Sunday, May 23, 2010
When Investors Buy Up the Neighborhood - A Policy Link Discussion
Post and photo of a Danna D III Hawthorne property by the Hawthorne Hawkman
Earlier this month, people from all across Minneapolis who work on housing issues got together at the McKnight Foundation to discuss the PolicyLink report "When Investors Buy Up the Neighborhood." On JNS, we covered one potential solution discussed, namely the need to be able to search city websites using the name of a property owner.
The report itself is about 45 pages and for wonks like myself it remains an engaging read. But today I want to focus on the small group discussions where we hashed out some ideas for how to help turn things around. One of the first issues that was raised was...
...the need to change the Non-homestead tax back to the rates used ten years ago or more. These changes made the difference in cost for homesteaded and non-homesteaded property taxes almost minimal. The intention was to drive down costs to landlords so that they could then offer cheaper rent to their tenants. One of the unintended side effects was to facilitate a financial model in which houses that would otherwise have remained owner-occupied were now run by landlords.
Many housing experts present felt that the lower-income renters were not seeing the trickle-down benefits of such a move, and communities like north Minneapolis or east Saint Paul were encountering landlords who were buying up dozens of properties with ease.
We recognized that having a simplistic "pass/fail" system for our landlords and investors results in scenarios where too many people get a D-. And we discussed ways to create incentives that would spur better landlord behavior. Some ideas included:
- a mandatory landlord training class (this by itself, I think, would not be very effective. Combine it with other efforts, and perhaps we could see some results.)
- Increase rental licensing fees significantly, but then create incentives that reduce them over time. For instance, double the fee, but make the second half of it due after a year. If the landlord completes training and has no code violations or other problems (or at least limited and minor issues) with the property, then the fee could be waived or reduced.
- set limits on how many LLC's one person can have as property owning entities within the city. One city employee mentioned a person who has over 80 individual LLC's for the properties he owns.
- While we're on the topic of needing better city databases and websites, we should also try and incorporate apps from iPhones, Droids, Blackberries, and other smart phones into how we track problem properties and share data. (I'm the wrong person to expand more on this, although I love the idea. I had my Blackberry for a year and a half before figuring out that the plus and minus buttons on the side were there to zoom the camera back and forth. My twin brother, on the other hand, has custom-installed several different operating systems on his cell phone simultaneously. Ask him.)
- In Collier County, Florida, housing violations are emailed out, resulting in quicker response times from property owners.
- Atlanta trains its residents to do certain kinds of inspections.
- Minneapolis has an Early Warning System to try and predict when properties will be in need of attention. That data should be expanded and at least the public data contained therein should be available and searchable to the general public.
- And of course, my personal favorite still remains good old Allentown, Pennsylvania, which publishes a landlord hall of shame on their own website.
Have at it, JNS readers. What policies would you like to see in place as a way to prevent slumlords and other unscrupulous investors from buying up the neighborhood?