Wednesday, April 8, 2009

Houston's Apartment Owners in Hot Water

Bill White has made apartment inspections a priority during his reign. His successor will have no choice in the matter. The Texas Legislature is set to approve a bill that will, according to the Chronicle:
[M]ake the city mandate minimum habitability standards in buildings with three or more multifamily units — and perform regular inspections to ensure compliance.

The bill only applies to Houston, which implies that multifamily housing in other cities is of no concern to lawmakers. But this is not the real objection to the bill--the proper response to the violation of one's property rights is not a demand that the rights of others also be violated.

The bill’s author, Rep. Dwayne Bohac, R-Houston, said:
This is about protecting tenants in apartments and about protecting surrounding neighborhoods. This is a really, really big step forward for the city of Houston.

I must disagree. Neither the state nor the city has any moral right to dictate habitability standards or conduct inspections of private property. If landlords wish to have apartments that do not offer running water, or sealed windows, or anything else, that is their right. And if tenants desire operational toilets, hot water, and secured stairways, then they can select housing that offers such. A landlord who offers housing that lacks hot water, or secure stairways, or proper lighting has not violated anyone's rights (unless he has promised such things.) Of course, legislators would prefer to absolve individuals from any personal responsibility in such matters.

Bohac decided to push this legislation after the murder of a Houston policeman in a complex in Boha'c district. The murderer had run into the complex in an attempt to evade police after a traffic stop. Apparently, Bohac believes that if the complex were required to have hot water and operational toilets this scumbag would not have shot a police officer.

Andy Icken, a deputy director with the city’s Public Works and Engineering Department supports the bill:
Having a clear, established state law and city ordinance would clearly communicate to all the stakeholders what our expectations are.

What about the expectations of the property owners? What about their rights to use their property as they judge appropriate? Apparently, that is of no concern--to anyone. The Texas Apartment Association (TAA) supports the bill. George Allen, an executive vice president with the association, told the Chronicle:
As an association, we do not in any cases defend property owners that fail to maintain their properties and allow situations that could affect the health of their residents.

I certainly wouldn't expect TAA to support slumlords, but I would expect it to support property rights. Why can't TAA establish standards for its members? That of course, would be private and voluntary, and in this age of expanding government, non-coercive methods for dealing with any issue is the last alternative to be considered.

From an economic perspective, this bill will increase housing costs. At a minimum, the city will need additional tax dollars to enforce the law. And very likely many multifamily communities will be forced to spend money to meet the city's standards. As is often the case, the poor--who are the primary residents of such communities--will be impacted the most. They will have fewer housing options, and those that remain will cost more. Violating property rights always has economic costs, in addition to the loss of freedom.

Having railed against this attack on property rights, I should add that the city does have a legitimate role to play in dealing with some of the targeted apartment complexes. But that role should be clearly defined and limited to objectively demonstrated nuisances.

If for example, a landlord refuses to maintain his property and it becomes a haven for rats, or raw sewage runs off the property, or otherwise threatens the property of nearby land owners, that landlord has violated the rights of others. Then, and only then, does the city have any legitimacy in involving itself.


Anonymous said...

The reason the TAA supports this bill is the same reason that most big businesses support increased regulation. The costs of compliance are relatively high for smaller competitors and new entrants to the industry. Meanwhile, existing larger competitors – although faced with increased regulatory compliance cost, new licensing fees, etc. – will more than make up for those costs in decreased competition. If you can put a few marginal competitors out of business, or better yet keep them from entering the market in the first place, you can really impact your bottom line.

Another recent example (yesterday in fact) was the CEO of Goldman Sachs asking for increased regulation on his industry.

Brian Phillips said...

I agree, and it shows that developing political connections is more important than developing a good business model. TAA is hardly alone. As you mention, Goldman Sachs has joined the chorus for more regulations, as has Continental Airlines and assorted other businesses. They are willing to buy "security" at the price of their freedom, and as Ben Franklin said, they will wind up with neither.