California SB 1383 took effect on January 1, 2022. This legislation requires all multifamily communities in California to subscribe to organic waste collection services. DJA has subscribed to this service for all communities and is beginning the process of notifying and educating our residents, which we expect will conclude in April 2022. Over the coming months, we will be closely monitoring our collection to ensure that we are providing adequate receptacles for all of our residents. If you'd like to learn more about SB 1383, you can find lots of information on the benefits of this program for our planet on the CalRecycle's website . Additionally, you can find the information for residents provided by our waste management servicers at the links below! If you have any questions regarding how this new legislation affects your property, please reach out to your any member of your property supervisory team. Resident Resources: Recycling, Food Waste, and Trash Infographic Food Waste FAQs
We saw strong rent growth in all regions (10%+) except the Bay Area in 2021 and we expect that growth will continue at a more moderate pace in all regions in 2022. Rent control in California will continue to limit how much we can raise rents on existing residents. Currently, the limit is near 9% in most localities and is reset each spring. However, we expect rent increases on existing residents, increased mobility of the general population, and the elimination of COVID related restrictions on evictions to drive slightly higher turnover and therefore enable us to get more units to market rent even under rent control. There will be a partial offset to the increased rents from higher costs for both labor and materials which have also increased, though at a rate slightly lower than the increase in rents. This should allow for increased NOI for most properties. Now is a good time to invest some of that increase in higher quality turns and deferred maintenance to make sure properties remain valuable to the market should a future downturn arrive, or the property is sold. For California properties, now is the time to plan for SB721 and begin the process of identifying and repairing compromised balconies (read a summary of this law here ). While the final deadline is a few years off, we expect the costs will increase significantly for owners that wait until the last minute. There is a lot of latitude in how local officials can enforce the measure and we think that establishing a good relationship early will go a long way towards providing the needed flexibility to keep costs reasonable.
October is the month your DJA team is focused on drafting the 2022 budget for each property. As part of that process, we will be assessing the properties current status, near and long-term needs, and strategic opportunities to ensure we are focused on maximizing value. The Maintenance Supervisor kicks off the process by producing an annual maintenance and 3-year capital forecast, identifying needed projects such as balcony repairs or roof replacement. Our accounting team then puts a preliminary budget together based on the maintenance input and prior year activity. The Portfolio Manager and the rest of the team then meet to make sure everything is considered and complete. All elements are reviewed, from building structure and turn strategy to landscaping and parking areas. The team will assess market trends for rents, occupancy, material and labor costs, and consider constraints such as rent control and COVID mandates. This preliminary budget and property strategy is presented to each property Owner for discussion and adjustment as needed so we are aligned for the upcoming year. Finally, after the budget is finalized, we will present an annual report that summarizes the business strategy for managing your property. Our goal is to maximize the value of your property while providing a “Make it Home” experience for the residents of each community.
