Nichols: Managing the impact of neighborhood rental properties

For-rent-sign[1]The City of College Station is experiencing almost unprecedented growth stemming largely from the expansion of enrollment and research and development budgets at our institutions of higher education. These changes bring many opportunities for business development, employment, new retail experiences, and expanded regional and national recognition.

They also bring many challenges. We live with, and try to adapt to, the pressures of increasing traffic congestion and the transition of many commercial and residential neighborhoods.

The rapid expansion of rental properties into neighborhoods zoned for “single families” and long thought to be designed mainly for traditional owner-occupancy is the focus of intense current discussion by many residents and rental property owners. In College Station, the definition of permitted occupancy in what are designated as “Suburban Residential” and related similar zones is “no more than four unrelated individuals.”

Economic forces are driving the market demand for properties in these zoning districts, particularly in close proximity to the campus, to the point where the value for rental exceeds the value that is consistent with what many traditional owner-occupants are willing or able to pay. Investment opportunities exist and attract offers on residential properties to be converted to rental use.

Three Levels of Rental Regulation

The city manages the impact of rental properties in suburban residential zones at several levels. As I have listened to citizens and property owners/managers, and reviewed the issues with city staff, I have found it useful to categorize the levels of regulation involved in our management of the issue into three categories: registration, use, and behaviors.

Rental Registration: Owners of single-family and duplex rental properties are required by ordinance to annually register the property with the City of College Station. Rental properties which exist in “multi-family residential zones” are not required to be registered as those zones are specifically designed to provide the infrastructure to support the dense rental use.

The purpose of the registration ordinance, adopted in 2008, is to document the existence of rental properties, to establish a local contact for emergency purposes, and to use both the local contact and the owner contact information for on-going communication. Most important, by having data on the number and location of properties serving as rentals, the city is in a better position to plan and deliver services to all residents. The current rental registration ordinance is being reviewed to help staff to more efficiently assure that rental units (“single-family” and duplex only) are registered and to make enforcement of this requirement more efficient.

The rental registration requirement is part of the city’s business regulations. The focus of the revision is to redesign this ordinance to allow for an administrative process to be used in case of failure to register so that citations can be written and enforced more efficiently. In addition, the registration process should assure that property owners, managers and renters understand the zoning regulations and the expectations of all property owners in residential areas.

Use regulated by zoning: Once a rental property is registered, we need to consider the requirement of the residential zoning district in which it is located. Cities use zoning to distinguish and separate different uses of property to reduce conflicts among neighboring property owners. College Station has 31 different zoning districts ranging from rural to urban with many distinctions in between for commercial, office, mixed-use, residential, etc. In General Suburban, Restricted Suburban and similar zones, the use is limited to residential with no more than four unrelated occupants permitted in one residential unit.

Property owners are entirely within their rights to rent property in these zoning districts as long as they do not exceed this numerical limit. It should be noted that homeowners associations (HOAs) may have more restrictive limits, and in some areas deed restrictions may also address rental issues. HOA rules and deed restrictions are private property matters and are enforced by private action. The city has no role in the enforcement of these private covenants.

But the city does have the responsibility of enforcement of its zoning regulations. As noted , the first step in the process is registration, but enforcing the use aspect of the zoning ordinance is equally important. Unlike rental registration, which is a business ordinance, zoning regulation is incorporated in the Unified Development Ordinance (UDO) and is enforced with criminal penalties.

Many of the older registered rental units were built as traditional family-occupied homes that were later converted to rental purposes with little change in floor plan, or external design such as driveways and yards. With the greatly increased demand, we see residential properties being purchased where the old single-family home is torn down and new structures built specifically for the rental market, including such features as a bathroom for every separately locked bedroom, and more parking and common spaces designed with student use in mind. Many of these properties are rented on a “bedroom basis” to each of the occupants.

College Station is being challenged in various neighborhoods with claims that rental properties, particularly these new structures, are being rented to more than four occupants, thus breaching the zoning regulation.

It is important to recognize that the limit of number of unrelated individuals living in a rental unit is an effort by the city to reduce the conflict among uses within a zone. That is the main purpose of zoning. These traditional residential neighborhoods were not designed with the infrastructure necessary to support this new use.

The College Station City Charter states that it exists “… to accomplish any lawful purpose for the advancement of the interest, welfare, health, morals, comfort, safety and convenience of the city and its inhabitants…”  In addition, the first vision statement in the council’s current Strategic Plan states the goal of “Ensuring safe, tranquil, clean and healthy neighborhoods with enduring character.” Zoning and its enforcement is one key element in assuring that the city is delivering on this charter mandate and vision.

Behaviors Expected of All Residents: The third level of regulation addresses the behavior (for the lack of a better term) of residents, both owner-occupants and renters, which reflect the common standards consistent with modern urban and suburban living. College Station has numerous codes that address such items as parking on the grass, failure to maintain property, tall grass, failure to properly manage trash receptacles, loud parties, on-street parking, etc. This level of regulation is where “the rubber meets the road” and such rules are scattered throughout our code of ordinances.

