Pace Six THE MICHIGAN DAILY -Saturdoy, June 4, 1977 'Housing crisis' blues: increase supp hold pices By ELAINE FLETCHER Second of Two Parts WHIILE ANN ARBOR'S housing situation may seem hoeless to the tens of thous- ands of city tenants it afflicts, the situation is by no means insurmountable. In fact. it's quite simple to map out what needs to be done in order to alleviate the central city's hosing crisis. Two things must happen more or less simultaneously. First. the sonply of housing must be in- creased so that tenants will no longer be forced to live in poorly maintained housing owned and managed by disreputable land- lords. Second, the cost of housing must be kept down to reasonable levels-and the only feasible way to do this is through regu- lation of rental prices. Rental price regula- tion, otherwise known as rent control, is needed to stop assessmeint inflation and in- sure that the financial benefits of any newly constructed high rise housing are shared by consumers. Of course this is all easier said than done. The city's housing crisis has been tenaios's. largely because of the resistance posed by local landlords and bankers to pro- Saturday Magazine gressive measures which could change the housing situation. Community financial lead- er fTail to work toward alleviating the hous- ing problem, impede the efforts of those who do work toward alleviating the prob- lem, or refuse too acknowledge that such a thing as the "housing crisis" exists. Consider the landlord who, in an inter- view, professed a deep concern over the issue of new central city housing construc- tion, yet later in the interview insisted, "I think the shortage is a myth," said the landlord who wished to remain anonymous. "The ISR survey-I can pick those statistics apart in a few minutes. To say that prices in the Ann Arbor market are higher is ma- larky. These characters (pro-tenant acti- vists) seem to think that someone else owes them an apartment at whatever price they want to pay" Landlords often complain that their ten- ants understand few of the trials and tor- ments involved in rental housing owner- ship, construction or management. How- ever, landlords themselves have offered little response to tenant concerns regarding the housing crunch. When faced with ten- ant-backed housing proposals the response of the landlord community has generally been far from constructive. William Tyler vice-president of McKinley Management companies, recently admitted that he had not finished reading the study which he as part of the Mayor's Housing and Fair Rental Practices Committee, com- sioned and approved. Tyler also did not know what interim recommendations his committee had sent to the Mayor and Coun- cil for approval. He is perhaps typical among ctiy realtors in that he is "absolute- ly against rent control" and against the city or University backing mortgages for non-profit residential development. When the Housing Committee's interim recom- mendations were r-ead to him, he said that he was against most of them. Although he acknowledges the city has problems with high prices and housing Although there is some vacant land in shortages, Tyler offers no ideas as to how the central city more sites must be made to deal with the problem, explaining, "I available if any construction other than think it's always going to be tight here and high rise is to be done. A large proportion I don't know what solution there is to hous- of the city's older homes are still desirable ing at a lower cost-though my opinion on tenant dwellings but units which are in an rent control is no different than before (the extreme state of disrepair or which have study)." Still when asked if he thought the been condemned should be torn down and University should increase its housing sup- the land made available for new construc- ply Tyler said, "Let the private market do tion. that." When it was pointed out again that the private market had failed to provide an To eliminate sub-standard housing, the adequate supply of low cost city housing, cty de no codetid andingr. Tyler responded, "Perhaps people will "the demolition of condemned buildings, have to shift their living habits-perhaps. "The city could really solve some of that will have to live farther away from the evil landlords stuff by taking some of the they .r really rotten ones and going after them, Uoveators wharhauling them into court for code violations," To realtors who are making comfortable remarked one landlord, who refused to be profits in the existing housing market, it is- identified. "My feeling is that I'm just dis- easy to be negative about proposals for gusted with city hall. They could make ev- change. Change, after all, represents a ery landlord in this town shake. They could threat to their investments. make me shake if they would enforce codes, Their views however, are not acceptable start forcing people to rip condemned build- to the overwhelming majority of people who ings down and offer a real incentive (tax have a vested personal or economic stake incentive) to build. Hell we're all human. in the growth and prosperity of the central Eighty per cent of what I do in a day is city. Businesspersons, bankers, investors. motivated by greed-or call it the competi- tive spirit. You've got to offer them some kind