HomeOpinionColumn: Government Spending is One Cause of Affordable Housing Crisis

Column: Government Spending is One Cause of Affordable Housing Crisis

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Editor’s note: Joe Edge is the broker of Sherman and Hemstreet Real Estate Co., in addition to serving as publisher of The Augusta Press. He has worked in commercial real estate and as a landlord for nearly 16 years. In this column, he addresses some of the reasons affordable housing is scarce in Augusta.

This past Sunday, Oct. 10, Mayor Hardie Davis wrote an Op-Ed in the Augusta Chronicle encouraging the adoption of a law requiring landlords to offer security deposit insurance for renters. 

The suggestion that this is a viable option or good for tenants and landlords is not founded in fact but in politics. Such a policy could have dangerous implications for our community.

Davis’ proposal diverts attention from the real housing problems that our community faces and places the blame where it is not due. Security deposit insurance has historically been a failed project in a few other, primarily Democrat-leaning, cities.

MORE: Property Tax Increases Hurt Apartment Renters Most

Augusta has a problem with affordable housing. Rents are going up quickly, and tenants are bearing the burden of the increase. But the cause isn’t greedy landlords. It’s more complicated, and multiple parties share responsibility for the problem.

Davis’s article also suggests issues of race and inequality contribute to the problem, but he offers scant evidence to support his position. He references a “recent study,” but offers little other evidence to demonstrate that race or inequality contribute to housing problems  in Augusta.

Augusta’s affordable housing problem is rooted in part in local government spending. The more government spends, the higher property taxes have to rise to support the level of public spending. Higher property taxes are always passed along to tenants, which means higher rents.

Davis has been in the spotlight this year for his spending. That is a perfect example of the problem. Every single dollar Davis, or any other city official, spends at lunch, on hair and makeup, on a resume writing service, or traveling is a dollar that must be covered by property taxes.

In 2020, during the pandemic, Richmond County raised property taxes on apartment complexes by 20% to 30% across the board. In 2021, the county raised manufactured housing rental property taxes between 300% and 400%. That increase hurt the lowest income renters in Augusta.

Every dollar that property taxes increase landlords must pass along to tenants.  When current tenants move out because they can’t afford the increase, they usually have to pay a new security deposit on their new rental. The bottom line is that the single biggest issue contributing to the affordable housing crisis is local governments property tax increases. 

Utility rate increases have the same effect.  When the storm water tax was put into place in Richmond County, every landlord raised rents to offset the costs. Local officials try to penalize the landlords who provide housing by raising costs. In doing so, they harm the renters they were trying to assist.

In his article, Davis assumes that minority renters housing expenses went from 30% to 50% of their household income and that thousands of homes and apartments are inaccessible to minorities. He also supposes that getting rid of security deposits will solve the problem. Davis also attempts to use the findings the “recent report” he cites to imply that there is a problem in our community that needs addressed. Again, he offers little evidence that any of his three assertions are actual problems that affect citizens of Augusta.

Davis, who owns rental property and is a landlord himself, suggests that security deposits are an “outdated and problematic tool.” Security deposits are also highly regulated by the government to protect tenants, but they are also often a landlord’s only method for recovering losses from a bad tenant who causes damage or leaves owing rent. Landlords nationwide use security deposits for very good reasons. 

Any person can easily research the security deposit insurance, which has been around for years, and see where the flaws in the system are. The largest problem is that it hurts tenants disproportionately, despite the claims that it is designed to help them. If a tenant has to be evicted or leaves and causes damage, the insurance protects the landlord.  The insurance pays the landlord and then bills the tenant for the cost.  When the tenant can’t pay, the insurance company turns the tenant over to collections, often ruining the tenant’s credit and making it harder for them to find what Davis calls “stable and secure” housing in the future. 

The security deposit insurance is actually not even insurance.  The landlord gets a bond, not an insurance policy. That is a substantial difference in and of itself. A bond is not regulated by law as is a security deposit.  Tenants may not incur the upfront cost, but they pay a monthly fee for the bond to the insurance company. When it comes time for the security deposit to be applied to unpaid rent or repairs, none of the money the tenant paid gets applied to the bill.  Instead, the insurance company pays the landlord, and then the company bills the tenant.  

This idea that Davis says will be the “beginning of a new era” that will help a few tenants in the short term will just make the problem worse in the long term.

Davis asserts that there are thousands of apartments and homes that are inaccessible to Augusta renters. The statement is clearly an attempt to evoke emotion because it’s just not true. There are not that many vacant rental units in Augusta. Rentals are available to those who can afford them and who meet the landlords’ qualifications to lease.

Davis asserts that federal rental assistance programs to avert evictions fell short of their goals. This last statement needs supporting evidence.  My company manages over 7,000 rental units, and we made every effort to help tenants who had financial challenges related to the pandemic find assistance.  The federal programs helped those tenants.  Our experience is that the programs worked very well to help tenants that were actually in need of help and not just trying to take advantage of the system.

If the policy Davis is seeking were to pass, the result would be a bad policy that hurts local tenants and further exacerbates the local housing problem. Further, landlords will never adapt the proposal Davis is making and will figure out ways to work around it that will likely be more damaging to tenants.

Joe Edge is the Publisher for The Augusta Press. Reach him at [email protected].

10 COMMENTS

  1. davis wouldn’t know a good idea if it hit him in his credit card..he’s useless..a career politician who got his on the taxpayer dime..be smarter Augusta. quit electing these politicians that say things to make you feel better about giving them unlimited access to YOUR money!!

  2. This is spot on. Politicians, especially ones like him have their heads so far up their rear end they cannot see the obvious. The mayor continues daily to show how out of touch with reality he truly is

  3. what all government officials hope that the voting masses will not realize is that every increase gets passed on to the consumer. in my neighborhood rent has gone from $750 in the last year to over $1200. our taxes went up, our insurance went up, we have to pay the storm water fee on the complex. our monthly dues for the hoa went up over 50% because of increased expenses. People rent out property with one goal in mind, to make money. this must be achieved or there will be no rental property. lofty aspirations look good on paper, but they will never be achieved in the real world.

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