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Friday, 22 January 2010

RUCO History

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(RENTAL UNIT CERTIFICATE OF OCCUPANCY)

In 2003 the Greensboro City Council passed the Rental Unit Certificate of Occupancy ordinance (to read the ordinance click here, then go to chapter 11, section 11-40.)  The stated purpose of the ordinance is to ensure that all rental housing in the city meets minimum property standards.  A noble sounding objective, who could argue with it? An examination of the history of property maintenance in Greensboro, the apparent philosophical underpinnings of the ordinance, and the details that will guide its administration are helpful in answering that question.

HISTORY

Historically (that is dating back to the 1960s) minimum property standards have been administered through an inspections program run by the city.  City officials maintain that they divided the city into areas, and assigned an inspector to each area.  They claim that over the course of a four or five year period every residential unit in the city was inspected.  Or at least every residential rental unit, and some single family owner occupied.  It makes a good story.  However, it doesn’t hold up very well to closer examination. 

Talking with a number of property owners it is clear that no systematic, comprehensive, inspections have ever been conducted.  Most owners of reasonably well maintained properties report that their properties have never been inspected, or have only been inspected if there was a complaint from a tenant that triggered the inspection.  That would lead one to conclude that either city officials are being disingenuous when they claim that there was a systematic program that inspected all properties, or that they are uninformed of how the inspections program they administered actually worked.  Neither of these conclusions inspires confidence in the officials who will be administering the RUCO program. 

If there had been an on going, systematic, inspection program for approximately forty years the city would have amassed a wealth of data on the housing base in Greensboro.  The type of inspections the city claims to have conducted would have resulted in a database that would, at a minimum, have included the address of all rental property in the city, and the number of rental units at each address.  This information should be complete and accurate up to the time the city stopped conducting these systematic inspections.  Taking these data, and combining them with data from building permits issued from that date forward would permit the city to form a comprehensive and accurate database of rental housing in Greensboro.  That hasn’t happened.  And apparently isn't possible.

In attempting to implement the RUCO ordinance the city has demonstrated it has little or no knowledge of what rental housing exists in the city, where it is located, or who owns it.  This further calls into question the supposed systematic inspections that had been conducted.  This is important, because part of the rationale for RUCO is that it is really not a new program, but merely the continuation of an existing program in a slightly different form.

APPARENT PHILOSOPHICAL UNDERPINNINGS OF RUCO

Since the philosophy underlying the RUCO has never been explicitly stated it is necessary to try to determine it from what has been said. 

IMPROVE HOUSING QUALITY

One of the stated goals of the ordinance is to improve the quality of housing in the city.  A lofty sounding objective, and one with which most people would agree.  But, what that really means is that the goal of the city is to increase the cost of housing in the city.  And not just any housing, but specifically rental housing, since the RUCO focuses only on rental housing. 

The facts of economic life are not difficult to understand—unless you happen to be an elected official, or work for government, an are insulated from the real world.  If money must be spent to improve the quality of housing that money must come from somewhere.  Property owners have only one source of income for maintenance and improvement, the rent they receive.  So, in the face of increased taxes and fees levied by government the property owner has no choice but to increase rents to realize the money needed to be in compliance with city ordinances.  In reality, the RUCO ordinance is an ordinance to raise rents throughout the city. 

The state of the rental market is such at the moment that general rent increases are unlikely.  Historically high vacancy rates plague the rental industry.  However, as these high vacancy rates work themselves out of the system the pent up pressure for major rent increases will be released throughout the city.  When that happens, and tenants complain, be sure to make it clear that they have the City of Greensboro to thank for their rent going up.

TENANT INCOMPETENCE

Another apparent philosophy underlying the ordinance is that tenants are incompetent and incapable of looking after themselves without the intervention of the heavy hand of government.  It follows from this governmental view of tenants that they will live in unsanitary, unsafe, substandard conditions unless government intervenes on their behalf. Anyone with any knowledge of the rental market knows better.

The door swings both ways.  Tenants can, and do, move out.  Even if it means breaking a lease.  Landlords can, and do, make all manner of accommodations to retain desirable tenants—in strong and weak rental markets. 

