[bouldercouncilhotline] Hotline: Proposed SmartRegs Fee

[cmosupport at bouldercolorado.gov]

Sender: Richstone, Susan

Dear council members,



City staff recently learned that the Boulder Area Rental Housing Association (BARHA) has concerns (see attached brief) with the proposed SmartRegs fee. Staff has prepared responses to each of BARHA's concerns below. We have included relevant background information about the proposed SmartRegs fee, and you can also learn more by visiting the SmartRegs website at https://bouldercolorado.gov/plan-develop/smartregs.



Background on SmartRegs and Rental Housing Licensing Fees

The SmartRegs Program, which was adopted in September 2010 and implemented in January 2011, established baseline energy efficiency requirements for dwellings offered to the public for rent. By December 31, 2018, all rental properties in Boulder are required to obtain and pass a SmartRegs inspection to demonstrate compliance with the minimum energy efficiency requirements. As of July 2016, approximately 4,650 properties (46 percent of the total required properties) with rental housing licenses have not completed the SmartRegs process.



City costs to administer the SmartRegs program include contracted services and associated FTE. Since its inception, the program has been 100 percent funded by the CAP tax. When SmartRegs was originally implemented, the city planned to provide incentives and services for the first few years to assist rental property owners with compliance and to incentivize early adoption. After a review of the Rental Housing Licensing and SmartRegs programs, staff has recommended that the costs for administering the SmartRegs program be partially recovered through a new fee, similar to the Rental Licensing Fee, that is charged to those properties who utilize the SmartRegs services. This would mean 60 percent of the program costs would be covered by the new fee while the remaining 40 percent would be covered using the CAP tax. EnergySmart services to assist with compliance are still available through the county EnergySmart program and the city's expanded contract with CLEAResult. However, SmartRegs rebates will no longer be available in 2017 and 2018.



The proposed $50 fee would apply to any new or renewal rental housing license that has not passed a SmartRegs inspection by December 31, 2016. The fee would be due at the time of license issuance. Public outreach regarding this new fee was conducted in September.

Notification
BARHA contends that the city has not provided adequate notice to property owners about the fee. However, since January 2015, the city has included the following language in correspondence to rental license owners and agents that addresses the potential of an increased fee for non-compliant properties:

Failure to gain compliance may result in increased fees, fines, penalties or other enforcement action. The City of Boulder highly encourages property owners to achieve SmartRegs compliance before the December 2018 deadline.

Additionally, the SmartRegs brochure, which has been sent to customers since 2011, states:

EnergySmart assistance and financial rebates are available for a limited time on a first-come, first-served basis. (Reach compliance in order to) Avoid future fees and fines for not reaching compliance.

Finally, the SmartRegs website, under Program History, states:

Adjustments to the rental licensing provisions of the code may be warranted to further streamline and clarify its administration, including evaluating the program's cost recovery and fees.

Differentiation for Partial Compliance
In their brief, BARHA states "the proposed increase in fee does not differentiate between a property owner who is working toward the deadline, but is not quite done." LandLink, the city's current development management software system, does not have the capability to track property owners who have had an initial inspection, but who have not completed the compliance process. CLEAResult uses the software Salesforce to track properties, by unit, that have received an initial inspection. LandLink tracks cases by building rather than by unit and only has the capability to record whether or not a building is fully compliant. Staff is exploring options to add this functionality to the system in 2018, but at this time, manually tracking and comparing this information across systems to assess fees would create a resource burden, which would increase the resource needs and the cost of administering the program beyond what is currently proposed. This would likely result in a higher recommended fee by staff.

The intent of the program is to incentivize early compliance, and the best way to do that is to track properties that are fully compliant.

2013 Flood
BARHA suggests that the fee would pose a burden to property owners who are still recovering from the 2013 flood. As part of the SmartRegs program, the city initially offered rebates for work that led toward compliance. The rebates were scheduled to be discontinued in July 2013, but were extended through 2016, in part out of recognition of the 2013 flood.

New Ownership
BARHA has expressed concern that there are no allowances for new ownership. The ordinance requires that all property owners meet SmartRegs compliance, regardless of when they purchased the property. If the proposed $50 fee is implemented, staff expect that new property owners will factor that cost into the overall cost of purchasing and operating a property.


If you have questions about this information, please contact Sara Easton, Administrative Services Manager for Planning, Housing + Sustainability, at EastonS at bouldercolorado.gov<mailto:EastonS at bouldercolorado.gov> or 303-441-4085.

I hope this helps in understanding the background for the proposed fee.

-          Susan

Susan Richstone, AICP
Deputy Director for Planning
[Planning,%20Housing%2]
O: 303 441-3271
richstones at bouldercolorado.gov<mailto:richstones at bouldercolorado.gov>

Department of Planning, Housing + Sustainability
1739 Broadway | PO Box 791| Boulder, CO 80306-0791
bouldercolorado.gov<http://www.bouldercolorado.gov/>
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