Mark Parrell: Well, I’m going to split that question up. If you’re asking whether we think we comply with the law right now, we think we do. We’ve done extensive reviews on that because we feel like you do, there’s more regulatory sensitivity. A lot of these rules, by the way, are very complex or very judgmental. They may say you can’t charge unfair fees and things like that that are harder for us to peg. But the legal team has worked really hard with operations to make sure what we’re doing right now makes a ton of sense. Either Michael or Bob could talk about what percent of total revenues are the kinds of fees you’re talking about. I think it’s 3% in that neighborhood. So it’s meaningful, and it can grow faster than the remainder of the portfolio.
But if we had to moderate it, we’ll deal with it. But again, things like pet fees, I mean, pets create real cost to the property. I mean the cleaning costs are much higher. So in some cases, these are profit and in some cases, these are just additional costs that will come into the system one way or another. So on the regulatory front, we’re just going to have good conversations with all these regulators about all this stuff. A lot of this is not thoughtful and it’s going to discourage capital going into residential and isn’t going to help with the shortage of affordable housing. So, we’re going to push that line more and more and keep having that kind of conversation. But on the fee side, it’s really that material to us, it’s just not a good idea.
It’s another one of those sort of why shouldn’t the cost of someone’s pet be borne by the pet owner as opposed to borne by the entire complex, for example.
Alexander Goldfarb: Okay. No, makes sense. And then second question is, the recent L.A. good cause eviction, one of the items, if I read it correctly, was that basically a tenant cannot pay a month and be fine and not be deemed to be in arrears or anything. Is this the correct understanding? And if so, is that — does that mean that in L.A. county and hopefully — not hopefully, and unfortunately, if other markets adopt this, that bad debt could now seem to be the sort of elevated thing versus historic? Or is there a way for landlords to make sure that someone just isn’t getting a free month for no reason other than they can get a free month?
Mark Parrell: Yes. Thanks for that question. I don’t have that right in front of me. I did read the sort of general idea that there is a permissible amount of default — defaulted debt that a resident could have. But again, our rents on average approach $3,000, in that market a little bit lower, but they’re significant. So if it was a dollar limit — gosh, I thought, Alex, it was a dollar limit, not a month’s rent limit, but I’d have to look into that, we’d have to have another conversation. But I think the theme here is the more you regulate things like this, the less capital that will go into the industry, to renovate properties or to create more housing. And it’s just a bad idea, and we’ve got a really good team that’s pushing this.
And people hear us. When you talked about the administration, I mean, the Biden administration’s Build Back Better Act had some terrific stuff about zoning flexibility and encouraging at localities. The Governor of California and the Governor of New York have been pushing supply and more units being built and trying to work with the industry, both on the for sale and rental side. So I think there are people listening to us. It’s just we got to keep it up because a lot of the ideas you mentioned are just not constructive.