It is expected that all citizens would treat their neighbors with respect and provide for the common good of the neighborhood. But in our society, it is logical that values and concerns differ among individuals, including those which define common community standards.

The city, charged with considering the health, safety and welfare of the entire community, adopts regulations that are designed to represent the common interests of citizens as can best be done by an elected body of citizen representatives. These regulations include, but go beyond, the obvious police and fire regulations to encompass the topics noted at the beginning of this section. Regulations in all areas are regularly reviewed and updated to maintain relevance to current and expected citizen concerns, technology and enforcement capabilities. But regulation of behaviors can be managed more efficiently if the zoning regulations that determine commonality of “use” are clearly delineated and maintained.

Efficient and Effective Enforcement

As stated at the outset, the review of our rental registration ordinance represents the fundamental issue. The effort is all about compliance and encouragement that all rental properties in residential zones be documented. It is hoped that planned changes will improve the efficiency and effectiveness of this documentation process.

With success in this area, the foundation can be laid to better document cases where the rental use is inconsistent with the law. Further examination of our zoning ordinance will likely be needed to provide the tools that code enforcement officers can use to efficiently determine if a violation has occurred and provide evidence sufficient for prosecution. In recent years, the code enforcement budget has been significantly reduced, and this will have to be addressed by the council if we expect to make significant progress.

Education of property owners, managers and renters is a high priority as part of the solution. The need for enforcement of use (more than four unrelated) and behaviors can be reduced if we can reach all parties to the rental contract regarding community expectations and the law. The city is examining more avenues to reach decision makers at each of these levels and the community at large. This component of the solution to such a multi-faceted problem may not be as expensive as code enforcement, but certainly is a complex process and deserving of the best efforts we can make.

I welcome your comments and feedback as we continue our discussion of this important issue. Citizen engagement and input is the bedrock of local government.

John Nichols
John Nichols
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7 responses

  1. Councilman Nichols,

    Thanks for your action on this important issue. Ensuring that the appropriate rules are on the books and enforced is critical to the future of many neighborhoods in College Station.

    I fear however, that these tools will not be sufficient to address what is perhaps the most fundamental issue for many of the families living in this area. We are witnessing an inexorable change in the character of our neighborhoods. The problem is not just related to having too many people in a house or homes that are not well maintained. A longer term but bigger problem is that slowly but surely these neighborhoods are becoming 100% rental properties. That is not a desirable state of affairs for the city and it certainly undesirable for those of us who remain in these neighborhoods and want to raise our families close to the university.

    To me, the neighborhoods should be zoned as mixed family-rental neighborhoods, with the emphasis on the word mixed. What is the right mix? How do you create rules that will allow the city to manage that mix? These are difficult questions, but I fear it would be a mistake to simply hope that creating home-by-home regulations will be the answer.

    Rich Woodward

    April 24, 2014 at 6:34 am

    • cstxkillian

      Councilman Nichols Responds:

      Mr. Woodward expresses a significant concern about entire neighborhoods converting to rental properties. During our discussion of the South Knoll Plan last year, it was noted that some of the streets in that area are already in excess of 80 percent rental.

      I noted in the public discussion that one of the costs not typically considered in our assessment of the impact of rental properties in single-family neighborhoods is the possibility of “stranding” important public assets such as an elementary school. When there are no longer any families with children of school age in the neighborhood, school attendance zones have to be altered and more children are bussed in. This poses a cost on the school district and the community at large.

      I am not sure how to accomplish Mr. Woodward’s suggestion of having neighborhoods such as South Knoll be zoned as mixed family and rental properties without limiting someone’s property rights. What has been done in some limited neighborhood areas is to create a new HOA with specific limitations against rentals. Another approach that has seen limited success is for the small area to recruit all their neighbors to change the deed restrictions on each of their properties, one-by-one, to similarly limit the potential for further rental encroachment into that segment of the neighborhood.

      These are private covenants and require significant effort on the part of affected property owners. I agree that, if used, these are home-by-home approaches that Mr. Woodward says will not be sufficient, but it does provide some small areas to maintain single-family character despite the surrounding pressures of rental transition.

      During the South Knoll Plan discussion, a recommendation was presented by the committee to have the city develop and adopt a new ordinance to limit further expansion of rental properties. The proposed ordinance would provide a zoning overlay (available by petition) offering small areas within a neighborhood the ability to limit rentals to “no more than two unrelated persons”.

      The intent was to reduce the impact by slowing the encroachment of rentals into highly vulnerable single-family neighborhoods. Existing rental properties and those in the petitioning area who did not want to include their property would be exempt from the new overlay restrictions. This recommendation was removed from the report by vote of the council.

      I hope others might suggest workable alternatives to address Mr. Woodward’s idea and assist the city in managing this difficult set of problems.

      April 24, 2014 at 3:03 pm

  2. Mr. Nichols. As a long term resident of College Station and aggie I agree that there are problems with students renting house. but even if we tighten code enforcement the problems are still going to be there. I urge students and Older residents to find common ground. students due need to be aware that even though they are renting homes in a single family neighborhood that there are still older people, and older people need to understand that this can happen with a major state university with 50K students.

