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Council moves forward with study on rebate-rent hike connection

Friday, May 24, 2013 by Michael Kanin

City Council moved forward Thursday with a study to establish whether or not there is a correlation between multi-family property owner participation in Austin Energy’s Energy Efficiency Rebate Program and an increase in rents for affected units. Their action came over the objections of three Council members and concerns of utility General Manager Larry Weis.

 

Staff is set to begin collecting data from properties that receive more than $50,000 in energy efficiency rebates on June 1. Council, the city’s Electric Utility Commission, and the Community Development Commission are all set to receive updates on progress by Dec. 1. Staff will return to all three bodies with a report in June 2014.

 

Mayor Lee Leffingwell, Mayor Pro Tem Sheryl Cole, and Council Member Chris Riley all voted against the study. For his part, Riley suggested that even asking questions about the issue might drive down participation in the multi-family energy efficiency rebate program. “I share…concerns that this item could have (a negative effect on) participation in Austin Energy efficiency programs,” he said. “(Property owners) even indicated that just attaching rent data collection to energy efficiency…could be a deterrent.”

 

To support his point, Riley quoted extensively from a May 7 memo penned by Weis. In addition to arguments similar to Riley’s, Weis also suggested that a freeze in rents – one possible outcome, depending on study results – would be detrimental.

 

“A review suggests that attaching a conditional rent-freeze to the multifamily program could have unintended negative consequences on the customers this program seeks to benefit,” Weis argues. “Due to the relatively larger energy (cost) burden for many living in rental communities, reducing energy bills has a larger and more positive impact on disposable household income.” (See In Fact Daily, May 16.)

 

Leffingwell also echoed this position. “I thought that was the whole point: We reduce the cost of living, which is a combination of the cost of utilities and rent,” he said. “Everybody benefits that way, and I think this resolution will not be helpful.”

 

Council Member Bill Spelman pushed back against that idea. He admitted that he agreed with everything that Riley said – aside from the conclusion. “The savings that tenants will receive in exchange for a slight increase in rent, in terms of lower utility bills, will, I think, be much, much greater than a slight increase in rent,” he said. “That’s what I’m hoping we’ll be able to verify, empirically for the first time, not on the basis of engineering estimates, but on the basis of real honest to goodness empirical data, that that is in fact happening.”

 

Council Member Mike Martinez argued for the need for more information. He noted that many of the apartments in question are in older units, the type where the landlord has only one electric meter, and therefore offers its tenants an “all-bills-paid rent structure.” Utility savings, he argued, theoretically goes to the apartment owner.

 

But, as Spelman said, Martinez implied that information was not yet available. “That’s the information we need,” he said.

 

The approved version of the ordinance allows city staff to refer to local rent databases. This change could save them a potentially cold reception from tenants contacted directly who might otherwise not want to divulge their rent.

 

Now approved, the study will look at seven metrics including comparisons of rent at the time that a property owner applies for the program, and then after the work is completed; estimated energy savings figures; and how average rents of participating units compare to the rest of the market.

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