Tuesday, June 13, 2006

Municipal Micromanagement

Two new municipal ordinances make me glad I'm out of the business of rental properties.

Speedway's new ordinance is especially awful. Do you really want landlords to be police? This is what they will have to become if fines to landlords result from tenant misbehavior. From WIBC's report:
The Speedway Town Council has approved some tough, new apartment regulations, despite protests from apartment dwellers and landlords alike.

The ordinance requires owners of rental properties to pay an annual licensing fee as well as a permit fee, per rental unit. The licensing fees were set at $25 for a landlord with five or fewer units. Those with more than five units will pay a $125 fee.

The ordinance also allows the Speedway Town Council to revoke the operating license of rental properties if those addresses see a lot of police runs.

Opponents say the fees are too high, and say they’ll just give landlords an excuse to raise rents.

And to become extra nosy. It isn't worth it to a landlord to lose his license just because a tenant does a lot of loud late-night partying. So, higher rent is just the beginning of the landlord protecting himself all the way to the expense of the tenant.

Greenwood recently passed an ordinance prohibiting the rental of a home within three years of its' construction. From an Indy Star report:
Mayor Charles Henderson says his plan, motivated by what he describes as a sour housing development deal, is designed to help maintain property values.

"I want to send a message that people deserve some protection and that anybody that buys into an addition can feel comfortable it isn't going to be turned into a rental community," said Henderson, whose idea could also face an up-or-down vote tonight. "It would help protect folks that get crossed up."

The Mayor also sends the message that if you bought thinking you would be there for a while, but got transferred to LA or Chicago within three years, you have to sell and take a major loss in sales commissions to the realtor. After all, the first several years of any mortgage payments are mainly interest, with little equity being built. I guess these people who get crossed up aren't in the Mayor's 'protection' plan. And it does little to help property values. If you can't rent it, you have to sell it fast, which means you sell at a lower price, which reflects poorly on the neighborhood.

It also prevents newer, nicer housing from entering the rental market in Greenwood. Is this a sort of plan to keep renters in older, deteriorating houses?

Local governments sure are making it harder to be a landlord in Central Indiana- and a tenant!

8 comments:

Rick Ehlin said...

Mike,
I think this ordinance is trying to make property owners take some responsiblity for there properties. I worked for a couple of years as a housing inspector in Marion County and dealt with horrible landlords many times. The fees being collected are to be used for enforcement of housing codes. Many times the home was in disrepar and the renter would get no response from the owner. This enforcement is not only to maintain the quality of the structure, but the heath of the renter. I don't see a problem with it. The instance you point out is one of the rare situations where it would be a negative.

Michael said...

Just another nail in the property rights coffin. Look at the disparity in fees. If you have 5 units your permission slip is $25 and if you have 6 it increases 5 fold. As usual Indiana and its politicians are showing their anti-small business stance. Where's the incentive for someone to invest? Nowhere.

All someone with a grudge who wishes a landlord out of business has to do is make a series of bogus 911 calls about a property and that person's out of business. Yep...Central Indiana is certainly going in a different direction. Unfortunately, it's a bad direction.

Rick Ehlin said...

Is $125 really gonna make Amli think twice about building new complexes in Speedway??? Those fees are nominal at most and to help ensure minimal standards of responsiblity, I think it's fair. I don't think bogus 911 calls are going to put anybody out of business...you're being rather extreme. You and I both no that they're not trying to push out renters or prevent anybody from having rentals. Just take care of your responsiblity and make sure your tenants are responsible.

Mike Kole said...

No- these fees probably won't put anyone out of business, most of all AMLI. The fees are set at a level such that Speedway will expect full compliance and be able to fully fund a new bureaucracy. But it was reported in the Star that one complex owner faces $11,000 in licensing fees. Someone's going to be paying a little more rent.

Speedway landlords will be at a marginal disadvantage, though, because only Speedway will be charging these fees, at least for now. The landlord isn't going to eat the cost. He's going to pass it on to the tenant. That means the rents will marginally higher in Speedway for comparable rental property than they will be across the line in Indy. I can tell you, losing just one month's rent can kill your whole year, especially if you are in the first 8 years of owning the rental property.

