Rental controls measure gains no traction with City Council

 A proposal by Mayor Jim Ireton to impose rent controls on single-family homes in Salisbury was rejected by the Salisbury City Council at its work session Monday.

Legislation Ireton wrote would have created a seven-member rent stabilization board and would have based monthly rent prices on a home’s property value.

He told City Council members the effort would lower rent bills for hundreds of residents and would put $8 million back into the local economy, while relieving those overburdened by high rent.

But after listening to a lengthy presentation by grant specialist Ireton hired, followed by several residents – all whom were opposed  to the plan — 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, the grant specialist.

“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.

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.

At the suggestion of City Council President Jake Day, council members agreed to place the matter on the mayor’s list for future discussion.

“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.

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.

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.

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.

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 listed 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 landlords speaking in opposition was Bret Hopkins, president of the Salisbury Area Property Owners Association, 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,” said Hopkins, a managing member of Fairfax Properties.

Landlord Kevin Adams said he hates 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, the city’s top real estate broker, 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.

Wesley Cox, representing the Coastal Association of Realtors, 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.

Richard Insley Jr., who’s been in the rental business 47 years, said the proposal is the fastest way he knows of to destroy neighborhoods.

Banker Craig 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.

Chris Eccleston of Delmarva Veteran Builders said the proposition  would contribute to the crime rate and not boost Salisbury’s goal for long-term improvement and  growth. Subsidized housing is preferable, he said.

Ireton, in 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, who remained in good spirits despite the business community’s succession of attacks, 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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