Local view: Rules stifle Duluth rental market
There is something wrong here. A Feb. 9 News Tribune editorial quoted the Duluth Economic Development Authority executive director saying that, “In the next three to five years, Duluth needs an estimated 1,000 new market-rate apartments and single-family homes.” Later, the editorial stated, “The Legislature could help — and will be asked to this session” (Our View: “Let’s work together to close Duluth’s housing gap”).
Why promote more government investment in the housing sector? If the market needed more market-rate apartments, the market would have filled the need. That’s the beauty of the free market.
I have a hard time believing there is a need. I have been active in the Arrowhead Multi-Housing Association for years, and landlords are saying there is a lot of vacancy now. Some say they have more vacancy now than ever.
Why would a landlord think about expanding when the average quality of tenants has gone way down in the past 20 years? Our laws and the courts are unjustly skewed in favor of those who refuse to pay their debts and who damage property.
Taxes also are a problem. Tenants, via their rent, pay more than twice as much real estate taxes as the owners of homesteaded property.
And how about regulations? Imagine you had your house inspected and you had a little bit of peeling paint on the exterior trim. It is late fall and as warm as it will be until next summer. The temperature is in the low 50s and falling fast, and it will be dark in two-and-a-half hours. You ask if you could do it next summer, but, “No,” is the reply. You hustle like crazy to get your tools, ladder and primer. Forget about anything else you had planned for that afternoon. You start to scrape and the wood tears because it’s wet from the rain of the past few days. So the wood can’t really be scraped and primer doesn’t bond to wet wood. The primer I use is $53 a gallon and is not to be used below 50 degrees. Obviously, I will have to do it right next summer. Now does this kind of regulation lead to increased safety? No! What do you think this does to rents?
And did I mention city ordinances such as administrative fines and “three strikes” that punish landlords for the bad behavior of tenants?
And what effect does government-subsidized housing have on the market?
Landlords are quitting the business or are not expanding. Minnesota generally and Duluth in particular are not good places to be in the business of rental housing. I want to expand. I improve my properties over time. But my next investment will not be in Duluth.
I hope that someday we realize that when it comes to housing, government is the problem, not the solution.
Allan Kehr lives in Duluth and owns rental property here.