Opinion: Eviction initiative could lead to higher rents

This year Boulder has three citizen initiatives in process. Two are ordinances: One requires the city government to pay for lawyers to represent renters that face eviction. The other diverts certain tax money currently collected on our electricity bills to subsidize renewables. The third amends the city charter: It requires the city to allow all housing units to be occupied by one person per bedroom plus one more, and units with fewer than four bedrooms to have four people.
Given social distancing and that the online petition system is still not operational, the probability of these making the ballot is low. But it’s still useful to discuss some of the details and implications, so that people who are asked to sign petitions are aware of what might happen if these actually pass. I’ll take the “eviction” one on first, with the rest to follow in future pieces.
The No Eviction Without Representation act requires that the city provide legal representation in any proceeding where a tenant faces the loss of housing, and that the city pays the cost of providing that representation as well as any fees and costs related to the proceedings. Further, all “operators” possessing a valid rental license are required to pay an annual fee of $75 per dwelling unit to help fund this legal work, with the fee adjusted for inflation.
The first question that comes up is — what problem is this trying to solve? Boulder does not have rent control. So we don’t have the kind of battles, as happened in New York City, where the landlords want to evict tenants that have had fixed rents for years or decades so that the landlords can raise the rents, or tear down the buildings and redevelop the sites. The biggest eviction issues here, at least of which I’m aware, are in mobile home parks. And there, the city is already very involved in trying to keep the tenants in their housing one way or another.

The next question is the economics. Bottom line, this is really about forcing some people to pay other peoples’ legal bills. Per Boulder’s 2018 Community Profile, there were 46,189 total housing units, and 52%, or 24,018, are rental units. So now we’re somewhere around 25,000 rental units. Per the initiative’s language, a few units are exempt from paying the fee, but for my purposes, the round number is adequate for getting a sense of how this will play out. Twenty-five thousand units times the $75 fee per unit equals $1,875,000 of revenue per year.
This legal work will be quite repetitive, and will not require huge expertise. So, to make the math easy, I’ll guesstimate that each attorney plus support might cost $187,500 per year. Thus, the landlords’ fees alone might pay for up to 10 attorneys working full time representing tenants facing eviction. Renting is a competitive business here, and landlords that try to boot tenants out for no good reason are just shooting themselves in the foot. Do we really need that many more attorneys?
Looking from the renters’ side, renters will know that their legal costs are covered no matter how irresponsibly they behave. So, for example, if they are on their way out and don’t care about renting again in Boulder, they might just bail on their last few months rent, knowing that their rental deposit typically only covers the last month.
If that happens, landlords could lose a few months of rent per lease, and also have to pay their own attorneys to try to collect against tenants who have free representation. So they could easily take a multi-million dollar hit. Since all landlords will be dealing with the same potential situation, they will likely just tack the expected costs onto the rents, and also raise the rental deposits to cover the potential lost months to the extent possible, making rental housing less affordable.
Attorneys, court costs, and other fees on the tenants’ side may exceed the fee revenues from landlords. This initiative obligates the city to pay this excess, so that money will have to come out of the city’s general fund revenues, meaning we pay it.

Finally, a fee is a charge for services rendered. I doubt if landlords will consider it a service to them to have to pay for tenants’ attorneys. So they will likely sue the city over this to have it declared a tax. That would require a TABOR-specific ballot measure, which this initiative is not. The lawsuit will cost the city plenty to defend, and they will almost certainly lose, leaving we taxpayers on the hook for everything.

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