But what you said at the end of your last comment echoes what I said in my main post, Rick. There will be an onus on landlords to make sure their tenants are in line. I don't want landlords taking this role. It's not the job of a landlord to make sure that a tenant is responsible.

Again, I used to be a landlord. I was a pretty easy-going landlord. Just make sure you pay your rent on time, and I'm cool with you. However, if I owned rental property in Speedway, you'd best believe that my standards just got a lot more strict.

I rented to people with a record in Ohio. I believed in giving a guy a chance if he appeared to be trying. There is absolutely no way I would take a chance on a guy with a record if I was a landlord in Speedway. I'd require a college degree, 15 years continuous employment in one place, a spotless record, and a huge list of references. As you could guess, there aren't many renters who fit the bill. Interestingly, those are the ones who rent newer homes, but Greenwood will prevent that!

So, no, Speedway isn't trying to push out renters, but the ordinance may well have that effect as an unintended consequence.

Rick Ehlin said...

What I meant as to having the landlord be responsible for his property is...maintain the outside of the structure, be sure your tenant isn't leaving trash around and is keeping up with the lawn. I don't think it's to much to ask a property owner that the property he owns is maintained. If he rents that property out or if he lives there it should be treated the same way. Your example of $11,000 in fees and passing it to the renters is bogus...that's a 700 unit complex and worked through to each unit per month is about $1.50.
As for your ridiculous example of finding a renter of course you should do some research for who you are going to rent. I wouldn't want some person in there that doesn't care what type of lifestyle they live. As a property owner I wouldn't want tenant that is going to trash my property. I think it's a good think that some landlords are getting held responsible for the properties they own adn the people they rent to.

Anonymous said...

did you hear the lady from Speedway on Abdul's show? she sounded insane and was basically making the case that the inspections aren't the issue - the issue is trying to prevent crime...

huh?!?

Mike Kole said...

Missed that part of Abdul's show.

Rick- I really don't think raising the standards high for tenants is a ridiculous response at all. It's necessary. What it means is, people who have had a little youthful indiscretions are probably going to find it harder to rent in Speedway. What's the answer for these people? More government housing?

But believe me- I'm a huge proponent of people keeping up their properties. I just have a different way of going about it than using government. I actually talk to people and ask them to get on the ball. It works.

Traci Lipp said...

Mike,
Thanks for posting on this topic, as you are providing a valuable service that the news media has ignored.
I've been both a renter and a homeowner in Speedway, and I can't help but feel that the Town Council should have investigated other options before trying to push through this Ordinance. It has effectively split the town in two, angering both sides.
Did you know that the landlords who already paid their license fees were required to attend a mandatory 4-hour class? And that they were NEVER notified by the Council as to when those meetings were? (But note that the Council cashed all their checks, so they knew who they were and how to reach them) Now they are being told that they are going to be fined for not attending the training, despite the fact that they paid for those licenses and never received follow-up information!

This whole thing was never thought through, never discussed or communicated to anyone involved. Why is everyone being kept in the dark on these decisions?

At the request of my neighbors (Democrats, Republicans AND Independents), I have filed to run against Lucinda Hillmer for Speedway Town Council in November. I agree that crime and safety are important issues, but there were other ways to approach this issue, none of which were explored.

As other residents have stepped forward to offer their services to the Town Council, they have been systematically intimidated and threatened into silence (and this is by their own fellow Republicans!)by a group of a few individuals who run this town as their own fiefdom and tolerate no other views.

I'm on the ballot and encourage other residents to join me, regardless of political party. This is not about political affiliation, it's about the future of Speedway and its residents.
As the largest majority of voters in Speedway are INDEPENDENTS, I hope others are willing to step up and join me (and I'm speaking to you Libertarians, too - it's not too late to get involved).

By the way, poster 7:31 - that lady you referenced on Abdul's show sounded suspiciously like Ms. Hillmer, who tends to get very emotional on the issue. Don't believe me? Go to WRTV or WTHR's news sites and watch the video of last summer's standing-room only council meeting at Speedway High School. After watching the performances on that video, I was angered, saddened and deeply embarrased for my town; we came across as angry and small-minded, when I know there are many other indepdent thinkers here.
I've had enough and I know I am not alone.
It's time for change - I invite you all to step up and help me take back our Town!
-Traci Lipp
Candidate for District #5
Speedway Town Council
www.speedwayindiana.net