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Ludington Rental Inspection Ordinance, Crux of Area's Housing Crisis, Turns Ten Years Old
Ludington's original Rental Inspection Ordinance officially turned 10 years old this week, this last Sunday being the ten-year anniversary of the Ludington City Council's passing of the program that registers rental property units and has a city officer inspect them for compliance with the International Property Maintenance Code.
Landlords, tenants, and others came out to multiple sessions of the city council starting back in the spring of 2015 up to the end of October telling councilors and all others that this was a bad idea and an infringement of basic civil rights of those involved. Despite this. four of six councilors voted to enact it. First-term and current Councilor Kathy Winczewski, the deciding vote, indicated she wanted the program to be reviewed in a year by the council, but it never had any formal review.
Several people, even non-landlords like this reporter, predicted that this program would lead to the loss of hundreds of affordable housing units, without any good prospect of recovering them. Many had even foreseen that those would not be easily replaceable by relying on government housing programs, and that any new units made from the private sector would not be affordable. The stats provided by a recent housing study bears this out:
Thus, our area's current housing crisis and homelessness problems were very predictable and could have been lessened or even avoided had the council decided not to send their people into our private homes and disincentivize establishing and maintaining affordable rental units. Remarkably, the local experts behind the Rental Inspection Ordinance push would maintain for seven years that the reverse would happen if we were to put it into action. From the May 5, 2009 minutes of the Ludington Planning Commission (the birthplace of most bad government policies), Commissioner Joe Moloney started the ball rolling by acting on a counterintuitive notion:
In Moloney's defense, PC members across the state are fed a lot of baloney in the course of their training about "more government" being the solution to all zoning and housing problems. He suggested that rental registrations/inspections would be the path towards getting affordable housing, and it's really unclear how he came to that conclusion without believing that the Michigan State Housing Development Authority (MSHDA) and other federal housing assistance would make affordable housing units in Ludington to replace all of the low-end housing being taken out of the matrix, and then some.
But Moloney would show up throughout 2015 and argue this point at meetings to try and sell the concept, regardless of those providing housing services and reasonable guys like myself telling him a much different story. Separating the alarmism out of some of the officials proclaiming our area has a severe housing crisis, having an affordable place to stay in the Ludington area has gotten a lot tougher. Even the 'experts' utilizing the crisis in order to try and game more money from MSHDA and grants can't help but be astounded by the numbers in a county where the two incorporated cities therein have ambitious rental inspection programs:
Yet, they are not honest enough to tell us what one of the main factors might be. For the other side, the landlords can say that they told them so, but the same people who have foisted non-affordable housing on us will defend themselves with their own sophistry about how the government can come in and fix this issue that has just worked fine throughout the years of our republic without their help. Believe that what the government wants for your housing future is not the same as what you want for your housing future.
One cannot overcome such sophistry easy with rational arguments using common sense, so maybe they would understand better artificial intelligence (AI) explaining the basics to them. I asked Google AI a simple question, and I halfway expected it to follow along with the myths of those who trumpet rental registrations as good things, like Mr. Moloney does. But what I got was supportive of reality:
Can mandatory rental inspection ordinances unintentionally harm the affordable housing market?
- Fees and penalties: Municipalities often charge per-unit registration and inspection fees, which increase operating costs for property owners. Landlords who fail inspections face additional reinspection fees and potential fines, further raising expenses.
- Repair expenses: Landlords must pay for necessary repairs to bring properties up to code. For small or "mom-and-pop" landlords operating on thin profit margins, these costs can be prohibitive.
- Cost transference: These increased costs are often passed on to tenants through rent increases. In some cases, the only way for a landlord to cover the costs of fees and repairs is to raise rent, making housing less affordable.
- Displacement: If a landlord is unable or unwilling to pay for costly repairs, they may sell the property or convert it to a different use, reducing the supply of affordable units. Property flippers, in particular, may purchase run-down properties, evict existing tenants, and renovate the units to be rented at higher rates, leading to displacement.
- Retaliatory evictions: Fear of landlord retaliation can discourage tenants from reporting problems, even in complaint-based inspection systems. While proactive inspection programs can help, they do not fully remove the potential for strained landlord-tenant relations, especially when faced with large repair costs.
- Discouraged investment: As profit margins shrink and compliance becomes more difficult, landlords may be incentivized to neglect maintenance or pull their properties out of the rental market altogether. Over time, this leads to a decline in housing quality and fewer affordable units available.
- Lost units: As landlords find it financially unsustainable to operate properties in compliance with strict and costly inspection programs, some units are sold or converted out of the rental stock. A 2018 study on San Francisco's rent control policy, for example, found that landlords removed 15% of the rental housing stock by converting units to condominiums or other uses.
- Fewer housing options: With fewer low-cost units on the market, competition increases, and low-income residents have fewer housing options.
- Alternative strategies: Instead of relying solely on inspections, some suggest that policies should focus on increasing the overall supply of affordable housing, offering targeted rental assistance for low-income renters, or subsidizing repairs for necessary improvements to ensure safety without unduly burdening owners or displacing tenants.
One can see the unintended consequences from rental inspection programs from this answer, and one needs only look at the Lofts on Rowe property above to see how a heavily-government-subsidized project touted by many officials as "affordable workforce housing" is anything but that. A small 400 sq. ft. one-bedroom unit will cost you $1116/month. It goes up to $1520/mo. for a 650 sq. ft. 2 bedroom unit.
If we accept the definition of affordable housing as rent costing no more than 30% of your household income, one will need to be making over $45K per year to afford a one-bedroom home here for effectively a 20' X 20' cubicle of living space. Let's cross-reference that with the average income for the area:
Unfortunately, there is no good resource to track how rents have increased since 2015 in Ludington, but the introduction of many unaffordable units into an area is obviously going to be inflationary to the housing market overall.
While it would be in the public interest to discontinue the rental inspection programs in Ludington and Scottville as it would lead to truly affordable housing opportunities as long as the stake is placed squarely in the heart of such programs, like any government program that has went bad, you can't easily get rid of it without electing people to city councils and commissions who will buck the "more government needed" orthodoxy ingrained into the various training sessions they are likely to receive after election to get them to become a 'team player'. It's definitely time to reconsider this.
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