Experts told Colorado’s property tax commission on Thursday that rate cuts and tax decreases don’t often translate into savings for renters but that tax hikes can lead to higher rents.
This comes after three rounds – and two special legislative sessions – of rate cuts over the past year in the Legislature, and criticism from progressive lawmakers that the focus on the state’s property taxes benefits homeowners and ignores renters.
There has been “some conversation over the last couple of years that a reduction in property taxes, or some property tax relief, would in some way be a benefit that is passed on to tenants. This is not something that we have ever seen happen. We know that rents are going up,” Melissa Mejía, the head of state local policy for the Community Economic Defense Project, told the bipartisan Commission on Property Tax during a hearing focused on equity impacts.
Rent is a “function of what the market can bear,” she said.
“Landlords are looking to make revenue,” she said. “We often see that property tax increases are blamed for increases in rent, but that has never come with a corresponding decrease in rent. We have never seen voluntary decreases in rent with any of our clients.”
The commission includes state and local elected officials and other stakeholders.
The Legislature passed property tax rate cut bills during a special session in 2023, the regular 2024 session and during another special session in 2024, amounting to over $1 billion in relief for property owners.
But renters are unlikely to see many direct benefits from those legislative efforts.
“Renters are paying more property taxes through higher rents than our owners,” said Drew Hamrick, the general counsel for the Colorado Apartment Association.
“The only revenue source for a rental housing provider is rent. So every operating cost, ultimately, is paid for in the form of higher rents,” he said.
It can be an indirect effect, he said, and just because a property’s taxes increase by 15% does not mean rent will also increase by that much. Supply and demand have a bigger impact on rent prices, but higher property taxes can trickle down to cause higher rent. High property taxes can also deter development that increases supply and keeps rents down.
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