    April 25, 2014 at 10:13 pm

    • Emre Yurttas; I agree with your basic comment that basic mutual respect will help resolve most conflicts among residents. The purpose of my original post was to explain the various regulations we already have on the books and the reasons they were promulgated. Most of the residents are here because of the major public university you mentioned so we need to have thoughtful regulation as a basis for managing the issues. Common sense and mutual understanding will make the resolution of problems much easier.

      Outreach and engagement through education and communication was mentioned in my post as a key part of the management of use conflicts between renters and owner-occupants. Such efforts have been utilized to varying degrees in the past. More efforts with a higher level of cooperation between the city and the university, including student organizations, are needed.

      April 28, 2014 at 8:53 am

  3. While the challenge of managing the mix of housing within a neighborhood is difficult, it is not impossible. There is a useful precedent in an that seeks to maintain rural landscape and manage growth called Transferable Development Rights.

    TDR programs grant all landowners a partial right to develop open-space. When a landowner seeks to develop a parcel, he or she must not only retire the right associated with that land, but must also purchase and retire the right associated with some other parcel. In this way, the regional government is able to manage how much land is converted from open space and, with designations of some areas as suitable for development and others as unsuitable, they can also manage where development occurs. As summarized on a Rutgers University web site (https://njaes.rutgers.edu/highlands/tdr.asp),

    “If it works properly, nobody is any worse off financially than they would have been in the absence of the combined environmental/TDR program. But the new houses will be built in a less environmentally sensitive location, which is the government’s main objective.”

    A similar approach, call it Transferable Rental Rights (TRR), might be adopted for managing the mix of rental vs. owner-occupied housing in a College Station neighborhood. Suppose that there are 100 homes in a neighborhood, 40 of which are already rental units. Further, suppose that the City decides that an appropriate maximum percentage of rental units for this neighborhood would be 70% so that no more than half of the remaining homes could be converted to rental units. Each of the remaining owner-occupied houses would be given a 1/2 right that would be tied to the address and maintained in a registry by the city. If a home owner wants to convert a home to rental, he or she would need to purchase and retire a TRR from one of the other owners. Hence, each time a house converts to rental, another home would be taken off the rental market.

    A TRR system would fundamentally change the dynamic of the single-family home market in a number of positive ways. At present, numerous neighborhoods in town are moving consistently toward being 100% rental. One of the reasons for this is that if a family moves to town, they are unlikely to want to move to a neighborhood that appears to be moving in the direction of 100% rentals. Hence, the demand for homes in neighborhoods that are on this trajectory basically does not include families. A limit on the number of rentals would raise demand for all homes in the neighborhood by making it attractive again to families without eliminating the rental market. Indeed, since rental opportunities are now scarce, the price buyers might be willing to pay for a home for rental purposes would actually rise.

    For the city as a whole there are a number of benefits of such an approach. It would allow the city to manage the character of neighborhoods near its center. It would offer a positive incentive to maintain a home in owner-occupied status. It may even increase the value of all homes in an area.

    Compare this to the approach that was considered at the South Knoll Plan discussion. Few neighborhoods with a strong rental demand would voluntarily limit rentals because this would lead to an immediate reduction in the demand for those homes. Furthermore, if one neighborhood adopts this, it simply pushes that demand elsewhere, increasing the speed at which those neighborhoods will convert to rental.

    There are, of course, many legal and logistical issues that would need to be worked out before a TRR approach might be adopted. But I would hope that the Council would look for creative solutions to long-term problems rather than surrendering to the status quo that is leading to a fundamental change in the nature of the historic neighborhoods in close proximity to Texas A&M.

    April 27, 2014 at 8:21 am

    • Mr. Woodward provides an interesting and creative idea. As far as I know, no city has investigated the idea of transferable rights applied to rental property opportunities. As he notes there are many legal and logistical issues involved. I will refer this to our planning and legal departments to consider along with other options.

      I believe that the main concern at the moment is our ability, as a city, to document and enforce the use (no more than four unrelated renters) aspect of our zoning code. The current discussion revolves around improvement of our rental registration processes and providing information that will allow ultimately for a better enforcement of the “no more than four” regulation that is already in our zoning ordinances for single-family neighborhoods. If we cannot find a way to enforce this ordinance, then any other extensions or modifications will not be useful or productive in terms of addressing the pressing impacts of major rental encroachment into single-family neighborhoods.

      As I noted in my earlier post, the strengthening of our ability to educate renters and neighbors, and increased code enforcement of behavioral impacts (noise, appearance, loud parties, etc.) are two other keys to dealing with the symptoms of the underlying economic transition we are seeing in neighborhoods across the City.

      I look forward to working with the citizens of College Station, my Council Colleagues and Staff as we strive to reach the goal of strong and sustainable neighborhoods.

      May 6, 2014 at 8:59 pm

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