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Home · Property Management · Latest News : City’s Revitalization Plan: Squeeze Out Rentals

landlord helpA plan to revitalize aging neighborhoods in Tupelo, Mississippi– the birthplace of Elvis, has landlords there all shook up.
Central to the controversy are  findings by the Community Development Foundation, which has been instrumental in developing the Tupelo Neighborhood Reinvestment Plan.  The CDF is recommending that the city reduce rental housing by at least 10% if it wants to lower crime, and expand its property tax base, according to a report by

The reasons given by the CDF for reducing rentals include a finding that once rental properties reach 25% or so of available housing, crime statistics go up,  and the flight of middle class families to the suburbs lowers the property tax base.  Tupelo rental market already surpasses 25%.
To discourage rental property owners from doing business in Tupelo, the city is pushing forward a measure that could sharply escalate licensing fees, and require all rental property owners to post a bond to cover future infractions.  That may not sound disturbing, until you see the math.
The goal is to generate around $1 million in city revenues. Some of that money will go to beef up code enforcement, but some will go to pay for the actual revitalization efforts in neighborhoods.  Individual rental property owners are looking at increases from the current $10 per structure to as much as $240 per structure. They also would be required to post bonds of $10,000 for single-family houses, and as much as $100,000 for owners of large complexes.
Landlords fear the only way to cover the increased costs will be to increase rents.
The head of CDF has told the city that’s because landlords have it too good, according to reports.
Others in the community are not so convinced.  One suggestion is for the city to refine the plans so that only those landlords who are in violation of building codes have to pay the higher fees.  Otherwise, the city is throwing the baby out with the bath water.
Another suggestion is hiring contract inspectors rather than full-time workers to cut down on the city’s costs.  Some have raised suspicions that the overall logic is flawed, because rental property owners pay property taxes just like middle class homeowners, so there should not be a reduction in the property tax base if a property is converted to a rental.
The plan may exempt Section 8 rentals. One councilman expressed concerns that by exempting Section 8 and forcing significant rent increases on all others, the city will soon have defeated its purpose by driving out the middle class families and creating even more rentals, or worse–vacant properties.
While the council members hash it out, those who oppose the rules don’t want anything to be rammed through without careful consideration. The city has opened the subject to public debate over the next several weeks.
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  • Another Doug (in CT)

    Another instance of statist intervention that will undoubtedly lead to negative unintended consequences. The exemption of section 8 housing all but locks down the result which will be lower revenues for the city, more vacant housing and higher crime. I’m going out on a limb here but I bet if you look at the current situation you will find past actions by the city/state/feds is already responsible for the current situation.

  • Gary Carlson

    I’m not an economist, but I suspect that those on the “Community Development Foundation” are not as well. Yet, they sit with their “findings” and come to conclusions that should be looked at by economists who are schooled in such matters.
    It doesn’t require a genius to see the several flaws in their logic. Keeping up the pressure on the middle class is what gets us into these messes and encourages the chaos this country is in. This development foundation needs to get their walking papers – soon – before it all becomes Section 8.

  • There is some merit to the position of Tupelo’s government. When too much of a city is rental property, there is a lessening of deep interest in the infrastructure. Yes, tenants indirectly pay property taxes but as long as their needs are met affordably, they do not tend to care what is being done to enhance someone else’s block.

    In Philadelphi, neighborhoods plaged by absentee landlords, tenant apathy and lack of pride in living circumstances was turned around a decade or so ago by a mayor who focused on taking back the housing and turning it into affordable owned homes.

    Us landlords need to be wary of jumping on the existence of a plan that will in the end possibly help rather than harm our interests. My own investments in rental condos in Downtown Philadelphia were enhanced by a huge uptick in ownership in the immediate vicinity. Crime did diminish and greater pride in the envioronment showed through multiple improvements to the streets and a growth of retail stores and restaurants serving the community.

    WE need to weigh all of the consequences. After all, to survive, we had to learn to be flexible and invewst wheere the need existed. If you can’t change and grow with the times, you will rot under them.

    Me? I would rather have a backbone of middle-class owners in a neighborhood than even rich tenants. Don’t get me wrong. I want to make a profit, but i also want to make a profit 25 years from now. I own property for the long haul. Afterr it is depreciated, I still want it as a revenue source, even though it will be somewhat less net at the end of the year. A stable neighborhood appreciates rentals in the long run. I’ve personally lived in neighborhoods that turned to slums overnight and it sure wasn’t because a lower class of BUYERS came in!

  • Bobbi

    If they are concerned about crime, they should get rid of the Section 8 housing, and not punish property owners who are already paying property taxes and license fees and take care of their properties.

  • Anthony

    Some of you sound so ignorant that its a shame we are arguing on the same side. Section 8 housing will not increase crime; especially when there is a proper balance of diversity in a neighborhood. However, trying to increase revenue by allowing more people with subsidized rent to live in an area doesn’t make economic sense.

    The problem lies in the taxes…decreasing taxes makes the burden more local. Pushing rental properties out makes the market less stable by placing all the eggs in one basket. With all the foreclosures this is not the correct basket to be in.

    The proper way to maintain a healthy neighborhood (economically) is to have a diversity of income. That means a good mix of owners and renters.

  • George in NY

    The City of Middletown, New York is attempting a similar strategy by requiring all multifamily buildings in a particular district to be converted to single family homes within a specific time period, five years I think. Multifamily owners have seen the value of their properties drop to a fraction of their previous value, and can’t sell them. How many abandoned buildings with no tax revenue is that going to create? Then the city can sieze them for unpaid taxes, knock them down at taxpayer expense, and sell the land to their developer friends for a song. Last I heard it was being challenged in court.

  • Steve Walsh

    I have been on this bread-crumb trail with a vengeance for 42 years this October. First, government is not your friend. If it was we would all still be in Europe and America would be a big unknown forest. Interpret government as interventionism. At heart it is a property-rights issue. Property rights boils down to a monetary issue. At the root of the monetary issue is Keynesian economics. Keynes believed in social engineering which demanded that the funds of one person be used for the benefit of another. That can only be accomplished by government coercion. Hence, government is not your friend.
    We must be better educated. Schools for over 100 years have punched out indoctrinated student buying into the premise that government is the source of our prosperity. It is not. Google FEE and Mises Institute.
    For the immediate…when developing profit and loss documents, be sure to account for revenue lost due to vacancy. Don’t stop there. You must calculate for the rate of turnover within a building, the cost of turnover i.e. getting it ready to re-rent, and replacement costs for roofs, furnaces, hot water, floor covering, appliances etc. [email protected]

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