of incentive to people, and then all of a sudden you'll find the market flooded." The city can further stimulate the devel- opment of new housing by trying to make the profits on existing housing less attract- ive relative to those to be made in the new housing market. It can do this by holding down the prices of existing rental units while perhaps exempting newly constructed housing from regulation. Such regulation would insure that consumers as well as developers would profit from an increased supply of rental housing. Jonathan Rose of the MSA Housing Law Reform Project believes that city regulation landlords, developers, city hall, tenants, of housing prices need not imply bureau- and the University all have a responsibility cracies. Rather he suggests that some form to the community as a whole to help in al- of localized "rental costs index" be estab- leviating the housing shortage and high lished which would- measure the per unit prices. A variety of creative solutions can rise in landlord costs like utilities, taxes, be explored or a few unwieldly ones may be ets. and then would automatically allow for imposed. What course the city chooses de- a rent increase comparable to that amount. pends largely on how well the broad spec- Rental appeals would then be necessary trum of interests can work together to- only if exceptional circumstances make the wards some common goals-or if they can allowable rent unfair to landlord or tenant. work together at all. Although many landlords balk noisily at any sort of rent regulation, if what they THE CITY GOVERNMENT could be the say is really true-if their rent increases key figure in the housing crisis. It must really only reflect rising operating costs- learn how to- work together with the busi- they have nothing to fear from rent regula- ness and financial comm'nity to stimulate tion. Not only would it hold down prices to new ho'esin'g cnstrmction without sacrific- tenants,. but it would further help stem the ine the broader interests of its electorate. rise in property tax assessments which One crcial way in which the city and busi- erode into a landlord's profits. ness esn enn'wrsti is in the develonment of "I think most people would favor rent tax relief which will stimulate new housing control if they could get direct cost pass- constr'ection. through," commented one landlord, who The supply of housing must be increased in poorly maintained housing, agreed to an interview on the condition that he not be named. "A lot of people are against rent control, just because it would regulate them, but I've never seen an in. dostry which was regulated which didn't end up liking it. Look at the airline indus try. Now they wouldn't want to be deregu. lated. Besides I think they're going to have them (restrictions) sooner or later so they might as well work to get the right ones." This landlord added that rent control would "run out of town some of the land lords who've really got it coming and who are giving some of the better landlords a bad name." WHILE A CERTAIN amount of high rise development might be desirable for downtown, high rises alone will not serve a broad variety of the community's housing tastse and needs. The city needs to encour- age more low and midrise construction at the same time, by relaxing zoning density restrictions. Parking provisions should be loosened in the city where a pedestrian lifestyle is desirable to many. According to Rose, relaxation of require- ments for large lot and single family zon- ing would allow greater housing density it areas near the central city. Also to make possible greater density, Rose questions the proposal that the city could allow the conversion of illegal rooms to make then conform to legal standards. "This might just overcrowd tenants to the benefit o' landlords but, if coupled with rett control would at least let the tenants have the eca nomic savings of their crowding." Tax incentives which encourage develop ers to put up downtown hoesing should not be unfairly limited to profit motivated ii dividuals or corporations. Explains Rose "Another way of increasing the supply is to give a greater number of people access to building capital. If mortgages for new cOt struction were insured by the city, prive insurance companies or other instituti or non-profit cooperatives, could borr1 the money to build their own buildings Wit no downpayment." He adds, "Local final cial institutions might oppose this plan a it would in fact increase supply, thereb making their existing investments less i demand and less financially secure." Such a proposal was in fact an interim recommendation of the Mayor's Fair Rental Housing Committee. It was opposed by only two of the voting committee menber Jerry Bell (the Republican Council repre sentative) and Carolyn Dana Lewis, Pre;' dentof the Ann Arbor Board of Realtors. While it is important that city policie encourage new construction, it is equal;' important that any new rent control rettai tions contain financial incertives to pr mote the maintenance and rehabilitatioa the vast number of existing housing 5t which are in seasonably good repair Elaine Fletcher is Sunday magszine editor during the school yar. Doiy Strict code enforcement and enforced demolition of tial to improvement of housing conditions.