Searching for the Mythical Yeoman Landlord: Detroit’s Rental Registration Ordinance

Searching for the Mythical Yeoman Landlord: Detroit’s Rental Registration Ordinance
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By Nat Zorach

Public champion Bill Johnson recently penned an article on his blog about how Detroit’s rental registration ordinance will exacerbate blight in Detroit neighborhoods. Financially struggling landlords will be unable to comply with the new regulations, he argues, and this untenable burden will displace countless Detroit renters. Johnson is hardly averse to taking strong positions, having referred to the massive public subsidy that brought the Detroit Pistons back to the city after years in the distant suburbs as “reverse Robin Hood.” But this particular argument is puzzling and deserves further exploration.

The city’s goal is to protect its tenants and, accordingly, tenant protections are often stronger in cities where there are higher numbers of renters. A lawsuit against the city by, among others, Gibraltar-based MS Rentals and Taylor-based Garner Property Management, argues that the inspection requirement violates their Fourth Amendment protections from unreasonable searches and seizures.

Just one in 13 rental units in the city were found to be in compliance.

I can rattle off a laundry list of Supreme Court cases arguing in favor of states’ abilities to enforce what is called “police power,” regulating things like land use, zoning, and building codes for the common welfare. These landmark cases define, in large part, modern urban planning in our common law system, so it seems impossible that an argument by the companies, based on Constitutional rights could be remotely credible in a court of law.

Taylor-based attorney Aaron Cox, who specializes in debt collection and “real estate and investor services,” is representing four companies in the lawsuit. A spokesperson for Garner did not respond to our request for comment.

The administration walking an extraordinarily fine line between protecting tenants and ensuring that developers want to develop if we are going to do things like require modern code compliance.

Notice a geographic trend? These are suburban actors involved in a fight against the city and, arguably, urban tenants, something evidenced by parcel data showing that a full fifth of Detroit properties are registered to suburban owners (with plenty of city-based, suburban-owned LLC’s, to boot).

So, does this idealized vision of the noble, yeoman landlord actually exist?

Sarah Alvarez, the force behind Outlier Media, a consumer-focused, digital platform, doubts it.

“The idea that these are small neighborhood landlords being squeezed by the rental registration ordinance is likely to not be supported by ownership data,” she says.

The 24,645 units on the radar of city inspectors, as of the most recent tally, account for just under one-sixth of the city’s total inventory of rental units, estimates show. Of those, certificates have only been issued for 1,400, or 5.6 percent. This might be called a good start, but what’s particularly interesting is the number of compliance inspections that have been effected through tenant complaints and emergency inspections. This seems to evidence the fact that tenants have some power in the transaction and the city is responsive. But also significant is that the emergency inspections seem to suggest there is something horribly wrong with properties that are not being maintained to a reasonable standard.

The Detroit News’ Christine MacDonald wrote about the plight of tenants served with eviction notices in properties that weren’t legally inspected by the city. Just one in 13 rental units in the city were found to be in compliance. Beyond the Detroit News’ analysis of this topic, Matt Desmond won a Pulitzer for his 2016 book, Evicted: Poverty and Profit in the American City, which explored devastating effects on families and economies.

Regulation in this regard is critical in an era when suburban investors have treated the auction block as, essentially, a marketplace for value, investing because they don’t have to bear the enormous toll that evictions and poverty have on the communities they profit from.

Code compliance is a critical issue in a jurisdiction that, as I’ve lamented before  (see article here), fundamentally fails to follow building code. An understaffed building division tasked with compliance is at odds with an executive agenda that aims to promote a business-friendly environment, the administration walking an extraordinarily fine line between protecting tenants and ensuring that developers want to develop if we are going to do things like require modern code compliance.

We expect to dig into the data more in the coming weeks to understand more about the geography of ownership, but for now, let us be unequivocal in saying that inspections are a first step toward maintaining stable neighborhoods with habitable homes.

Editor’s Note: Nat Zorach is a Detroit-based housing and development champion and a regular contributor to TheHUB Detroit. 

Lead photo by Michelle & Chris Gerard

 

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