Podcast 263: Minneapolis Landlords Pushing Back

Strict proposed screening laws have pushed Minneapolis landlords too far and they’re pushing back…

The ordinance would also disallow property owners from denying an application because of an insufficient credit history, credit scores lower than 500 and eviction judgments more than three years old.

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Show Transcription:

00:00     Hey everybody. Welcome back to another episode of Rentprep for landlords. I’m your host, Eric Worral. And this is episode 263 and we’re going to be talking about a story coming out of Minneapolis where property owners and tenants are working together against bad policies. So we’re gonna get to that right after this.

00:23     1,2,3,4 ya ya ya…. Welcome to the RentPrep for landlords podcast. And now your host, Steven White and Eric Worral.

00:23      So before we get to our featured news story, I thought I would, uh, let you in on a little change that’s happening in Oregon or Oregon depending on where you’re from. Uh, this came from the Oregonian, uh, and the author is Elliot and it’s saying that a legislature, bands, landlords from using prior marijuana convictions to reject renters. So recreational marijuana legal in Oregon. Uh, but the, uh, the Senate bill nine 70 has a provision that says that marijuana provisions apply to all Ronald’s across the state and that you cannot ban a tenant for prior marijuana convictions. Uh, the bill passed with little discussion in either chamber after winning approval in the house last week at next heads to Governor Kate Brown’s desk for signing, said that Senate bill 420, very funny, which would allow Oregonians to set aside convictions for marijuana offenses that are no longer crimes is headed for a final vote in the house this week.

01:31      So I just thought I’d throw that in there in case you are either in a state that it’s recreational or you having to be an Oregon. Uh, they are now taking a look at prior convictions more and creating provisions so that people aren’t being penalized for that in my opinion, to make sense. I mean, if the things in that, a law now and it’s legal now, why are you going to deny somebody housing because of something that’s legal, you know, today. I understand that it was illegal before and people have different viewpoints on this, but, uh, I think this is the right move. I understand some landlords might not like it, but to me

02:07     it’s fine. To our featured story, this one’s pretty interesting. Comes out of forbes.com on the author’s name is Roger Valdez. And the title says that Minneapolis property owners and tenants work together against bad policies. I think this guy, Roger is spot on with a lot of his articles. I’m going to read a lot of it too. You can kind of get some thoughts here. Uh, in the, uh, opening paragraphs here, it says that, can landlords and tenants work together to solve issues with rents and leases? Of course. So he says that he’s a major advocate for landlords and tenants working together. And he said that it’s happening right now as far as pushing back on bad policy and it’s happening in Minneapolis. So Nicole, Back strand is the president and the Minnesota Multi Housing Association Mha, and she’s been working on a collaborative project called safe, affordable Minneapolis. The efforts which include, tenants was put together to push back and I’m proposal by the Minneapolis City Council to ban the use of criminal background checks to screen tenants. Their similar measure was passed in Seattle without much fact. So, uh, if you guys are familiar with the laws and the reportability of evictions and Criminal Reporting, you might find this kind of crazy, but the ordinance is pushing to disallow property owners from denying an application because of insufficient credit history, credit scores lower than 500 and eviction judgments more than three years old.

03:33     So When I read these three things, if you’re not familiar with insufficient credit history, most of the time that’s usually a younger population. They just don’t have enough credit on file yet to have credit history. But in this case, they are kind of focused on, people who are coming out of prison. So that might be a good case too where you might have insufficient credit history and why they might be focusing on that. But the one that really jumps out to me is that you cannot deny an applicant for having a credit score lower than a 500, which I think is ridiculous. And the idea behind it might be fine, but the execution is so incredibly flawed. So what I get out of that is that somebody who has a 501 credit score, it has a very good likelihood that they’re not going to get a rental.

04:17    But if they had a 499 credit score, then it wouldn’t have been able to even been considered. So to me that’s such a weird rule. The have that has so little thought put into it because why would you just Brandon, we pick a, you know, 500. That sounds like a pretty even number. And you know what, if you’re less than that, you can hide it. If it’s more than that while you’re going to have to deal with your credit score. I think that one’s ridiculous. As far as eviction judgements, more than three years old, currently eviction judgements are reportable for up to seven years. So they’re looking to shorten that window to three years. I mean, you could make an argument. Um, what we found, and also from a transunion study is that if you have two applicants side by side, one has a previous eviction and one does not.

05:05   The person with the previous eviction is more than two and a half times more likely to be evicted again. So it’s just a, you know, eviction on somebody’s record is not a complete, you know, shut case. No, this person’s never going to be a good runner again. But when you look at the data, the data tells us that somebody with an eviction is much more likely to evict again and then your average eviction can run you somewhere between two to $5,000 depending on what state you live in and how long it takes to go through the eviction process. So in this particular case, um, the insufficient credit history, I’m fine with, it’s not a real big deal to me, but the credits core is lower than 500 and an eviction judgements, more than three years old, three years, it seems like a long time, but at the same time as somebody was evicted for, you know, horrible behavior or not paying rent or whatever it was three years ago, I think that that’s still kind of close enough that you would consider that a, if you’re comparing them to somebody else who’s never been evicted.

