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Good Intentions don't create Affordable Housing- an Editorial by Julie Stoll, A/CREIA board member
Everyone wants Akron residents to have access to safe, stable and affordable housing. But declaring housing a “fundamental human right” does not make housing more affordable, and good intentions do not guarantee good outcomes.
Akron voters will soon decide on charter amendments that would regulate security deposits and application-related expenses while adding criminal history and source of income to the city's housing discrimination protections. The proposals sound compassionate. Their unintended consequences could be anything but.
Start with a simple economic reality: government can prohibit a fee, but it cannot eliminate the cost behind it.
Credit reports cost money. Criminal and background checks cost money. Screening services cost money. If housing providers can no longer recover those expenses from the person requesting consideration for a home, the expense doesn't disappear. It becomes another cost of operating rental housing. And operating costs ultimately affect housing costs.
We understand this everywhere else in the economy. If government prohibited airlines from charging baggage fees, luggage wouldn't suddenly become free to transport. The cost would simply be incorporated somewhere else. Security deposits work much the same way.
Try renting a car without providing a credit card or accepting financial responsibility for damage. Rent a piece of construction equipment and the company wants protection before handing you a $20,000 machine. Hotels commonly require a card for incidentals before giving you the room key.
We accept this principle throughout the economy: when someone temporarily gives another person control of a valuable asset, reasonable financial security protects the owner from loss.
Yet Akron would require housing providers to turn over possession of what may be a $150,000 or $200,000 asset before the agreed security deposit has been fully funded.
If a resident leaves early, stops paying or causes substantial damage before completing those payments, that risk doesn't disappear. Someone absorbs the loss.
For a corporation owning thousands of homes, that may be another line on a spreadsheet. For an Akron couple owning two rental properties as part of their retirement plan, it can be significant.
Ironically, regulations intended to protect residents from large housing companies can create an environment increasingly suited to large housing companies. Corporations can spread losses across thousands of properties and employ compliance departments and attorneys. Independent housing providers cannot.
Criminal-background protections raise a different concern.
No responsible housing provider should automatically reject every person who has ever made a mistake. Existing federal fair-housing guidance already cautions against overly broad criminal-history policies and encourages individualized consideration.
But housing providers also have obligations to existing residents, neighbors, employees and contractors. They must be allowed to make reasonable decisions about risks involving safety, property and the peaceful enjoyment of a community.
There is an enormous difference between preventing discrimination and preventing reasonable risk assessment.
The larger concern, however, isn't any single fee or regulation.
It is what happens to Akron's rental housing market when providing housing becomes progressively more expensive, complicated and risky.
“We share the goal of making Akron a place where residents can find safe, quality housing they can afford. But you don't create affordable housing by making it more expensive and risky for people to provide it. If Akron wants more housing choices and lower costs, we should encourage responsible people to invest in our neighborhoods—not give them reasons to invest somewhere else.” — President, Akron Real Estate Investors Association
Housing markets respond to incentives.
No ordinance can require someone to buy and renovate Akron's next vacant duplex. No charter amendment can force a retiring housing provider to keep a rental rather than sell it. And city government cannot require an investor to choose Akron instead of another community.
Those decisions happen quietly. Nobody writes a news story about the house that wasn't renovated, the rental that was sold, or the investor who decided to put money somewhere else.
But multiply those decisions across hundreds of properties and several years and the consequences become very real: fewer rental homes, fewer choices for residents and greater pressure on rents.
There are better ways to reduce barriers to housing. Help residents who genuinely need assistance with security deposits. Encourage reusable screening reports so applicants aren't repeatedly paying for the same information. Make it easier to renovate vacant properties, build additional housing and bring neglected homes back into productive use.
Most importantly, recognize that residents and housing providers are not opposing teams.
Affordable housing requires people willing to provide housing.
Akron voters should judge these amendments not simply by the aspirations behind them, but by the incentives they create and the consequences that follow.
Because if we make providing rental housing more expensive, uncertain and risky, we shouldn't be surprised when we eventually get less of it.
And less housing will never be the path to more affordable housing.
Does the city of Kent hate Nuns and foster kids?
Not really. But that was sort of what the arguments came down to when asked very pointed questions by the Ohio Supreme Court justices.
The city of Kent ignored a federal ruling about unrelated persons and continued to enforce its own zoning regulations against housing provider Reed Havel. The 1851 Center for Constitutional Law believes there should be no restrictions on using your property as you best see fit as long as it doesn't directly inflict harm on others.
Watch oral arguments HERE.
We once again thank Maurice Thompson, The 1851 Center for Constitutional Law, and the Pacific Legal Foundation for their continued work on behalf of all property owners in Ohio.
Ohio Supreme Court to heard rental inspection case
We had a wonderful turnout to support Maurice Thompson and his co-councils from Pacific Legal Foundation, Allison Daniel and Nichole Papageorgiou. The justices asked great questions and seemed very interested the arguments.
A moment of humor came when Chief Justice Kennedy corrected opposing counsel who kept saying "searches" instead of "inspections". Kind of exactly the problem we have with this!!!!
Click HERE to watch a replay of the arguments.
Click HERE to make a donation to Maurice's 1851 Center for Constitutional Law so that he can keep fighting for us!
Cities across the state have implemented Rental Inspections under the guise of safety and code concerns. Though, these inspections are targeted to only one type of housing. Entering the living space of a renter with no legitimate cause and no lawful warrant is a violation of that renter's privacy.
We expect a ruling to come down in early May.
OREIA is looking for real estate investors willing to share their stories with legislators. Our professional lobbyists do a great job, but we've found that personal narratives are much more impactful. You can be an expert in the field, or simply have a compelling story about the topic; be that a positive or negative experience, a reason for entering or leaving an investing strategy, or a barrier you've experienced. It's the personal stories that best sway legislators.