Should residents be entitled to an amenity fee refund?

QUESTION: Need your honest opinion on this. Trying to view this from both sides. Ready?

Resident pays large amenity fee when they move in. Amenities are closed and have remained closed for the majority of their lease. Appears they will not be re-opening any time soon. Resident asks for partial rebate of amenity fee. Management company says it's not their fault, refuses to refund partial amenity fee.

Should resident(s) be entitled to refund? TIA

#mutifamilystrong

Yes! Do the right thing If you charge a fee “specific” to something that you don’t provide, it should be refunded.

I think they should refund at least half of the fee. The property still has to maintain them even when they are closed. They could also prorate the fee over 12 months and return to the resident the amount for the months it has been closed.

I would say if the amenity fee is strictly for pool, gym, a business center etc I say, yes but if trash removal, pest control, WiFi, cable or any other service is included then maybe a small credit.

So if a tornado(hurricane, flood, whatever) takes out your amenities, would you provide them a refund then?

In my opinion, if they are paying extra specifically for use of the amenities and can't use them, they are due at least a 50% refund. Personally I would refund 100% for 2020 as a gesture of goodwill, but that's just me.

Yes. But only if they are charged a separate amenity fee, independent of their rent, and especially yes if it’s an optional fee for use and access.

*the mgmt company could also market this like “StateFarm” and the larger car insurance providers as a portion of amenity fee will be credited etc etc

Do the amenities still need to be maintained, such as the pool, or is it drained and covered? If everything is locked up with no additional work from the team, then I would refund. Problem may be that the owner budgeted for that income to meet some metric and will feel the pinch.

Yes, if an amenity fee is something separate I would strongly advise prorating that. Otherwise, no concessions are required if you’ve had to close down amenities temporarily during the pandemic. Just be sure to really step up your social engagement and appreciation in other ways

Personally believe this is cut and dry. A prorated portion of the amenity fee should be refunded so long as the amenity fee is truly for the amenities that are closed (as opposed to a door person, concierge, package receiving, etc.)
Believe this pandemic has brought to mind for many PM professionals that an amenity fee may be the way to go in the future to 1. Gain additional income; 2. Give us something tangible to refund should we experience something like this shut down again in the future.

Absolutely a portion should be refunded. This is why I'm not a fan of amenity fees. Pool closes for a day for cleaning - residents want a discount. Treadmill breaks - residents want a discount. Just up your rents to cover all your expenses associated with amenities, etc and make it easy on everyone.

Its like the gym's. They were.closed and did not charge any customers any membership fees. If there is a specific Amenity Fee and no access to the Amemities, YES, Prorate it the months they were closed in good faith. Its much better than 1 star review. Remember, people only really read the negatives. Show as a company you care about your residents renewing or not. This could flip the decision to go ahead and renew.

If you collected a separate amenity fee at move in, for the entire term, and you cannot provide that service, they are entitled to 100% refund. If they choose to sue, they can claim that refund plus treble damages through deceptive trade practice theory.

Amenities are part of why people choose the apartment lifestyle. Fees should not be separate but included in the overall rent. Since they are separate in this circumstance, there should be some level of compensation to the resident. If not money back, then something.

Deduct the fee from the last month of the lease agreement. This will assure that they stay the full term and work towards renewing them throughout the year. The small fee will save you on unit turn loss and vacancy loss.

Do the right thing. If you are charging for a product or service you cannot provide, you should refund the money and apologize, even if it is outside of your control. Owner/investor won't like the hit to NOI, but not doing the right thing causes long-term damage to your ability to lease due to poor word-of-mouth.

If residents are charged a fee for amenities, and amenities are closed for an extended time period, the fee should be prorated back to the resident. If the resident does not get charged an amenity fee, they are not entitled to any compensation for closed amenities as they pay for the apartment and amenities are perks

I love the discussion; I've received a few rebates from companies, e.g. insurance, both of my personal insurance carriers gave refunds on home and auto. There are also rebates being given from our company's dental provider, since basically no claims could be submitted ( I believe 50% of one month's premium). There is potential here for mgmt companies to perhaps do a prorated refund or some token <depending on if the fee is monthly or if it is a one-timer that covers the entire residency, even if the person lives there for ten years>. It's an opportunity to create some goodwill, even if lease does not guarantee the availability of amenities.

Lisa Trosien If fee is paid for specific services that are no longer available then credit should be applied for the time period. We are addressing same issues here with our HOA Associations. Example, Homeowner pays two separate HOA fees. One normal annual fee and one for amenity services, or "swim & rec fees". If the amenity services are no longer available for use, should homeowner still be required to pay fee or should a reduction be given. If the amenities are not used, then cost to maintain should decrease.

All good feedback. Looking backwards we used to have higher rents based in our amenities. This would not be up for discussion as it was all in rent. Looking forward, maybe we can learn from this and not add fees but go back to inclusion. So frustrating when hotels force resort fees and you don’t use the gym or pool. When there is a flat hotel rate we don’t feel the same about the impact.

I recommend refunding or partial refund. I’m all for working to keep residents. I‘m hearing that my clients who work with resident requests and concerns in a sympathetic manner, are keeping good residents and increasing occupancy. The ones who refuse, they’ve been losing ground.

