RENTAL REGISTRY ORDINANCES

The Proposed Rental Registry Is A “Tax On Tenants,” Certificate of Occupancy and Minimum Standard of Habitability. This Fee Based Proposal’s Potential Cost: $10 to $19 Million.

INTRODUCTION

After a careful review and analysis of the proposed ordinances to amend and reordain article II of chapter 6 and articles I, II, III, IV, and V [sic] [VIII] of chapter 26 of the New Orleans Code of Ordinances, we concluded that the proposed ordinances seek to address individual issues not systemic to the rental industry and are effectively addressed in existing municipal and state ordinances. Costly, blanketing legislate must be avoided. Rental Registry proponents have ignored and dismissed all existing solutions without consideration. The Rental Registry is a flawed bureaucratic concept that fails to address the real problem. Moreover, the proposed ordinances failed to pass a basic cost–benefit analysis as demonstrated below.

COST-BENEFIT REVIEW: Before embarking on any major plan or policy change, prudent managers will exercise due diligence to ascertain and fully comprehend the challenges or problems confronting them. The process is fourfold:

  1. Define the real problem.
  2. Investigate and define the cause(s) of the problem.
  3. Examine existing solutions and alternatives to effectively addressing the problem.
  4. Choose the best possible cost effective solution to resolving the problem.

The Rental Registry is being touted as the panacea to blighted housing, safe living and property owner accountability for New Orleans renters. But New Orleans code enforcement already addresses these issuesi and there is overwhelming state and city ordinances to effectively address all such problems. One such example is $30,000 in fines levied against a landlordii who refused to begin or make needed repairs.

We hope you will take a few minutes to read this important information and realize there is a better approach than imposing a $10 million “tax on tenants,” and an overlapping bureaucratic nightmare.

