthly income on housing, with those who spend more than 30% being classified as cost burdened.
But with the cost of housing in Colorado rising faster than incomes, fewer and fewer residents are able to adhere to this standard. In 2022, a study found that half of Colorado renters spent more than 30% of their income on housing — a rate above the national average and the eighth highest of all states.
Other opponents of the bill lamented the increasingly frequent restrictions put on landlords in Colorado.
The state legislature is currently considering several bills that sponsors say will lower housing costs for renters by, among other things, prohibiting evictions without just cause and capping housing fees for owning pets.
One the same day that SB 184 advanced out of committee, the legislature granted final approval to House Bill 1095, prohibiting rental agreements from including provisions that waive certain tenant rights, such as the right to a jury trial or to prevent landlords from entering a property without notice.
"All this legislation is making it really, really hard for us," said Amber Kelly, a Fort Collins landlord, testifying against SB 184. "If these bills all pass, I am going to quit being a landlord. It's too much. ... We need some freedom to run our business."
Winter responded that her bill is not meant to be punitive towards landlords, but to be supportive towards tenants.
"We know that there are many, many phenomenal people that are landlords," Winter said. "However, over the last decade, the cost of housing in Colorado has doubled, forcing folks to spend larger shares of their income on rent. Our rental market hasn't adjusted to these challenging economic realities. ... It's time to put in place sensible guardrails."
The Senate Local Government and Housing Committee voted, 4-3, to advance the bill to the full Senate for consideration. The vote was along party lines, with all Democrats in support and all Republicans in opposition.
Winter said she expects to further amend the bill during the second reading on the Senate floor.