I've thought about this in terms of many different businesses and have landed on the opinion that sharing the burden makes sense. It's the the businesses fault, but neither is it the customers fault. I think sharing the burden goes a long way in terms of showing integrity from both parties. If a company can afford to split the financial burden, they should. In the long run, it will boost their reputation and lead to future business. Just because they can keep the funds, doesn't mean they should. I've seen this play out with wedding venues quite a bit. Many are keeping the huge deposits customers have paid.

Is it a fee paid once and is it a small fee or is this a recurring fee. If that fee at move in was $25 and you are not charging every month or even at renewal it should be classified more as a set up fee or community fee because the upkeep is still required. If it’s recurring, credit those month’s not used.

If it’s a monthly fee that is charged, then yes refund for the time it’s closed. But if it’s a $150 at move in and covers their full length of stay lease renewal after lease renewal no. Actually it’s really pre mature to even think about what to do until this is all behind us. Today, you have no idea how long or when it will reopen. I would say that this (like a Hurricane) is out of our control. We will be happy to revisit this with you once we are 100% up and running again.

Absolutely! In DC there is a mandate to not charge and reimburse amenity fees based on a proration from March when the pandemic hit. I've reimbursed partial amenity fees from January through March and if any renewals were schedule between April through July, amenity fees have been waived. The law also requires no rent increases or amenity fees 30 day after pandemic. Its a hard financial hit on revenue however we have to honor the law.

I would refund a portion as a good faith gesture. Idk what the fee was or how to effectively prorate it if the amount isn’t tied to the length of a lease but something to say you understand and empathize with the loss of something you attached value to.
If the fee was specified as relating the amenities, I could see a court ordering repayment.
Curious, are gyms like planet fitness making people pay monthly membership right now? Seems like this would be somewhat similar.
In situations where amenities are not singled out as a spectate value and they are closed, I don’t necessarily see a reason to refund rent for the inconvenience, especially where the closure is in compliance with govt orders. .

My opinion: some people actually choose one community over another based on advertised amenities; they may tour those amenities prior to submitting their applications. Now they are excited and planning to use them, especially Fitness/Cardio Centers and they are willing to pay HIGHER rent for them. If they can’t use them for months, it’s reasonable to reduce the rent with a concession.

My opinion is I think the residents would at least appreciate a partial refund. And I live in a market where high amenity fees like that are common. So many of my friends outside of the industry think property management companies are so greedy with expensive amenity fees, utility bill fees and high renewal increases. I think at least the gesture of a partial refund would be appropriate for the months the amenities were not able to be used.

Yes, definitely refund- especially when you advertise the rent includes all the amenities. True it's not management's fault, but it's not the tenants fault either. They were clearly paying for something they didn't get - no fault of their own.. Sometimes, you just "got to do the right thing".

A partial refund would be appropriate.
Though amenities are closed, our pool still needs chlorine, equipment can’t just be left neglected, everything has to be sanitized etc. we are still incurring costs on closed amenities but a partial refund might help to secure a renewal.

My thinking is that we closed amenities to comply with an executive order not because we are withholding access by choice so either way we approach it is valid. I think it's more about showing good faith to our residents. We've got to build loyalty it's very expensive not to...

At my properties that we charge a separate amenity fee we've given every resident a credit each month based off the prorated monthly value. I'd rather give my residents a few dollars back each month than them being pissed and giving us a bad review. Do we have to do it? No, but my clients also understand why it's better to do this than roll the dice and see how we fare at the end of this.

Are they monthly, yearly, or a onetime fee? Depending on how you answer is depending on how it should be treated.
Monthly-yes should not charge while they are closed.
Yearly-partial
One Time-No

Refund the money - i own a lodging company and my properties did - that’s ridiculous especially what everyone is facing right now - curious who you work for ? - speaks volumes of how they truly feel about the residents and resident retention

yes, is my personal opinion and what I would do if I were an owner. I believe it is a question regarding moral business compass. However, legally the issue is about the lease they signed. If there is a clause stating the $$ is not refundable if the amenities are closed due to circumstances beyond the control of the management company or owner well then....there are no legal grounds for any refund. Again, my personal opinion is it would be really crappy not to give back a portion or allow a partial rent concession for the amount ....it is better to be the hero than the hated.

I'd say yes if you're charging a fee for them. or at least crediting the pro-rate for that month. My gym did not charge a membership fee AT ALL during the shut downs.

No, I think the Covid-19 falls in the category of "An act of God" Meaning man had no control over this New Disease. Facilities still require maintenance, man power,chemicals,insurance and taxes on the facility. The same costs when they were open.

We charge a monthly CAM fee that partially overs the maintenance of the amenities. We broke down the amount of the monthly CAM that would go towards the amenities and refunded the residents that amount for the time the amenities have been closed - everyone received a $100 credit to their ledger in May. We even gave more than that amount out of good faith to our residents. Now residents are asking for more credits, which we are not going to offer anymore, as the amenities are partially re-opened and we accounted for this with the additional credit.

Of our comp properties in the Denver area, I have not heard of any others giving amenity credits, however several of them do not charge a monthly CAM fee either.

Yes, if the property manager or leasing agent sells the consumer on a list of services that are also detailed out in the lease agreement, a refund should be offered to all residents. This is tough on many landlords and property management teams having budgeted 2020 using these revenues.

My suggestion is finding accommodations to these amenities that aren't quite as costly as a full refund. Offering services via your property management software group or local service teams for things like dog walking, food delivery perks and discounts to creative and socially distanced events are a way of balancing the issue.

Happy to discuss with another affected by concessions and refund challenges.