  1. EXISTING ALTERNATIVES: Sufficient codes and ordinances for health, safety and welfare currently exist for residential habitability. The proposed ordinances serve to create a duplicate layer of costly oversight, will increase consumer’s (tenant’s) rental cost and further exacerbate the rental market rates. The proposed ordinances produce no measurable benefit to tenants or property owners that cannot otherwise be provided through well established existing ordinances.
  1. EXISTING COMPLIANCE STANDARDS: Preexisting state and municipal ordinances currently provide for sufficient compliance of minimum habitability standards. The implications of the proposed ordinances suggest perceived deficiencies that are otherwise currently addressed in existing ordinances. Duplicate, similar and overlapping ordinances create unnecessary hardships and are counterproductive when embraced and implemented.
    1. New Orleans Codes and Ordinancesiii has sufficient preexisting and exhaustive standards of habitability safety, and welfare codes addressing the intent proposed herein. Chapter 26 Article IV, Minimum Property Maintenance Codes, Divisions 1-11 provides a detailed body of ordinances that require compliance and provide for a minimum habitability standard.
    2. Louisiana Civil Codesiv comprises over 45 civil codes regarding minimum standards for rental properties, leasing agreements, property owners responsibility and provides detailed tenant’s rightsv and laws governing habitability, safety and welfare of tenant’s and much more. All information is free to download.
  1. EXCESSIVE AND BURDENSOME FUNDING: In 2013 the United States Census Bureau estimated there were 189,896vi housing units in our city of which 47% are owner occupied, leaving 53% or 100,700 as potential rental units. Using the current $190 registration fee charged to a home owner to register a small home business for a simple “certificate of occupancy,”vii consumers (tenants) would be taxed $19 million.viii This number excludes all other fees, re-inspection fees, penalties, hearing fees, property liens and other revenue generating activities that are part and parcel of this unnecessary ordinance. Because the proposed ordinances intentionally lack transparency by omitting projected cost to fund such legislation, the actual numbers could be higher or lower as indicated here:
    1. Assuming a $60 registration fee per unit, the tax on tenants would be $6.0 million.
    2. Assuming a $75 registration fee per unit, the tax on tenants would be $7.5 million.
    3. Assuming a $100 registration fee per unit, the tax on tenants would be $10.1 million.
    4. Assuming a $150 registration fee per unit, the tax on tenants would be $15.1 million.
  1. RENTAL RATES INCREASE: Currently, tenant’s rental rates face significant increases with the council’s passage of the sewerage and water rate hike that is scheduled to double S&WB bills over next 4 -5 years. Doubling water bills poses a substantial hardship for tenants with fixed and limited income and only those who live otherwise may disagree. By comparison, the cost–benefit outcome of these proposed ordinances only adds to the soaring cost of unaffordable housing in the city of New Orleans and lays on the backs of our consumers (tenants) yet another rental increase. To add a $10 to $19 million tax on these consumers (tenants) seems unconscionable.
  1. PROPERTY OWNERS: According to First City Court’s 2014 eviction records, landlords were forced to evict 4,516 tenants for not paying their rent and lost over $3.6 million annually or about $300,000 per month in rental income. Add $850,000 annually in court filing fees and the cost of repairs to the trashed units at the average cost of $1,000 per unit or $4.5 million annually which is $376,000 per month and landlords lost a total of $8.9 million in rental income. In addition, recent rate hikes in property taxes, flood insurance doubling, property & casualty insurance increases, S&WB bills doubling, Entergy’s carbon tax and ongoing maintenance, repairs and improvement cost all add to skyrocketing expenses and drive rents higher. Unfortunately, these costs must and shall all be passed on to the consumers (tenants) if a business hopes to remain solvent. To add additional layers of overlapping bureaucracy and a millions in unnecessary fees, rental rates will certainly escalate.
  1. BENEFICIAL OUTCOME: There are 3 principal entities involved in these proposed ordinances that will be significantly effected:
    1. The municipality: The City of New Orleans would initiate yet another revenue stream potentially valued at approximately $19 million in exchange for creating a similar and overlapping regulatory process that is already well addressed by preexisting ordinances as demonstrated in 2.1 and 2.2 EXISTING COMPLIANCE STANDARDS of this document. Furthermore, the option to outsource the proposed program to a 3rd party, as suggested in the proposed ordinance, would further increase the cost to the consumer (tenant). The ordinance produces costly and excessive bureaucratic scrutiny that offers no greater outcome than existing codes and ordinances. Layers of bureaucracy are always excessive and costly. The revenue streams created by these ordinances would potentially enrich the city’s coffers while providing little in return to the consumers (tenants) or property owners.
    2. The consumer (tenant): This multimillion dollar program will adversely effect the consumer (tenant) and ultimately drive rents higher. It is naive to assume that this “tax on tenants” will benefit the consumer (tenant) in any way that is not otherwise provided for in existing ordinances. Hard working consumers (tenants) are extremely competent and capable of inspecting rentals, negotiating leases, and procuring a residence without the need of paying a 3rd party to tell them it’s habitable. Consider the following facts:
      1. Tenants carefully inspect their rental unit for habitability prior to entering a leasing agreement. The proposed ordinance is a veiled inference that the tenant lacks basic common sense and good judgment.
      2. Tenants have a wealth of codes, ordinances and resources currently enacted that require property owners to comply and facilitate any required repairs necessary to maintain a minimum standard of habitability.
      3. Current codes and ordinances allow tenants to effect repairs themselves and deduct it from the rental cost should a property owner fail to make reasonable repairs in a timely manner.
      4. There is no legitimate evidence suggesting the need for blanketed ordinances, effecting all rental units and consumers (tenants).
    3. The property owner: The property owner will once again be charged with the unpleasant task of justifying yet another rental increase due to a new city ordinance. This will not sit well with the tenant who has suffered previous rental increases that were imposed for property tax increase, flood insurance increase, property and casualty insurance increase and other costs of doing business. No amount of empathy will console their frustration and anger as they consider how to absorb yet another rental increase.
  1. MISGUIDED LEGISLATION: Costly, blanketing legislate action is never the answer to addressing limited individual issues, especially when preexisting remedies are available to achieve the same result. The proposed ordinances speak to a perceived deficiency that in reality is not systemic, but limited in nature to about 5% or 10% of landlords rental properties. Sometimes, seemingly good ideas are the enemy of what is best. The vast majority of consumers (tenants) and property owners are well served by existing ordinances and should not be additionally burdened with costly and unnecessary legislative action.
  1. UNINTENTIONAL IMPACT: Misguided agenda’s often attempt repairing that which is not broke for the purpose of self validation. These proposed ordinances attempt to do just that and will negatively impact the current rental market and all entities as follows:
    1. Higher rental rates for tenants.
    2. Costly legislation.
    3. Similar and overlapping regulatory process.
    4. Escalating Open-ended fee based structure.
    5. Hardship for tenants on fixed and low incomes.
    6. Overlapping and unwarranted intervention.
    7. Misdirected focus and lost productivity.
CONCLUSION

