Landlords relieved by rent control derailment

Landlords and developers said they’re pleased the City Council rejected Mayor Jim Ireton’s rent stabilization plan this week, following a lengthy discussion Monday.

“It’s really a crazy proposal. I’m surprised that anyone would even propose such a thing,” said Richard Insley, owner of Insley Rentals, one of Salisbury’s longest-in-business landlords.

Ireton’s idea, to impose rent restrictions on single-family homes, would have meant creating a seven-member stabilization board and basing monthly rent on a home’s property value.

“You don’t have to look very far down the road to see what is the next thing that happens. You have to able to look down the road 10 feet in front of you and see if there are collisions pending,” Insley said Tuesday.

If landlords don’t have the money to make repairs and maintain buildings, “the next thing you know things start right away going downhill and before you know it, the building is boarded up,” he said.

“What will that do to the value of properties in the neighborhood? It will cause them to go down. It’s a spiral. The next thing you know, property is sold for way less than what it would have been. Then assessments go down, then tax collections go down … it’s a lose-lose,” he said.

Chris Eccelston, owner of Delmarva Veteran Builders, said City Council members made “the right call at the right time” when they tabled the matter.

“I think the mayor has a point. It may be that homeownership is a good goal, but I don’t know if he’s going about it the right way. I think a conversation needs to happen about it,” he said, adding landlords should be consulted.

Ireton told City Council members his idea would put $8 million back into the local economy while relieving those overburdened by high rent, but all of those who spoke during the public comments section of the meeting on Monday were opposed.

Councilman Jack Heath said putting reasonable people together for discussion solves problems, not “lobbing hand grenades.”

“I think this is lobbing hand grenades,” he said.

“The timing is not good. Let’s talk to the stakeholders. I’m not about to make any decisions on something like this without input from everyone,” he said.

Councilman Tim Spies asked Ireton, “Why did this pop up four weeks before the election when you’ve been here for four years?”

Ireton told him his administration decided to tackle the problem in January, and it took several months of research by Theo Williams, a grant specialist who made a presentation for Ireton.

“Mr. Williams did most of this during the summer … we wanted to make sure what we did was, go through and pull up frequently asked questions … We tried to determine what kind of questions we would get. That took probably another two or three months,” Ireton said.

Spies said the issue “should be talked about in years, not in months.”

“I have serious doubts .everywhere I look. This is not a long-term solution to anything. It takes a bite no matter where it goes. With a month until elections, this board is going to be changed. We’re going to  have a new mayor. This is a real fluff issue. We’ve had much ado about nothing,” he said.

Ireton calmly apologized for the timing —  so close to the election that includes him as a candidate for City  Council — but said he won’t drop the matter.

“No one is here this evening from the rental community or from single-family homes. There’s a reason for that and it’s the not the reason you think. If I’m the only one in the room, then I’ll say we may not have to do this in particular, but we have to do something.

“I would be remiss if I didn’t push to talk about it. I will not stop talking about it, ever, as long as I’m here,” Ireton said.

 “I’m not going to take exception to anything the council members said, or anything that was said here, except for one person who made it incredibly personal,” Ireton said.

Councilwoman Shanie Shields said nothing positive could come from the mayor’s objective. “We need to treat people with respect. We need to sit down and talk to them. A lot of things can be solved if we talk this over and look at the pros and cons,” she said.

Councilwoman Laura Mitchell was absent.

Council President Jake Day said the issues are bigger than the cost of rent, that they involve chronic and debilitating poverty, as well as homeownership, and must be considered as a community.

“If we only discuss the problem through a lens of a solution, we omit alternatives. If we only talk about one solution we miss an opportunity,” Day said.

He asked  several questions: What if a property owner can’t pay the mortgage? What happens to renters? Why doesn’t this affect renters in multi-family housing, since that’s the majority of renters in the city?

“I think we’ve got to look beyond the 35 or 40-day election cycle, and say, ‘OK, how do we resolve this in the long term?’ I don’t know if we can solve that in 35 or 40 days,” Day said.

Ireton called it “a conversation we need to have.”

Among residents speaking in opposition was Brett Hopkins, who said Ireton talked about his plan as though it were a utopia, “but there is no such thing as a utopia.”

