Build-to-Rent Subdivisions: Regulate, Restrict, or Encourage Alternatives
In researching the trend of build-to-rent subdivisions and how our State and local governments handle them, I came across an interesting article on LinkedIn written by Doraville Mayor Joseph Geierman with some interesting points to consider.
He wrote this in February 2022, when the General Assembly was considering HB1093 and SB494. Those bills would have made it illegal for local governments to prohibit or limit build-to-rent (BTR) subdivisions and imposed penalties for doing so.
Geierman starts by mentioning that there was a lot of money behind those bills from out-of-state real estate interests. That sounds about right to me. Realistically, most bills that come through our General Assembly are probably driven by money, not the common good.
His primary issue with BTR subdivisions is that cities are allowed to require inspections of apartment buildings to ensure they're maintained to a certain standard, but aren't legally allowed to require similar inspections of single-family houses before they can be rented.
He indicates that in Doraville, around 50% of the single-family homes are rentals. Geierman says they've seen issues with out-of-state landlords dodging their responsibilities to increase their profits. He goes on to say that they hide behind LLCs and hurt tenants and the community.
I don't think that mindset is unique to out-of-state landlords. These rental problems are really just the nature of the beast. The fact of the matter is that both parties with a stake in the property will do just enough to suit their own purposes. Tenants won't do much to maintain a property that isn't theirs and that they may not stay in for long. Landlords won't do any more than they absolutely must to maintain a property they don't actually live in because those costs cut into their profit margin. Any housing shortages will only magnify that problem as landlords don't have to compete to make money.
The idea of requiring inspections IS interesting. Although cities CAN inspect apartments, I'd like to know how many do. For the ones who do, I'd like to know the financial implications for the government and how much good it truly does. How much can a city legally require, what remedies can they pursue, and how much do those remedies cost taxpayers? I suspect the answers to these questions are not all that reassuring, or it looks like someone in the government would be quick to volunteer them. The fact that government can't point to a lot of problems that it has successfully solved (without creating more problems) only heightens my doubt.
The BTR subdivision concept, apartment-construction boom, and some policies followed and promoted in government circles suggest that both big business and big government are actively trying to drive people away from home and property ownership and into comparatively unstable rental situations. Local governments are giving tax incentives to apartment complexes. SOLIS, the 300-unit apartment complex going up next door to City Hall, was given a 15-year property tax break by the City of Sugar Hill. If we could afford that, it seems likely we could afford to provide tax incentives for developers willing to work with the City to provide single-family starter homes and workforce housing. As far as I know, no one in the City of Sugar Hill has yet discussed or investigated this idea.