The cost-benefit review of the proposed new ordinances, aka Rental Registry, make it abundantly clear that the proposal fails to address the implied problem—forcing negligent property owners to repair their properties that fail to meet a standard of habitability. While we commend Ms. Cantrell’s intentions to address these important issues that effect about 5% to 10% of the rental properties and owners, the proposed legislation is a broad and costly measure that far exceeds the scope of its implied intention and concentrates more on the 90% to 95% of rental properties that do not have complaints of neglect or lack of habitability. The Rental Registry approach is tantamount to owning a fleet of 100 vehicles and 7 of them have flat tires. Would your solution to get those 7 vehicles back on the road be to buy new tires for all 100 vehicles or simply fix the flat tires?

The citywide Rental Registry is being called a vehicle to help our neighbors suffering from substandard housing, but its real destination is the 90% to 95% of rental units, tenants and landlords that are not the problem and shake down a multimillion dollar fee that is without justification. The properties that have already been identified by tenants as having habitability problems must be the focus of our attention. Any proposed solution must be predicated upon the actual problem in order to effectuate the proper result and provide expeditious relief to the tenants with habitability issues. While New Orleans code enforce lacks the resources to register and inspect the 90% to 95% of the rental properties that are not part of the problem, they are certainly capable of addressing the real problem which is the 5% to 10% of the properties with reported code violations.

The proposed ordinances produce no measurable benefit to tenants or property owners that cannot otherwise be provided through well established existing ordinances. From a business perspective, the right focus and actionable plan will result in accomplishing everyone’s goals in a cost-effective approach and bring relief to frustrated tenants.

From a humanitarian perspective, there are about 5% to 10% of our neighbors that need assistance in getting their rental units repaired. We have effective tools and remedies in place now on both a state and municipal level to accomplish the task. Let’s focus on the problem and not a costly overlapping bureaucracy that is certain drive rents higher.

One One of the largest challenges facing our city is not the passage of costly ordinances that will increase a tenant’s rental cost, but to legislate an actionable plan to repair the deplorable conditions of our streets. Tenants and property owners alike are forced to navigate a virtual minefield of potholes as they attempt to reach their homes each day. We would urge this council to avoid consideration of these proposed ordinances and move to focus on more urgent and vital issues affecting our residents.

vA Guide To Louisiana Landlord & Tenant Laws: https://www.ag.state.la.us/Shared/ViewDoc.aspx?Type=3&Doc=220

viiCity of New Orleans One Stop Permits and License: http://www.nola.gov/onestop/business/

viiiValuation $19.3 million: These values are calculated from existing fees for like and kind permit fees currently being charged. It is reasonable to assume that proponents initial valuations will be low-balled to overcome objections to passage.

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6 Responses to RENTAL REGISTRY ORDINANCES

  1. Stephen Ehlinger says:

    This city council is grasping at straws to find a way to generate more money so the city can squander it. Where has all of the money gone that the city absconded from the Feds ? They practically begged people to come back after Katrina and this is the price we pay. Huge pot holes that ruin our cars and bicycles, streetlights that are missing or burned out. Water leaking like a sieve underground. Raising costs of city services ( like garbage pickup and sewerage and water ), property taxes that are rising out of control….. The list goes on and on. Additionally we have a police force that is underfunded and losing officers daily and a jail/legal system bringing in millions of dollars/year yet we can’t find money to fund any of the city’s basic infrastructure. This is a money grab and it’s not going to stop here. Once they pass this rental registry, the next step is RENT CONTROL…… This is exactly how it started in other major city’s such as New York and San Francisco. We have to stop this nonsense before it gets legs. NO RENTAL REGISTRY and NO RENT CONTROL !!

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  2. Michelle says:

    This seems like yet another way for politicians to line their pockets (again) when most of these issues are already covered by existing ordinances. I think they already are well aware of the problem landlords and have failed to do what needs to be done about seriously blighted housing. Instead we are going to tax to death the landlords who provide not only good housing, but jobs in a city that needs that so badly. These meetings and protests are misdirection at its finest effort. Let’s make a problem where there isn’t one so in the background we can do something else.

