A former tenant of this Raleigh house says her landlord avoided fixing the home’s electrical system — despite it causing half her outlets not to work, which violates City of Memphis code — and ignored requests to repair her roof.  Photo by Andrea Morales for MLK50

Nobody should live in substandard housing. That’s the idea Robert Knecht said is driving his political fight.

Knecht, who leads the City of Memphis division in charge of code enforcement, has been working for years to establish a mandatory rental registry and a licensing program for landlords.

In Memphis, renters often struggle to reach their out-of-town landlords about problems such as fried electrical systems, so they report their issues to the city. But the city can have just as much trouble reaching landlords, making it difficult for them to work on a renter’s behalf. A registry would require owners of rental property to name a local contact person and provide their contact information.

A licensing program would establish regular rental inspections; repeat code violators could lose their license and the ability to collect rent. It’s a tool that would help the city do something it’s long struggled to — punish terrible landlords.

Last year, Knecht thought he was nearing the finish line on this effort. He had prepared an ordinance that he was pretty sure would get City Council approval.

But then, in April, the Tennessee General Assembly placed a major obstacle in his way. It unanimously passed legislation that prohibited local governments from regulating rental property in any way that is more burdensome for landlords than state statute.

In recent months, Knecht and others have been working to revive measures they say are meant to protect renters. But, they’re being forced to make major compromises, and with this year’s legislative session almost over, they acknowledged this week that they have at least another year left in their journey.

Power imbalance

When MLK50: Justice through Journalism spoke with residents of a chronic code violator that owns hundreds of local homes, The Prager Group, a few declined to be quoted because they feared eviction. 

Steve Barlow, vice president of The Works Inc. and Neighborhood Preservation Inc., said many Memphians are unwilling to report code violations to the City of Memphis. 

“Any type of oppressed person anywhere … underreports (problems and crimes),” said Barlow, whose prominent local nonprofit works to remove blight and revitalize neighborhoods. “People are not going to report on their landlord (often).”

Even so, Knecht said investor-owned homes generate three times the number of code violations as owner-occupied homes.

And, beyond providing substandard housing, large corporate landlords such as The Prager Group are often poor partners in city- and community-led efforts to stabilize and improve long-disinvested neighborhoods, according to Council member Chase Carlisle, who has been rallying support for Knecht’s effort. Carlisle, an investor in commercial real estate, thinks registration and licensing measures could go a long way to address some of the problems neglectful landlords present.

Steve Barlow, vice president of Neighborhood Preservation, Inc. 

Barlow said combining the two measures would mean fewer dilapidated homes and fewer landlords ignoring or mistreating their tenants. 

“For most businesses, you have to have a license. For renting a house to a human being who has a 2-year-old … you don’t have to have any kind of guarantee of the quality of that housing,” Barlow said. 

Preemption

Tennessee is widely considered one of the nation’s most pro-landlord states. 

Still, to help renters, Nashville’s Metro Council passed a law in 2020 that required landlords to give 90 days notice before raising rent and it considered passing other pro-tenant regulations, according to News 4 Nashville

In response, the Tennessee Association of Realtors — an organization tied to the nation’s second-largest lobbying entity — brought legislation to the General Assembly that prohibited local governments from regulating rental property in any way that is more burdensome for landlords than state statute, according to the association’s website

Memphis’ attempt at a rental registry and licensing program was collateral damage in the association’s effort to rein in Nashville, which was allowed to keep the rental registry it’s had for years.

Sen. John Stevens, R-Huntingdon, who sponsored the legislation in the state senate, said he hadn’t heard of Memphis’ effort until MLK50 brought it up. But he’s glad his bill quashed its plans.

“How can they force you to get a license to do what you want to do with your own property?” said Stevens, who received his law degree from the University of Memphis. “That’s not fair. … In  any event, if that debate is going to happen, the proper forum for the debate is the state general assembly.”

He added that he doesn’t think cities or states should regulate rental property at all, “allowing landowners and renters to determine their own terms of their agreement.”

A rental home in Raleigh owned by VineBrook Homes, an out-of-town investment firm that recently moved into the Memphis market. Photo by Andrea Morales for MLK50

Barlow, a longtime lawyer, says the state preempting Memphis’ efforts was “as frustrating as it gets.”  He said Memphis’ proposed rental regulations are clear examples of serving the “health, safety and welfare” of Memphians, which is the fundamental legal purpose of local government.

Hulet Gregory, whose Memphis-based firm either owns or manages thousands of rental homes across the city, largely agreed with Stevens. He questioned the City of Memphis’ ability to both manage a rental registry and get absentee landlords to register.

“(Just like) criminals out there, (don’t) register their car … the landlords you’re going after aren’t going to participate,” Gregory said.

Carlisle disagrees. While admitting not every landlord would register — just like not every driver gets car insurance — he thinks it would be hard for the largest landlords to hide. Prager, for instance, owns most of its homes under a couple of easily identifiable LLCs.

Trying again

In recent months, Carlisle, Knecht and others began putting the registry and licensing plans together again.

They reached out to state legislators, local property owners and the Memphis Area Association of Realtors to build support for state legislation that would carve out Memphis from last year’s statewide law.

They received significant pushback on the licensing program, which means it’s likely dead for a while. But Carlisle said key industry leaders were largely supportive of the idea of registration, even if they had minor concerns.

As of Tuesday morning, Knecht was hopeful the city would get a bill before the General Assembly during the current legislative session that would allow for a rental registry, despite this week’s deadline for filing new bills. On Friday, Carlisle said the city will have to wait until 2023, but he’s confident it will succeed then.

Without licensing, Knecht said it will remain difficult to hold bad landlords accountable. But, he said registration moves things in the right direction.

As soon as registration passes, Knecht said the city will get back to work on the licensing piece. 

Jacob Steimer is a corps member with Report for America, a national service program that places journalists in local newsrooms. Email him at Jacob.Steimer@mlk50.com


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