Recently the mayor of the City of Buffalo vetoed a bill to license landlords. This was quite a shock to me and many others. Not because this was favorable legislation, but because of its absurdity. It was a disaster that has been temporarily averted.
Profits are not dirty words. It is the promise of profits that encourages capital to be invested in housing. In a downward or recessionary market where property marketability has weakened and prices have declined it is measures such as this and rent controls that would debase or destroy the hope of the market's timely resurgence in the city.
Increased costs and restrictive regulations further discourage investment and development. Without real estate investments by home owners, individuals and large corporations, our rental housing stock would be quickly depleted.
The alternatives -- more homeless or increased governmental ownership of rental housing, particularly low income -- are not acceptable. While the Municipal Housing Authority try their utmost to be fair and efficient, they have not proven to be cost effective cures for the problem.
It is much like the rent control laws in large cities where landlords were deprived of market rent and thereby discouraged from making needed improvements. The results in many instances were greater deferred maintenance and eventual abandonment of the property by landlord and tenant.
It is rather frightening to hear some politicians refer to "slum landlords" in a derogatory fashion. There is a difference between a slum landlord -- one who owns and rents property in the slum areas -- and "slum lords," a term that refers to property owners who "bleed" property, failing to maintain real estate.
Slum landlords provide housing to the lower income population and thereby provide a service. Many are good landlords, who attempt to maintain and improve their properties for profit and for altruistic reasons. It takes courage and conviction to invest in these areas and a willingness to accept higher risks than in some other areas.
Some governmental agencies and lending institutions have looked down upon slum investors, criticizing them for purchasing property at low prices, fixing them up and then selling them for a profit. It is true that some of these rehabilitations have been less than minimum standards. Without these entrepreneurs, there are few in this community who are willing to provide these services.
The proposed law which, in addition to the burdens of licensing, would include a $35 fee for application and licensing, a $30 inspection fee, additional charges of $10 per unit in one to four-unit properties, $8 per unit in five to ten-unit buildings and $5 per unit for ten or more units.
These costs may not seem unduly burdensome, and probably much would be passed on to the tenants. Once a tax or fee is imposed, it is seldom repealed or reduced. Taxes have had a way of increasing almost automatically.
Rental housing is much like a baseball game: everyone wants to win, but if the other team does not show up, there will be no game. Proper officiating is needed. Penalties for misconduct and shoddy maintenances should be enforced. It should not be a one way street. As there are some inadequate landlords, there are also malicious tenants.
Encourage profitability and you encourage ownership. Help protect the property rights that give real estate value. Each time you reduce the rights of ownership, you reduce the value of property.
Block clubs and neighborhood organizations have been effective ways of maintaining and improving neighborhoods. Tenants and absentee owners should be encouraged to participate in community affairs and work together for their betterment.
Altruism alone is not enough stimulus. Altruism, where only the landlord pays, is a negative motivation. If everyone works together cleaning, repairing and preventing undue damage, all will be rewarded.
Community and social organizations have much at stake. They should work to assure property owners of safety and assist or assure that rentals will be received, not unduly withheld.
When community and investors work hand in hand, the results are favorable. We have seen it succeed here. Let us continue to improve our wonderful city.
Richard Bronstein, president of R.W. Bronstein Corp., an appraisal, auction and real estate firm, is a senior member of the National Association of Independent Fee Appraisers and the American Society of Appraisers with IFAS, ASA and CRA designations.