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  3. Belinda says:

    We should be working toward a conscious effort to keep the high rents in the city down instead of imposing more fees on the landlords that will only trickle down to the already tapped out renters. I have no problem with my landlord!!! Stop this out of hand bureaucracy NOW!!!

    Liked by 1 person

  4. Shannon says:

    100 years after the Constitution was written, President Grover Cleveland vetoed a bill appropriating $10,000 for seeds for Texas farmers suffering from a drought stating “I can find no warrant for such an appropriation in the Constitution,”.

    President Cleveland understood that our Constitution only authorizes a limited government. History is filled with examples of other Presidents, Congressmen and Senators refusing to intervene in domestic affairs, preferring to allow our system of “““Free Will””” and market based capitalism to work. Our founders and early legislators understood the absolute necessity to limit government. Above all else, our founding fathers valued individual liberty. Our country was founded on a fundamental belief that only through liberty can any meaningful endeavor be achieved.

    God also understands the importance of “Free Will”. The Bible tells us that, only through “Free Will” and the freedom of choice can we fully have the kind of relationship God desires with each of us. God appeals to us: “O if only you would actually pay attention to my commandments! Then your peace would become just like a river.”—Isaiah 48:18. Here, He is acknowledges that we have the “Free Will” to following his commandants or not. But He provides us with “Free Will” to choose Him. Although HE could, God does not impose His will on us. “Free Will” is a precious gift from God, for it lets us love him with our “whole heart”—because we want to.—Matthew 22:37. It’s no small coincidence that our own Declaration of Independence mimics this very sentiment. “and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them….We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

    So the question is; Why has a great nation, one founded to insure and dedicated to individual liberty, increasing turned to government for redress? The line drawn for which we once dared the state to cross has steadily moved in our direction to the point where it’s hard to imagine life with out endless rules and regulation. In fact, there are few areas of our lives for which government believes it not fit to impose upon. From large sodas and restaurant menus, to retirement, health care, day care, wages, rents, prices, charity, and even rental registries, Got a problem? “I’m from the government and I’m here to help”.

    Those that tout more government do so, as they often claim, to right wrongs, correct injustices, and to better the collective lives of us all. Unfortunately, that is not the system upon which our country was founded. In fact, that very system of collectivism and government imposition is the form of government from which our forbearers ran. Our founders endeavored to create a government, instituted among men, deriving their just powers from the consent of the governed. Sound familiar? They also understood that such a government would hardly be perfect but understood that the alternative would never provide the safety and security that true freedom and liberty could.

    Unfortunately, it is the imperfection and not the amazing opportunities our founding principals provide for which the purveyors of collectivism latch onto. Excited to point out any perceived negative, fact or fiction, they often use tired and worn rhetoric such as, when we act as individuals, we often leave others behind, particularly the less fortunate among us. This elementary understanding of liberty is so basic that it almost begs pity. To the contrary, liberty provides freedom of choice to voluntarily join with others for economic, religious charitable, or any other endeavors for which we believe will further our positions in life. The key word being “voluntary”, and not forced through law. Inexplicably, however, is that there is an increasing number of individuals no longer willing to put forth the effort to attain a better positions in life, content to let others do the work for them. As this is opposite of every founding principle that has molded our country up to this point, yes, people who espouse to this belief get left behind. And, instead of encouraging and promoting individual responsibility as a pathway to success, there are those that want to change the system so that those no longer willing to work hard and strive for the “American Dream” do not have to. They believe that the lazy among us should be rewarded at the same level as those that are up before dawn on their way to a 12-16 hour work day. Simple madness is the only way I can explain this belief that that all the inequities created by the ambition and work ethic of others can be corrected through government regulation and by the imposition and oppression of un-natural law.

    Which brings us to the law. In order for legislation to be effective and for laws to be respected, they must be grounded in common sense. Unlike common sense law or natural law which is grounded in reason and based on principle and custom, legislation created to influence behavior, punish achievement and right wrongs is often nothing more than policy based initiatives that is solely determined by those in power at the time the legislation was written. “People crushed by laws, have no hope but to evade power. If the laws are their enemies, they will be enemies to the law” – Edmund Burke

    Progressives see government as an engine of good, an institution with a charter to solve all social and economic problems. But, one only needs to look at the past to determine the future success of any government initiative.

