Getting smart about SmartRegs for rentals

The December 31 deadline for SmartRegs compliance for residential rental properties in the city of Boulder is looming. When the City Council adopted the ordinance on September 21, 2010, the deadline seemed far in the future. However, that deadline is now only four months away. Recently, I heard owners of residential rental property in Boulder say, ‘SmartRegs – what’s that?’ 

 I’m not sure how you can be an owner of residential real estate in Boulder and not know about SmartRegs, but many are unaware.

The intent of SmartRegs, also known as Smart Regulations, is to support our community’s energy goals by creating baseline energy efficiency standards for the city of Boulder’s current rental housing supply. SmartRegs compliance is based on a point system. Each energy feature of a home is assigned a point value. All of those points need to add up to 100 or more to become compliant. In most cases, newer construction can meet that 100-point level without any improvements.

An older home, maybe with single-pane windows, a low efficiency furnace, and no attic or wall insulation, would have a tougher and more expensive time becoming complaint.

January 2, 2019 will be a big day for the SmartRegs program.

As of that day, any rental home without SmartRegs compliance will have its City of Boulder rental license expire. That means an owner can no longer legally be renting the property.

If an owner continues to rent a property without being SmartRegs compliant that owner will be subject to being fined.

The SmartRegs compliance date of January 2, 2019 could have influence on the City of Boulder’s real estate market. Owners of older homes could decide it is not worth the expense of meeting the ordinance’s requirements and elect to sell the home to an owner occupant since SmartRegs do not apply to owner occupied properties. This would take a rental property off the market where there is already high demand for rental housing. The Boulder ‘for sale’ inventory has been very low for several years, but there might be an increase of rental homes that come on the market for purchase by owner occupants or by investors willing to meet the SmartRegs requirements.

If you are a rental home owner in Boulder and not yet SmartRegs compliant, the time to take action is now. There are two ways you can work towards becoming compliant. The first way is the ‘Prescriptive Path’. To follow this path, the first step is to pick an approved inspector to come your property for a SmartRegs assessment. This inspection will tell you how many points you have toward SmartRegs as the home presently sits. You can then determine which energy improvements will give you the best point return for dollar invested, remembering that the goal is to get 100 points. Then you hire a qualified contractor to complete the improvements. This is the most common way owners have taken steps to become compliant.

There is a second way to become compliant, which is the ‘Performance Path’. This requires having a Home Energy Rating System (HERS) inspection score of 120. If the home has a score of 120 on the HERS index it will be deemed to have met the SmartRegs requirements.

The HERS inspection needs to be performed by an accredited inspector. Inspectors can be found on the Boulder County website at: bit.ly/2PQaaSO.

If you want to continue to keep renting your residential property in Boulder legally, it’s imperative to meet the SmartRegs requirements as soon as possible.

It’s much like starting your taxes on April 14. If you wait until the last minute, it’s going to be tough to connect with the proper resources to get the job done in time. The City of Boulder has complete information at bouldercolorado.gov/plandevelop/smartregs to quickly guide home owners through the process.

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Duane Duggan is an awardwinning Realtor and author of the book, ‘Realtor for Life’. He has been a Realtor for RE/MAX of Boulder since 1982 and has facilitated over 2,500 transactions over his career. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life.

For questions, e-mail Duane at DuaneDuggan@boulderco.com or call 303.441.5611