Sat, July 20

State may increase tenant referral fee to $200

PHOENIX -- Desperate to fill empty apartments, Arizona landlords want to be able to pay more money to tenants who provide referrals that pan out.

A measure approved by the House and Senate and awaiting gubernatorial action would permit referral fees of up to $200. That is twice as much as now permitted by law.

But tenants would be able to earn the extra money only five times a year, once less than now permitted with the $100 awards.

Not everyone is happy with the change. Rep. Andy Biggs, R-Gilbert, questioned why the state was interjecting itself into what should be a private matter between landlords and tenants.

The legislation, SB 1176, appears to be a negotiated deal between the landlords and the real estate agents.

According to Courtney Levinus, lobbyist for the Arizona Multihousing Association, there were no regulations at one time. The result, she said, was creation of a "cottage industry' of tenants who were "acting basically like licensed (real estate) agents.'

That resulted in an outright prohibition of paying fees to anyone who was not a licensed agent.

In 1999 the landlords got an exemption for finders' fees of up to $100 for six times a year.

"Times have changed,' said Sen. Barbara Leff, R-Paradise Valley, who agreed to sponsor SB 1176 for the owners and landlords. They are facing an unfavorable supply-demand ratio: Too many apartments built even as the state's population growth slowed and investors, unable to sell their single-family homes, began renting them out.

"It's hard to fill apartment complexes,' Leff said.

Levinus said the $200 figure is appropriate.

"It's meant to be a thank-you gift,' she said.

"And it's meant to catch the residents' attention,' Levinus continued. "$200 is a meaningful number, especially in this economy.'

Even at the current $100 figure, she said, those referrals are important. Levinus said a survey of her organization's members showed anywhere from 19 to 40 percent of apartments filled with new tenants brought in by existing ones.

"In this economy, our owners are certainly looking for new avenues to market and promote their communities without having to use traditional media and advertising and internet and the rental guides,' she said.

Biggs said the legislation doesn't go far enough. He wants the restrictions repealed outright.

"If the marketplace is driving us to raise the cap, why in the world do we have a cap?' he asked.

"If what we really want is people to fill up apartments, then we probably ought to let the marketplace drive that,' Biggs continued. "This is really an anti free-market bill,' he said.

Rep. Rich Crandall, R-Mesa, agreed with his assessment. But he ended up supporting the measure, saying it was at least an interim step toward deregulation.

Crandall vowed, though, that he will sponsor legislation next year to repeal the limits outright.