Shelia Horton, Executive Director of the Boulder Area Rental Housing Association, has recently taken up a new anti-SmartRegs talking point: the ‘No-Incentive” argument. The SmartRegs policy, in part, is meant to deal with a particular market failure, namely, the problem of the “Split-Incentive”. The split-incentive refers to the idea that there are currently no incentives to make energy efficient upgrades to rental properties. As it stands, landlords generally do not pay utility bills. As such, they have very little motivation to make energy efficient upgrades to their units. On the other side, renters have no long term commitment to the unit they rent, nor do they have the legal authority to make upgrades. Ms. Horton, playing off the split-incentive, claims there is “No-Incentive” for the city of Boulder to pass SmartRegs. This is false.
There are a number of incentives for Boulder to pass SmartRegs. First off, landlords may see a rise in their property’s value. All things equal, a more efficient property is more likely to rent. In addition, a property that has been upgraded will be more pleasant to live in and allow the property to command a higher rent price. Secondly, renters will see a decrease in the cost of their utility bills. Many students, including myself a couple years ago, face great financial pressure with tuition costs, books and materials, rent, utilities, etc. SmartRegs should help to relieve some of that pressure. Thirdly, passage of SmartRegs will get Boulder that much closer to the Kyoto Protocol’s goal; a commitment made by the city in 2002′s Kyoto Resolution. Lastly, the renovations that will occur with the passage of SmartRegs will stimulate the local economy; especially the building and construction sector. Passing SmartRegs, contrary to what Shelia Horton says, is not a “No-Incentive” proposition — it’s a no brainer.