    • Social Security: Broke.
    • Medicare: Broke. Mismanaged.
    • Medicaid: Broke. Mismanaged.
    • Post Office: Broke. Billions in debt. Cutting branches and employees. Slower mail delivery.
    • Fannie Mae: Broke. $4 billion taxpayer bail out. CEO fired, yet left with multimillion dollar bonus.
    • Freddie Mac: Broke. CEO still gets multimillion dollar salary plus bonuses.
    • No Child Left Behind. $54.4 billion per year. America ranks 17th in education compared to other modern countries.
    • Department of Energy: $26.4 billion budget. Gas prices at all time high!
    • Fair Housing Act: The Feds forced the Banks to issue Subprime Mortgages to minorities with bad credit, major cause of current recession. 841,073 foreclosures in 2012.
    • Federal Reserve Bank: Broke. There is no ‘reserve’, just printed paper money with no backing.
    • United States: Broke. $16.7 trillion in debt and counting. Liability per taxpayer: $1,041,46

    None of this madness should have been possible under the Constitution as written and amended. The original Constitution limited Congress’s authority to only 18 enumerated powers. The Bill of Rights further detailed how government must exercise these powers. And the amendments added as a result of the Civil war further limited the authority of central government and promoted states rights. When on the occasion that Congress overstepped it’s authority, often Presidents would veto such registration or the courts would block the law as being unconstitutional. However; with the rise of progressivism, these checks started to fail and government over reach began to take hold, feed upon itself and grow.

    Government overreach is more than just about assured government failure. Most everything touched by the bureaucracy of government fails and that is just cold hard fact. But it’s also about government’s lack of authority to insert itself in nearly every aspect of our lives as is expressly written and forbidden under the Constitution. Our government has no inherent power other than that which is provided and delegated to it by the people, that’s us. We have so long been bombarded with government interventionism that we have stopped looking at our liberty in the proper light. Under our constitutional system, everything is legal except that which is expressly made illegal. Let me repeat that. Under our original system of government, our liberty and the depth of the freedom that this liberty provides is boundless. It predates the founding of our country and is provided to us by our creator. It was not provided to us by government and, no matter what, cannot be taken away by government. Instead of asking the question, “is it illegal”, we often ask the question, “is it legal”. We have it backwards.

    Our constitution has two main functions, to authorize government to act on our behalf and to limit that power only to that which we authorize. Madison writes in federalist paper 45 that the powers of the new government were “few and defined.” Contrast that with today’s federal government. We no longer enforce the limits our Constitution places on government, We are spending as fast as we can borrow while regulating our liberties away, one by one. I leave you with the thoughts of some individuals that had an idea or two about the pitfalls of government unrestrained.

    “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow.” – James Madison

    “Those Who Sacrifice Liberty For Security Deserve Neither” – Benjamin Franklin

    “I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.” – James Madison

    “That government is best which governs least.” – Thomas Jefferson

    “To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” – Thomas Jefferson

    “Opportunity is missed by most people because it comes dressed in overalls and looks like work.” – Thomas Edison

    “It is axiomatic: When there is no penalty for failure, failures proliferate.” – George Will

    “My reading of history convinces me that most bad government results from too much government.” – Thomas Jefferson

    “A government big enough to give you everything you want, is strong enough to take everything you have.” -Thomas Jefferson

    “It is difficult for men in high office to avoid the malady of self-delusion. They are always surrounded by worshipers. They are constantly, and for the most part sincerely, assured of their greatness. They live in an artificial atmosphere of adulation and exaltation which sooner or later impairs their judgment. They are in grave danger of becoming careless and arrogant.” – Calvin Coolidge

    “The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government – lest it come to dominate our lives and interests.” – Patrick Henry

    “Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.” – Daniel Webster

    “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” – C.S. Lewis

    “When governments fear the people, there is liberty. When the people fear the government, there is tyranny.” – Thomas Jefferson

    “If Congress can do whatever in their discretion can be done by money, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions.” – James Madison

    “When the people find that they can vote themselves money, that will herald the end of the republic.” – Benjamin Franklin

    “Article I contains no whatever-it-takes-to-solve-a-national-problem power.” – U.S. Supreme Court

    “One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.” – Ayn Rand

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