Income requirements for renters would be capped under Colorado bill

Colorado tenants could qualify for more rental housing options under legislation making its way through the General Assembly.

If passed, Senate Bill 23-184 would cap minimum income requirements to twice the cost of monthly rent. It would also limit security deposits to the cost of two months’ rent.

“It would be great if none of us paid more than 30% of our income on housing. But that’s not reality,” bill sponsor Sen. Faith Winter, a Westminster Democrat, told members of the Senate Committee on Local Government and Housing on Tuesday. “That’s not where wages are. That’s not where housing is. And so when wages and housing are not matching up, something has to be done.”

The House sponsors are Democratic Reps. Meg Froelich of Greenwood Village and Lorena Garcia of Adams County.

In general, most landlords currently require tenants to make at least three times the rent, which bill supporters say is becoming more difficult as rent costs increase and wages remain stagnant.

“Overly burdensome requirements effectively shut people out of the rental market and force them to live in substandard housing and, in the worst cases, result in homelessness,” said Aubrey Wilde, the advocacy director for the Colorado Coalition for the Homeless.

The median rent for a one bedroom apartment in Denver in 2022 was $1,720, according to one estimate. An individual would need to make close to $62,000 annually to meet income requirements.

Over half of low-income Colorado residents — those who make between 51% and 80% of the area median income — are cost burdened, meaning they spend more than 30% of their income on rent.

Winter spoke about her work in a homeless shelter before she became a state senator. She’d often try to get housing for her clients, who were often single mothers with a source of income, but ran into roadblocks with the income requirements.

Winter offered significant amendments to the bill on Tuesday. As introduced, the bill would have capped the income requirement at 1.25 times the rent and a security deposit to one month’s rent. Provisions that would have required landlords to accept the first eligible tenant who applies, allowed tenants to pay deposits in monthly installments and prohibited landlords from considering a potential tenant’s financial history were also struck from the original bill.

Those amendments received strong support from stakeholders and groups originally in an opposition or amending position to the bill.

Winter’s bill is one of many pieces of legislation aimed at strengthening tenants’ rights this session. Proposed policies include establishing “just cause” requirements for evictions in Colorado, letting local governments enact rent stabilization, prohibiting certain costly provisions in rental agreements and letting renters skirt application fees with a portable screening report for multiple properties.

Bill supporters testified that it would reduce housing discrimination based on someone’s income, which became illegal with the passage of a 2020 law.

“Landlords can no longer deny someone because they have a voucher. In practice, however, we’re seeing some landlords circumvent this law by denying people based on their amount of income by imposing minimum income requirements and by denying people based on their credit scores,” said Jack Regenbogen, the deputy director of the Colorado Poverty Law Project.

“This bill would address those issues by balancing the landlord’s interest in ensuring the solvency of a prospective tenant while also providing a tenant with a more genuine chance to be considered,” he said.

Opponents, however, argue that reducing income requirements is a bad idea. Andrew Hamrick with the Colorado Apartment Association called it a “recipe for failure and default” and will ultimately increase evictions when tenants cannot meet their financial obligations.

“We do not want to sign up people for financial failure on the front end of these deals,” he said.

Landlords also testified about the burden of increasing restrictions placed on them, especially as private landlords without the resources larger management companies have.

“You’ll find that there are a lot of private owners in this industry that are working their tails off to help you guys out,” said Amber Kelley. “I am going to quit being a landlord because it is too much. I can’t even keep track of the things I can and can’t do. I don’t have the resources to manage all this. We need some freedom to run our own businesses.”

She said she believes that many private landlords are trying to provide affordable housing and consider the needs of the communities they live in.

The bill made it through committee on party lines and now heads to the entire Senate for consideration.