By Lawnae Hunter

Do you have a point you’d like to make or an issue you feel strongly about? Submit a letter to the editor or a guest column.

As a local property management professional, I read with great interest the editorial titled “Bend City Council should not dictate rental fees” on Page E2 of The Bulletin on Oct. 22.

I agree with The Bulletin’s position and conclusion that while no doubt well-intentioned, Councilor Nathan Boddie and others who may support his efforts have wandered directly into the path of the proverbial Law of Unintended Consequences.

Their efforts to increase the amount of moderately priced rental housing in our community by setting new limits on what landlords could charge as deposits as well as requiring them to refund application fees, negatively influences and directly interferes with producing additional moderately priced rental housing. Here’s why.

Local government and state officials are continually attempting to come up with ideas that theoretically reduce housing rental rates. At face value, that appears to be a good thing.

But efforts like Boddie’s seek to improve the rental housing inventory through tools born out of a fundamental misunderstanding of the basic economics that drive the rental housing market to increase its rental housing supply. The key here is understanding risk versus reward, as the rental housing investors are risking their dollars in exchange for a return on their investment (the reward).

Both of Boddie’s proposed changes create a disincentive for an investor to further risk their dollars to create the desired new housing units. Decreasing deposits that landlords receive as security against any damage the tenant may cause to the premises, puts the landlord at higher risk, as does refunding an application fee that exists to pay for actual services performed. These two seemingly minor items are in fact not minor at all. Individually, and combined, they alter (increase) the amount of risk being assumed by the investor, to a point where the investor will look at alternative investment strategies.

The city of Bend has already taken a drastic measure that interferes with the rental housing market. It now has in place an extremely restrictive requirement of a 90-day notice to tenants to vacate a property if they have occupied it for more than one year. This action alone has already served to discourage real estate investors and is driving higher rental prices in order to offset the increased risk.

Where is the common sense in this? Economists understand that to reduce prices on any commodity you increase supply. Conversely, a shrinking supply pipeline will drive prices up. This is basic economics.

If a city or state is really interested in reducing rental rates, then the logical solution is to implement actions that increase supply. These would include, but not be limited to, such things as: reducing the SDCs (system development charges) charged to build housing; fast-tracking permit processing (time is money); establishing a system to allow water meters to be installed on individual units.

Further, states can build in incentive tax advantages for investor-created housing, and can also rigorously fight any measures and restrictions that discourage investor ownership such as rent control or paying tenant’s move-out expenses.

I am happy to say many of our tenants understand these issues better than some local decision-makers.

They understand that if a house costs less to build/buy, an investor can charge less; that rents go down in a competitive market which has an increasing supply; and if a bad tenant destroys a unit it will reflect on how a landlord can collect on those damages. They understand that by selecting well-screened tenants and collecting a reasonable security deposit, the future of rental housing for all tenants and those to come is protected.

Along with The Bulletin, please join me in encouraging common-sense approaches to real-time problems, and do not support tactics that will shrink the available rental housing stock. Remember, investors have many options for their real estate investments. Let’s work to keep them here.

— Lawnae Hunter is the owner of Property Plus Management in Bend and Redmond.

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