“I don’t think there’s a problem with letting people make up their own minds. So what if we have 66 percent of renters out here? That provides maximum mobility,” he said.

“It’s a utopian dream. When you try and interject government it is no longer free market. That is socialism. In America, we know it when we see it and it needs to stop. When incomes collapsed around here, it was during Mayor Ireton’s watch,” he said to applause.

An academic economist said in the long run, Ireton’s concept would  reduce availability of housing. “Rent control is a bad idea. The tax burden is excessive … I stand very strongly against it,” he said.

Landlord Kevin Adams said he doesn’t like hearing landlords called greedy,  and that the negative word has no place in public office. “I don’t know what you do to help people, but I do a whole lot to help people,” he said, looking toward Ireton.

Realtor/landlord Michael Weisner said the recommendation would “clearly destroy the rental housing industry in Salisbury.”

“This initiative is rent reduction, not stabilization,” he said.

Bill Martin, whose real estate brokerage firm is the largest in Salisbury, said it would lead to vacant properties and drive values down. Lowered rent would prevent landlords from being able to afford necessary repairs, he said.

Because there are hundreds of units available, renters can shop for the best price. “That’s what the free market is about … we don’t have a monopoly. There are a lot of different properties … we have all varieties. People have a right to make their own selection from the variety,” he said.

Speaking on behalf of the Coastal Association of Realtors, Wesley Cox called Williams’ presentation a classroom exercise and “not the real world.”

Cox said if the mayor’s legislation passed, he would lose money and his properties would go back to the bank.

“I know these theories make sense, but this is real life,” he said, telling Ireton he is not a greedy landlord, and took offense to that description, used in a news release issued by Ireton.

Banker Greg Johnson said if rent were capped at $250 per month, “why would anybody want to become a  homeowner?”

“Maybe the focus should be on your administration to go out there and help people find better jobs or increase the educational opportunities,” he told Ireton, to more applause.

Ireton, in an earlier news releases, said from 2000 to 2008,  rent amounts in Salisbury rose dramatically and are higher than the national average, due to increased energy costs and a doubling of the average home price.

Following what he called “the real estate crash of 2008,” rent continued to rise, but median household income fell by nearly $8,500. He quoted  statistics from the U.S. Census, stating 59  percent of renting households in Salisbury  are severely cost-burdened.

“This means that over 1,600 Salisbury households are paying between 30 percent and 50 percent of their income for rental housing costs, and an additional 2,700 households are paying over 50 percent of their income for rental costs,” the news release stated.

He said from 2000 to 2008, rent and income in Salisbury both rose, overtaking the national average, but at the crash in 2008, rent increased but income was less, falling by more than $8,500 at the crash.

At the work session Monday, he told the City Council: “The only houses that are going to  be targeted are single-family homes, duplexes, triplexes and I think we have a couple quadraplexes.”

He joked he wasn’t certain about the word “quadraplexes” and that it might mean “something wrong with the back of your leg.”

Ireton said the city is composed of 66 percent renters, so the idea of increasing ownership and decreasing rentals should be welcome.

Instead of foreclosing – which Ireton called “going to the back of the property” — the idea is to go to the front of the property and reduce rent.

“Nobody is expecting rent stabilization to pass this evening, least of all me … I will say the crowd generated says we’ve gotten somebody’s attention and that’s a good thing for Salisbury, whether they are for it or against it,” Ireton said.

During his presentation, Williams, the grants specialist, said 34 percent of the population owns in Salisbury, compared to 50 percent in most metro areas.

“Salisbury is one of the lowest homeowner rates in the country,” he said.

He said studies have shown if a family is paying 30 percent of income on rent, it’s considered tax burdened, and that is a problem in Salisbury.

Rents increased after 2008, he said, citing theories from studies. One is high default rates, meaning, aggregately, landlords increased rent to recover from economic loss.

Ireton had said earlier that renters know when they are paying too much in rent, “when there’s no money left on the second of the month.”

“We have tried endlessly for 30 years to address the problem of the greed of the rental industry in Salisbury. This Rent Stabilization Program is good for our residents, good for the local economy, and will allow the city to get a return on the investment it makes in its citizens,” Ireton said.

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