The current SmartRegs proposal is designed to coerce property owners to do extensive and expensive upgrades without any creative financing or rebates. Rebates and energy savings, if any, would flow to tenants. This is called split financing. It doesn’t work.
In a collaborative democracy, stakeholders seek a consensus. This is a program where the city tells the owners do this or lose your rental license. Unfortunately, the city loses out on what can be intelligent and helpful suggestions from the owners, as well as that most important thing — buy-in, a true collaboration, which is necessary for all successful social programs.
If property owners are forced to spend large sums of money on upgrades, then they will have to pass those costs on to tenants, and the owners might go out of business anyway. Many seniors use rental properties as retirement investments. They don’t have deep pockets.
They may have to sell their real estate to wealthy, perhaps out-of-state, industrial investors. If so, Boulder loses its best landlords, local people engaged in local property.
Rents will go up. Tenants may flee to Lyons, Broomfield, Longmont and other communities to save money. This will raise the carbon footprint. This may harm the city and the university by an increase in rental costs and decreasing occupancy.
Another aspect of the program involves an upgrade of all appliances to Energy Star ratings. Energy Star is an EPA rating that has had notorious problems. Only now is independent testing becoming a requirement. The results of the efficacy of Energy Star ratings is not yet in.
This is a time of tea parties and fears about socialism — this is the wrong time to attack small businesses.
Landlords set aside money over time to replace appliances on a planned schedule. Why not simply require that all new appliances be of a satisfactory energy-compliant rating in the future and not immediately require staggering numbers of appliances be removed and dumped or moved out of the city?
Many have voiced a concern that the most important thing that can be done immediately would be to initiate a tenant education program. All tenants could receive brochures teaching energy efficient habits: Do not leave doors and windows open in hot and cold weather; use heat and air conditioning sparingly; don’t use multiple appliances; unplug electronics; use energy efficient light-bulbs, etc. Conservation is a great way, and the most efficient way, to save energy.
Property owners can improve insulation, upgrade appliances when old ones fail, install solar panels, replace drafty windows and so forth. These can easily cost tens of thousands of dollars or more per unit. Only the wealthiest landlords can embrace this without outside funds.
The solution is zero or near-zerocost financing for the landlords without destroying their income flow. The city of Boulder needs to engage in discussions with foundations and banks to provide no interest money to landlords. The city needs to initiate talks with the state, the Public Utilities Commission, and energy providers such as XCEL so that revenue flows to the landlords to pay for the cost of their energy upgrades.
If the city takes all of the income of the landlord, then this could rise to a regulatory takings. It would be unfair and unjust. This would be a new tax on the property owners. They deserve equal protection under the laws.
Many property owners are small or family-owned businesses. This is a time of tea parties and fears about socialism — this is the wrong time to attack small businesses. Boulder is a city where the majority of citizens are forward-looking and do care about energy and the environment. Why alienate allies? Why alienate the tax base of property owners with coercive and questionable programs? Why harm small and family-owned businesses?
The energy savings measures of SmartRegs are untested. It involves conjecture. It would make sense to do a pilot study, say for example, 10 percent of all the rental properties in Boulder, of all types, single family, multi-family, apartment buildings of different sizes, and statistically calculate how much energy can be saved and at what cost. The city could sponsor incentives.
An independent panel of statisticians and diverse scientists could be assembled to evaluate the costs and benefits of the changes. Facilitators and social scientists could integrate the findings and co-opt rather than coerce citizens. That would be an exciting program. Many would volunteer to help. I would.
Meanwhile City Council needs to direct their staff to find funding and no-interest loans for the property owners. Public-private partnerships are cutting edge. Work with XCEL, the PUC and the state. Provide rebates that flow to property owners (not tenants). Let the owners provide reasonably affordable, energy-efficient housing to energy-educated tenants, rather than forcing them to face hardship or go out of business. This would be a model for the country.
Jon Miller is a Boulder attorney, property owner, and student of environmental science and policy. He can be reached at email@example.com.