The Orem City Council is on track to approve a plan next month that would require residential rental properties to be licensed and to have city utilities in the name of the landlord, or property management company.
We have a lot of questions about the proposals and if they will really accomplish what city leaders want it do.
First, the city wants utility payments in the landlords’ names because it has a dismal collection rate on delinquent bills from renters. The city says that it turns about $70,000 in unpaid utilities over to collections each year and only collects 42.9%. Orem officials have also previously said that the delinquency rate among single-family home renters is 8% to 9% — several orders of magnitude higher than the 0.3% to 0.5% of multi-family tenants’ accounts that are turned over to collections.
On one level, it makes sense for the city to try to recoup the $40,000 in lost annual revenue. However, forcing landlords to keep city utilities in their name opens up new levels of complications and pain for tenant and landlord alike.
Several readers commented that landlords may be left holding the bag if a tenant skips out on a bill. Also, depending on how the city proposes that landlords pass along the bill to their tenants, the landlords may end up being shorted if the charged rent doesn’t cover the actual utility costs.
However, we’re certain that most landlords will come out ahead because they often do in Utah. Landlords over a number of properties in the state are very quick to impose any number of service or transaction fees to their base rents. We’re sure that landlords would be happy to handle the city’s billing of tenants — for an additional fee that will only serve to increase costs.
Second, we would definitely like to see where the revenue will go from the proposed $50 annual rental fee on landlords. With about 2,400 single-family home rentals in the city, this fee could generate at least $120,000.
According to the story that we published last week, the city asserts that the licensing program will help reduce the amount of work city employees spend with shut-offs, meter reading, reviewing lease agreements and other related tasks. This sounds good, but it seems like any savings to the city will come about as a charge to the landlords (and, inevitably, to the renters).
The city also maintains that the licensing will help maintain an up-to-date database of rental properties in the city, which will help if the city needs to contact someone about property damage or criminal activity. This is all well and good, but is it worth $50 per unit?
In addition to having civilian code enforcement employees, the police chief indicated that his officers need to be trained on rental code enforcement. Is this really the best use of our law enforcement resources?
Some readers complained about having to pay a fee on their properties. However, a rental property is a business so it makes sense to have some form of licensing — provided that the city can prove that the fee serves some purpose and that the revenue is being spent appropriately.
We’re not opposed to the city’s proposal, but we would definitely like to see more evidence from the city that this course of action is necessary and that these measures will actually solve the problems they’re trying to address.