The market is the most efficient and effective way of ensuring that the supply of anything, in this casing housing, meets the demand for it.  Housing that is poorly maintained and offers few amenities is priced to reflect these facts.  If no one wants to live in such housing it remains empty.  If someone chooses to rent such property it is obviously meeting that individual’s needs better than anything else that is available. 

Of course, it may be that the RUCO ordinance is really an attempt by City Council to eliminate poverty by making it too expensive for poor people to live in Greensboro.

Substandard Housing

 The City of Greensboro has demonstrated a remarkable inability to deal effectively with slum housing over the last 35-40 years.  There are a number of glaring examples in the city of housing that has been allowed to deteriorate.  Every few years the city goes through the motions of taking action against these properties.  After much gnashing of teeth and wringing of hands everything quietly returns to the status quo ante. 

The city would like one to believe that the RUCO ordinance is the tool it needs to correct this situation.  It is not.  High Point, for example, has found ways of dealing with this issue without an inspections program or the ensuing bureaucracy.   RUCO is a cosmetic attempt to mask a relatively small problem by shifting attention elsewhere.  It is also a waste of resources on an inspections program to inspect properties that are not problems, rather than focusing the resources where the problem exists. 

Owner Occupied Housing Exempt

In their zeal to raise the standard of housing in the city the powers that be seem to have no interest in also raising the standard of single family owner occupied housing.  There are a number of possible reasons for this.  It is quite likely that the city does not want to take the political and public relations heat that would result from city inspectors demanding entry into owner occupied homes to do inspections.  The city seems sensitive to the invasion of privacy issue when it comes to homeowners, but not when it comes to tenants.

One also suspects that the city fears a public relations disaster if an inspector condemns an owner occupied house whose resident is a sympathetic senior citizen living on a fixed income who cannot afford to make the needed repairs.  Living in squalor under these circumstances is acceptable, but not if the occupant is a 30 year old tenant who could move whenever it suited him.    What’s wrong with this picture?

The city claims that they will inspect owner occupied housing as needed.  Fair enough—if they inspect rental housing as needed. 

IMPLEMENTING THE RUCO ORDINANCE

The city has begun the RUCO inspections and they have done so without making any effort to inform property owners of the ordinance or their rights and responsibilities under it.  This seems to be the result of two things:  an indifference on the part of city officials toward the property owner, and an inability to identify the property owners they are planning on inspecting. 

The indifference is apparent in talking with city officials.  They are very polite, but it is painfully apparent that it never occurred to them that it they should notify property owners of what was being done.

The inability to identify rental property owners is more interesting.

In attempting to implement RUCO the city began by using a database supplied by the Water Department to attempt to notify property owners of impending inspections.  They soon learned the inadequacy of this approach, and have switched to a census database.  They claim that the census database is better.  It has been requested that they notify property owners in advance to inform them about the RUCO ordinance, that they plan on inspecting their property, and schedule such appointments to increase the efficiency of the city inspectors, and allow the owners to be present.  The city has said that they plan to follow that procedure for apartment complexes only.  For all other rental properties they will simply mail out notices that the inspectors will be in the area and will be knocking on doors.  This is a tacit admission that regardless of the database they have chosen to use the city is unable to identify rental property.  This is especially interesting in view of the supposed comprehensive inspection program the city claims was the predecessor to the RUCO.

PROPERTY MAINTENANCE STANDARDS

The city has adopted the International Property Maintenance Code to guide their efforts under the RUCO ordinance.  Call the inspections program to request a copy.  Then consult the city ordinances to see which parts have been adopted, and which have been modified.

Ask the Inspections Department for the checklist that the inspectors will be using.  You need to be well informed.

INSPECTIONS

Will all inspectors enforcing the ordinance in essentially the same way?   Do they all have similar levels of training and certification?  Good questions.  Time will tell.


CONCLUSIONS

The RUCO ordinance appears to have resulted from the unfortunate confluence of misguided good intentions, political pandering, and bureaucratic empire building.   How the ordinance is implemented and its long term effects on property owners and affordable housing are uncertain, but not promising.  Once government initiates a regulatory program the tendency is for the program to become more intrusive and more entrenched.    

It is vital that property owners organize now so that they can speak with a unified voice, and form an effective lobby to protect their interests and those of their tenants.  Residential, and commercial, rental property owners who are not now a members of the Greensboro Landlord Association should join now.

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