Experts told the Colorado Property Tax Commission on Thursday that rate cuts and tax breaks often don’t lead to savings for renters, but tax increases can lead to higher rents.
This comes after three rate cuts and two special sessions in the Legislature over the past year, and focuses the state’s property taxes to benefit homeowners and renters. There was also criticism from progressive lawmakers for ignoring the issue.
“There has been some discussion in recent years about whether a reduction in property taxes, or some reduction in property taxes, would somehow benefit tenants. We know that rents are going up,” said Melissa Mejia, state local policy director for the Regional Economic Defense Project, a nonpartisan fixed-asset organization focused on the impact on equity. He spoke at a tax committee hearing.
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Rents are “based on what the market can bear,” she says.
“Landlords are trying to make money,” she says. “It is often said that property tax increases are the cause of rent increases, but we have never seen a corresponding decrease in rent. Our clients have never voluntarily reduced their rent. There is no.”
The committee includes state and local elected officials and other stakeholders.
Congress passed property tax rate reduction legislation during a special session in 2023, a regular session in 2024, and another special session in 2024, providing more than $1 billion in relief to property owners.
However, renters are unlikely to benefit much directly from these legislative measures.
“Renters pay more property taxes than owners due to higher rents,” said Drew Hamrick, general counsel for the Colorado Apartment Association.
“Rents are the only source of income for rental housing companies, so all operating costs are ultimately paid in the form of higher rents,” he said.
It could be an indirect effect, he said, and just because property taxes increase by 15% doesn’t mean rents will increase by that much. Supply and demand have a big impact on rental prices, and increases in property taxes can lead to higher rents. High property taxes can also discourage development that increases supply and lowers rents.
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