06:07   So, uh, it’s just kind of a goofy, I’m goofy rule and maybe this is the art of negotiation where you just come out with really strong demands and then they kind of pull back and they go, okay, we’ll do five years. But I don’t know what the, the sentiment is behind the housing association that’s pushing for that. But the author here, like I said, he does a great job in it. ButI like is he’s actually, worked in communities and he is a tenant advocate, but I feel like he has a really good view of both sides of the fence. He says that these proposals don’t work to help tenants. He said, because anyone exiting the system already has huge barriers to housing, including bad credit, bad or no tendency history, and very likely not much income. Simply eliminating the ability to screen for any of these things increases the risk for a private property owner.

06:53   I always point out that the people wouldn’t let a stranger borrow their car without asking questions. Like, do you have a driver’s license? What will you leave me as a guarantee that you’ll bring my car back in one piece? Offsetting that risk makes sense. And by removing the ability to screen, the chances are the posits will rise and more stringent terms will be set on leases that won’t help anyone in a criminal background. So he brings up a really good point. So every time you have one of these rules that comes down, landlords are going to look at and say, okay, well I can’t do that, but you know what my security deposit and just went from one month’s rent, two month’s rent or they’re going to figure out other ways to protect themselves and protect their investments. So he says that what the MHA has founded itsthat many existing tenants worry that they will be exposed to potentially dangerous people moving in without any background checks.

07:42    We’ve covered this on a previous episode before where, somebody who was a, had a history of violence was in a community and actually, shot a police officer and shot himself and threatened a family, uh, and the, they were under fire that the property managers are there for not running a background check. So now you’re trying to say, well, you can’t run a background check because you can’t consider those things. And I guess, you know, what this really boils down to is it’s a really tough problem and depending on where your values rest and what you kind of focus on, is going to determine what kind of which way you lean. So if you’re somebody who is very, um, very big on reducing the recidivism rates, so like how frequently people are going back to prison after leaving prison, you’re of course going to side with some of these more stringent changes that are going to limit landlords.

08:31   If you’re a landlord, you’re going to side typically with landlord pro laws and rules. And it’s difficult because the people making the rules in my opinion are interested in helping people. And then you have landlords who are interested in protecting their investments that they’ve worked so hard to build over time. So I see these stories over and over again and it’s always this combative kind of heads butting against each other. And it’s because it’s really tough. One side has to kind of give up a little bit for the other side to gain a little bit. But when you’re talking about, you know, going to some landlord in Minneapolis who maybe has three rental units and he’s poured his blood, sweat and tears into those units and he’s put in those late nights, maybe, you know, painting walls and patching holes and doing tenant turnovers and he’s got a full-time job and he’s got a family and he’s putting all this work and effort into that and then you’re going to say that somebody is going to apply and you’re going to say, well their credit score earned or 500 you can’t even consider that on the a as a screening tool.

09:36    And so ridiculous to me. But at the same time I get it on the other end of the spectrum where you’re trying to help a population to at least have the chance to succeed so they don’t end up back on the streets so they don’t end up in prison again and trying to fix it from that side. I’m not saying I have any answers for this, but it’s interesting watching it play out. We watched it play out in Seattle where the city came down with a rulings that you can no longer use criminal background checks. And then the landlords of the town just came back and full force. And now it’s been this back and forth with, you know, rules getting applied and then repealed. And it, to be honest, I’m not even sure where everything’s at in Seattle anymore because it’s changed so much and you see this rolling out in other areas and it’s difficult.

10:23 It’s very difficult to figure out the solutions to these problems because everybody’s got a vested interest. And I believe for the most part, people’s hearts and minds are in the right place. Uh, but you can’t blame the landlord who’s, you know, got his blood, sweat and tears locked into this, investment in his future for not wanting to protect that investment. So a really, really interesting though coming out of Minneapolis. Uh, I’ll be, definitely following that. Uh, and it says that, this guy, he’s actually written previously as far as wanting to help people exiting the system as in the prisons. Um, he said that there’s a program in Washington state that is aimed at supporting the transition of people leaving jail or prison called early release voucher program. And that program provides a three month voucher to eligible people leaving the system. And, uh, he was pushing to actually have that voucher increased in timeframe.

11:14    But they haven’t done that yet. And, um, I don’t know. I think, uh, personally programs like that might be more successful than just trying to sweep things under the rug or saying like, no, that person doesn’t have a past. We’re not even gonna to like to consider it or see it or think about it. You need to just, you know, screen based on a very limited amount of details. That’s very difficult to do. I think it’s better to address the issue, fine landlords who are willing to help that population, uh, who are interested in that voucher program as well. And then create systems that allow people to help themselves so that they can get their feet back underneath them. And I know it’s easier said than done. Mean, this is a massive problem and we’ve covered the incarceration rates before on this a program with the amount of people that are incarcerated in the US compared to the world population and how disproportionate it is.

12:04    Uh, but it’s, uh, you know, it’s easy for someone like me just bitten out of podcast the kind of give his opinion, but it’s very tough to do these things. So, it’s good that people are trying to work forward towards a solution. So I’ll link to the article, the full article from Roger. Like I said, I thought it was a really thoughtful piece, very well done and I think he does a great job of advocating for both landlords and tenants and has some interesting ideas that you don’t see too much out there.Where it usually it’s just somebody you know, thumping their chest for their side and then saying the other side is completely wrong. I think he does a great job of, living at both sides and, we’re in both shoes so to speak. So yeah, check that out. And uh, yeah, that’s it for this week guys. Until next week, have a great week. Take care.