Defining Blight – Thoughts of Wausau Landlords

HAPPY NEW YEARS!!

It will be the last Dr Rent Radio Show of the year.  I have not really had any questions come up in the last week, so the show will be our main topic of taxes and landlords.  What are the ramifications of different types of ownership (individual vs LLC vs corporation)?  We will also look at some of the tax implications of owning investment property (such as the magic that is depreciation).  Of course, in our first show of the new year next week, we will look at the tax implications of renting from the tenant’s end of things, with a special emphasis on the Rent Certificate form and the Homestead Tax Credit program.

As you probably know, the Dr Rent Show is heard Thursdays on WNRB-LP, 93.3 FM in the greater Wausau area from 5 to 6 PM.

During last week’s radio program, I talked about the testimony at the public hearing before Wausau’s Public Health and Safety Committee as to a proposed definition of blight.  As expected, the biggest concern was from people wanting to know the purpose of the definition and how this impacted existing ordinances, because there appeared to be an overlap.

It was explained that this is just the first piece of a much larger puzzle, and there seemed to be agreement that this would not be codified until the entire package was put together as a whole.  However, it was thought it would be a good idea to have public hearings along the way to determine if the City was on the “right track” or not.

Some of the most valuable comments at the hearing were concerns that the definition was too vague.  One example was part of the definition that properties that contained environmental contamination were by definition blighted.  In concept, I don’t think there is much disagreement.  However, in reality, many properties built before 1978 may have lead based paint (it is almost a guaranteed sure thing that pre-1950 properties have lead based paint).  Lead based paint has been determined to be a pollutant here in Wisconsin, so depending on how you want to interpret the proposed ordinance, every property built prior to 1978 could in one full swoop become “blighted”, regardless of their actual condition.

In the end, the committee took no action (however, there was no intent to take any action at this meeting, it was for information gathering only).  There are two types of public hearings that local governments have.  There are the public hearings that are required by law; however the decision has already been made subject to the final vote and the only reason for the hearing is because of the statutory requirement (budget hearings fall firmly in this category).  Then you have public hearings where not only is the stated purpose to solicit public input, it is the actual purpose as well.  That is the type of hearing the blight definition hearing was.

As I had said before, in my mind, the main purpose to create this definition of blight was so that the Housing Task Force (which incidentally hasn’t met since the night of Wausau’s budget hearing) could try to come up with solutions to address the problem.  Blight is many different things to different people, and there are many different factors that contribute to blight.  In my own personal opinion, you can pass all the new ordinances and rules you want, but 1) without enforcement they are as useless and the rules we already have; and 2) the rules only go to address the symptoms of the problem without doing anything about addressing the causes.

With this definition, the Housing Task Force could come up with ideas to address these various causes of blight.  The hope being, that if you focus on many of the individual causes, over time, the problem will start to solve itself.  You can regulate the problems that blight creates, or you can come up with solutions that address the causes of blight itself.

At the next Public Health and Safety meeting, the committee (after having had time to consider the testimony given), can come up with their own thoughts about the path the Housing Task Force is on and provide input back.  As far as the actual “blight definition” being made a part of the Wausau book of ordinances, that is unlikely to happen any time soon.  And even when that does happen (if it happens), it will be one small piece of a larger item.

We also had a couple of questions last week.  The first was asking for a definition of a “material breach” of the lease.  Basically, when a landlord wants to evict a tenant (issue a 5-Day or 14-Day notice), the tenant had to violate the lease.  The lease violation cannot be just any violation, it has to be a violation that was a key issue of the agreement, or in legal terms, a “material” violation of the lease.  Of course, the landlord will state that each and every policy in the lease is “material” to the agreement.  Countering this, the tenant will say that only the most major provisions (such as rent payment) are “material”.  The truth is, it will be a judge who makes that decision.

In Marathon County, we are fortunate to have judges who tend to agree that provisions outlined in the written contract are material to the contract.  However, that is not always the case.  As a matter of fact, with these economic times, I am aware now of two counties where the judges will not consider missing one month’s rental payments “material.”  In other words, if you want to evict a tenant who is one month behind in rent, in those counties, the eviction case will be dismissed.  The tenant has to be two or more months behind before a judge will consider granting an eviction.

So… what is a “material breach”?  Well, that depends on where you are.  It is a good idea to talk to others who have gone to court in your county to learn what the courts there historically have considered “material” versus what infractions they have dismissed cases on.

A few weeks ago, I was invited to speak to the Wausau Noon Optimists about what it is like to be landlord.  One of the questions that came up there was about tenure.  How long does the average tenant stay in a property?

This was a hard question to answer, because in over 15 years with about 200 residential rental units, if I have learned one thing, it is that there is no such thing as an average tenant.  I did my best to answer the question though, pointing out that I have had tenants who will move only a few months after they move in (often when this happens, this move is not exactly voluntary).  On the other hand, I have residential tenants who have been in their apartments for 20 years or more.  If I had to place a best guess on “average” tenure, I would say that 60-70% of my tenants stay in their units for between 2 and 3 years.  However, that is my personal experience.  I have talked to landlords who can’t keep tenants for 6 months, and I have talked to landlords whose average tenure is 10 years or more.  (However, when landlords can’t keep tenants for even a year, that tells me a lot more about the landlord than it does their tenant.)

So.. that is a summary of last week’s program.  For the next few shows, we will get into more “taxing” topics.  Although this is my last Dr Rent Radio Show for the year, it is NOT my last radio appearance.  I will be a guest on the Conversation Digest show which airs on WNRB-LP, 93.3 FM Friday evening starting at 7 PM.

HAPPY RENTING!

(P.S.  If you are reading this blog entry at CitizenWausau.com, remember to change the favorites in your browser to www.drrent.wordpress.com, as the Dr Rent blog will be leaving CW as soon as they turn off their blog hosting feature.  If you are reading this blog entry at WausauDailyHerald.com, there are no changes to the hosting arrangements there any time soon.)

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About drrent

Wausau, Wisconsin Landlord, past president of the Wisconsin Apartment Association, Host of the Dr Rent Radio Show on WNRB-LP, 93.3 FM, Wausau, WI
This entry was posted in Blight, Questions, WNRB and tagged , , , , . Bookmark the permalink.

2 Responses to Defining Blight – Thoughts of Wausau Landlords

  1. dannyboy says:

    Love your blogs! With your vast experience in the real estate field, do you have any recommendations as to great real estate/business attorneys in Marathon County? I purchased a property on a land contract and have found out that after the deed was recorded and I received the property taxes that a neighbor’s property (or a portion thereof) may have also been transferred to me during the sale. The neighbor has continued to pay the property taxes for what he considers to be his parcel, although both properties now show the name of the LLC managed by me and I receive the tax billings for both properties. Land records department shows that the LLC managed by me now owns both parcels. Any ideas as to who would be good to straighten out this mess? Thanks.

    I need to find someone who can straighten out this mess. Any ideas? Thanks.

  2. There are a couple of attorneys that I have worked with that are pretty good with real estate transactions, especially landlord-tenant (such as Andrew Schmidt of Schmidt & Schmidt and Sara Ruffi of Ruffi Law Offices).

    However, for your specific issue, my personal recommendation would be Scott Jackman of Daubert Law Firm.

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