When people hear that RentLab is about data transparency, they often focus on the negative information that might come out – the properties or managers that might not show up looking so great. But few people focus on the fact that transparency lets us celebrate the “good guys” – the properties that are improving, helping pull the community’s stats in the right direction, the landlords who are modeling best practices.
We already know who some of those landlords are in Flagstaff.
Seth Dyer and Kevin Peterson of Moonbeam Investments fit that bill. They are some of the only local landlords who have participated in the city’s energy rebate program, which “assists Flagstaff residents with costs related to the purchase of energy efficient furnaces, water heaters, and upgrading insulation and air/duct sealing.”
In each of their rental homes, the pair have hired Cozy Home (a local company that performs energy upgrades as part of the rebate program) to “insulate everything they could.” In a climate like Flagstaff’s, that’s important for both comfort and for cost – a home without proper attic sealing and insulation in particular will never stay warm in the winter, and will struggle to stay cool in the summer.*
As we’ve noted in previous posts, landlords have little incentive to make improvements in their properties if they don’t pay the utility bills. So why bother? For one, says Dyer, “it’s the right thing to do.” Rentals make up over half of Flagstaff’s housing units, and will need to be part of the conversation if the community will ever be able to address housing affordability and meet its ambitious goal to reduce greenhouse gas emissions by 80% by 2050.
But in addition, Dyer says, one of their biggest fears is vacancy and turnover. Making sure their properties are comfortable and don’t come with utility bill surprises helps keep their tenants happy. Happy tenants stay in places longer, and save landlords the costs of turning over units.
At the other end of the size spectrum is the Grove, a 776-bed complex on Flagstaff’s east side. The Grove stands out for at least one big reason – the huge solar arrays on its roof and in its parking lot.
Having solar alone is great, but management at the Grove has taken it a step further. According to Caitlin Hailey, who manages the complex, each bedroom (most units rent by the bedroom) receives an allowance of $25 per month toward their electricity costs based on the amount of energy produced by the solar panels. If the unit uses more than this allowance, the residents split the costs. If they use less, they pay no additional costs.
In some ways, this is the ideal utility bill arrangement, and goes a long way toward solving the pernicious split incentive problem. The landlord has an incentive to keep the overall utility costs down through efficiency investments because it will save them money within that $25/bedroom budget. That is, for example, if they have a monthly cost of $15,000 ($180,000 a year) for electricity, it directly benefits their bottom line if they can chip away at that cost by making lighting and other upgrades.
Under this arrangement, the tenant also has an incentive to conserve. If they use less than $25 of electricity per bedroom within their unit, they have no additional costs. Since the building is all-electric, that means a pretty budget-friendly utility bill. And lest you think there isn’t much difference in energy use among these mostly identical units, that’s not the case. During a recent billing month, about 1/3 of units stayed within the $25 budget (hooray!), while the biggest users ended up with bills of $169 per bedroom. That’s a lot of cappuccinos and beer.
Why did the original owners (the property has since changed hands) decide to do it this way? Hailey doesn’t know. But the arrangement amounts to a sort of profit sharing – a solar dividend for their tenants.
And beyond energy, the Grove also furnishes its units, which means the complex doesn’t generate a heap of waste furniture and other materials every time the tenants turn over. That’s a part of being budget- and eco-friendly too. There are still improvements on Hailey’s wish list, though, like upgrading the carpet (which has to be replaced frequently) in the units to more durable flooring. She also notes that the complex does not yet provide recycling services – the tenants have not expressed this as a big concern.**
You’ll also notice another important thing about both of these landlords. Both of them opted for transparency, voluntarily. That’s another huge, important step toward making the rental sector better – helping tenants understand the real costs of housing, and enabling landlords to understand how their buildings compare to others in the community. This isn’t about every property being a “model property.” It’s about understanding where we are now, and nudging the whole community in a more affordable, efficient, sustainable direction.
That’s a better outcome for everyone.
Are you a landlord or property manager with a story you’d like to tell about successful improvements you’ve made, or best practices you've adopted related to energy, recycling, affordability, or sustainability? Are you a tenant living in a place you think is doing a great job? Let us know! email@example.com.
*If efficiency improvement options seem overwhelming and expensive, remember attic sealing and insulation is almost always the place to start. In many cases, the cost is a fraction of what it would take to do something like replace the windows, and the payback period (the time it takes to earn back all the money you spent on the improvement through savings in energy costs) can be as low as 3-5 years. That’s the equivalent of making a 20-30% return on an investment.
**NOTE: Tenants haven’t expressed this as a concern YET. You never know till you try…