Are Boulder’s post-Marshall Fire rent price hikes price hikes or business as usual?

Mike Linksayer via Flickr Creative Commons

Saturday, April 16, 2022

Estelle Smith has lived in Martin Acres since January 2021, first tenant of a newly purchased home. Her rent was increased exactly once: It went from $2,100 to $2,465 when a roommate joined her six months later, which seemed “fair, in my opinion,” Smith said.

So she was surprised when her landlord offered a higher rate for later this year, after Smith and her roommate’s lease ended: $535 more per month, a 22% increase.

It seemed particularly shocking because Smith’s owner had recently sent an email to the Martin Acres mailing list warning of price hikes following the Marshall fire, which displaced thousands. of their homes.

“It’s like she’s taking advantage of the situation,” Smith said.

Smith isn’t alone in wondering whether recent rent hikes are up to Boulder’s high-priced run — double-digit increases aren’t new, after all — or something more sinister. Price gouging for essentials after a natural disaster is illegal, as elected officials have repeatedly warned, but there doesn’t appear to be any real weight behind their words.

Landlords say they haven’t received any guidance from the state on what is and isn’t an acceptable amount to raise rents, and state officials have declined to answer questions about laws specific actions or actions against alleged offenders.

“It’s basically saying, ‘Please don’t,'” said Caleb Dickinson, owner of Louisville-based Fox Property Management and a member of that city’s city council.

Market rules

After the Dec. 30 Marshall Fire, every Boulder City Council meeting began the same way: the mayor reminded residents that “Colorado law prohibits charging excessive prices for certain essential products, goods, or services. during a time of disaster”. Boulderites who believe they have been victims of price gouging have been encouraged to call the Colorado Attorney General or visit the website set up to report such practices: StopFraudColorado.gov.

The top of this site features a message about the Marshall Fire, which “creates[d] fertile ground for fraudsters. A link invites users to find out more, including a page on price gouging after the fire. Accommodation is not mentioned.

The published guidelines simply list “building materials, consumer foodstuffs, emergency supplies, fuel, medical supplies or other necessities” (added emphasis) such as those for which indefinite “excessive prices” cannot be practiced without possibly breaking the law, passed during the pandemic.

Lodging is covered by state laws against “deceptive marketing practices,” as Colorado Attorney General Phil Weiser made clear when he sent letters to online rental companies in January after ” some owners have raised their prices excessively”.

A press release issued by the AG’s office did not include any specific definition or even an example. There is no published document provided by the state that defines price gouging with respect to rents during a disaster; outside of crisis periods, Colorado prohibits most forms of rent control.

“There is no clear rule,” Dickinson said. “I can’t find anything shielded.

Neither does BARHA, the Boulder Area Rental Housing Association. Chairman Todd Ulrich said BARHA’s lawyer laughed when he asked about state law regarding rental price hikes.

“There is no legal definition, relayed Ulrich. “At least not in state law.”

A spokesperson for the attorney general’s office canceled a proposed interview with boulder beat and declined to answer specific questions about the application, definitions, or advice to landlords and renters.

“Given where we are in our review process,” Emily Wenger wrote via email, “it would not be appropriate to discuss this matter at this time.”

Wenger provided a link to the one-page notice, which itself appears to indicate that there are no limits on rent increases.

There was no price increase, he says, if the “sellers” (in this case, the owners) “can demonstrate that the price increases were directly attributable to the additional costs imposed by the suppliers of the seller or other market conditions beyond the seller’s control.

‘All they want’

With 1,000 homes destroyed by the fire, many more people were suddenly looking at the same small pool of homes – the perfect market conditions for rising prices.

Rents in Boulder County have risen 4.4% so far in 2022, double what they did in the same period last year. Seasonal increases — rents here typically drop in the winter and rise again in the spring — also started earlier in Boulder and Broomfield, said Rob Warnock, senior research associate for Apartment List.

“Boulder and Broomfield counties saw seasonal rent increases begin about a month earlier,” Warnock said, “and prices have increased in those counties than in others.”

It’s impossible to say from this limited data that the Marshall Fire directly caused the increase, Warnock warned, but “the theory makes sense.”

“The fires had an impact on both supply and demand: they created more demand by displacing households and reduced the supply of available housing by destroying them,” Warnock said. “The theory is that it should have increased competitiveness, assuming people are looking to move within the same community. Price changes are consistent with this.

Costs have increased with inflation, so some increase is justifiable. It will be all the more difficult to prove the abusive prices, the burden of which lies with the tenant.

“People can definitely say, ‘My expenses have gone up and I’m raising my price,'” Dickinson said. “You have to prove otherwise. There’s no way anyone’s gonna win one of these cases. They’re not going to hire a lawyer and take on a case that’s really complicated legally.

“People are going to get away with doing what they want.”

Maximize revenue

Ulrich, who also runs a property management company, said supply is improving as homes damaged by smoke and water become habitable again. Secondary owners also offered empty houses to the victims. Some landlords have actually had to lower rents, after first trying to raise them, he said.

Dickinson wrote a letter to his clients, shared with boulder beatwarning them against asking for much higher rents and suggesting increases of 0-5% for renewing tenants and up to 8% for properties with turnover.

“If we try to maximize your income this summer,” he wrote, “we could potentially increase rents on all properties by 15-30%, which would certainly put us both in legal danger because we would move hundreds of families and couldn’t rationalize that increase. 12.5% ​​may be enough to file a complaint, and we don’t want to get anywhere near that line.

Those figures were based on independent research into price gouging for other items like water in past disasters, Dickinson said. He and Ulrich were unaware of any state guidance to landlords or property managers on what does or does not constitute a price hike.

Ulrich has his own definition, following the famous maxim on obscenity: “You know it when you see it”.

Instances of actual price increases were quite rare, Ulrich said. Most of Dickinson’s clients “responded positively” when he suggested that they “do (their) part by ONLY raising our rents by a fair and reasonable amount.”

Smith also found the kindness of neighbors and friends with whom she shared her saga. She was able to negotiate with her landlord a small monthly increase of $285, or 11%. But the experience further soured her on Boulder.

“I knew it was going to be expensive, but I kinda thought people were going to be better,” she said. “It really feels like people care a lot more about maximizing their investments than impacting people’s lives.

While it worked for her to stay in her house, Smith knows that next year the expected rent is $3,000 a month. And she will come back to the same place: looking for an alternative in a market where prices are only rising.

“There’s a lot of energy and support for people who lost their homes to the fire,” Dickinson said. “There won’t be the same emotional or financial support for people who get taken off the market a year later.”

— Shay’s Castle, @shayshinecastle

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Lodging Attorney General Rock boulder city lodging inflation Marshal Fire abusive price lease tenant

Lodging Attorney General Rock boulder city lodging inflation Marshal Fire abusive price lease tenant

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