Wednesday, January 10, 2007

Regulations on my Mind

I have regulations on my mind. This is because I am considering what to do with the second floor of my downtown building. It is large enough to make two nice size apartments. I will develop this property only if the projected benefit of the improvements (rental income, increased property value) exceeds the costs. The costs are the investment of cash and time, interest on loans, a property tax increase, and the big unknown; the costs associated with regulations.

The costs of regulations are hardest to calculate. Mainly this is because virtually every aspect of a development involves both state regulations and local ordinances. Plans are subject to arbitrary interpretations of codes made by unelected government bureaucrats. In other words, I am at the mercy of unelected, unaccountable people who may interpret codes in the most stringent manner, increasing my costs exponentially, ensuring a money losing venture. What's more, they can do this even after they have approved my plans.

I am hopeful that I am worrying needlessly. After all, my first investment downtown was relatively pain free, despite having some of the same worries.

Even so, I don't think it is right that unelected, unaccoutable individuals should hold so much power over others. Not only is it bad for individuals like myself, it is bad for the community if the risks of development exceed the likely rewards because of onerous regulations.

Now, for Kathy, I will try to tie this together with the posts about car safety. It is perhaps difficult to fathom the absurdity of some regulations associated with property development unless you have been there. But imagine, if you would, taking your car in for an oil change. There you meet an unelected state official who tells you that you may not drive your car unless you spend $5,000 retrofitting your car to accomodate people in wheelchairs.

Now you know that won't happen when you go for an oil change. But it may very well happen after I have already spent $100,000 renovating my building. Scary, isn't it?

3 comments:

eric said...

Dennis, my observation is that the more people hours you have in a nation, the more government you get, people hours being driven by two factors: length of time a government has existed in its approximate current form, and population density. The Europeans are exhibit 'A', and our own cities are exhibit 'B'.

Regarding your auto analogy, don't forget the bi-annual auto registration requirement to have your emissions checked.

Your biggest risk as a potentiual landlord is usually finding reliable/reasonable tenants.

Anonymous said...

you raise some interesting info. Repeating what you have stated in other posts regarding government intervention, you should just avoid these people as you can only control your own actions. So don't let them bother you, just forget about them and leave them in the dust, Sound familiar? Doesn't really work when these people have a potential effect on your livelihood does it...

One of the things that bothers me about some of the mentality of business owners (of which i am one too) is that most feel they are owed something because of their choice to go into business. They feel that because they CHOOSE to go into business that they are a benefit to the community (questionable in many instances) so they should be treated as gods and allowed to side step laws and regulations.

My opinion is that life is about choices, you choose to go into business, just like people choose to be employed and that decision has consequences of unavoidably dealing with the government in some way, shape, form or fashion, whether one likes it or not. To me, I don't need a city commission to force me to make my building handicapped accessible, i'd do it myself, gladly. Its a no-brainer for me because it potentially has numerous benefits that would help fill my bank account in the long term, despite swallowing the big upfront costs in the short term.

As far as the concept of regulation itself, the health, food, and insurance industries particularly, demonstrate the need for government regulation. Corporations are unbelievably poor sources for policing their own industries, hence the need for government intervention.

Denis Navratil said...

anonymous, interesting post. Should I just leave the government in my dust? You are alluding to my suggestion that those who are being discriminated against should get over it and leave bigots in the dust. Clever, but there are distinctions between attitudes among people and attitudes and policy of government. The all important difference is that the government, in theory at least, is ours. As such we ought to have the right to change it, and it has the responsibility to be coherent, fair, and accountable. The reality in the example I offered is that the government regulations are often confusing, contradictory, and the potential is there for said regulations to be administered unfairly and with little recourse for the aggrieved individual. Whereas with bigotry on the part of individuals, there is little or nothing that can be done about it, the attitudes belong to others, so one is better off leaving those people in the dust. So your efforts to expose hypocrisy on my part have failed. Do try again though.

On your other point, I can't speak for other business owners, but I don't hold the attitude that I am owed something. I hold the attitude that I have to earn something. As a citizen, I believe I have a responsibility to advocate for sensible and coherent government regulations which would allow the greatest freedom possible for all indivduals, such that they may pursue their happiness.

Using my example of retrofitting a car to accomodate the handicapped or maxing speeds at 15 mph, would you simply leave it alone and figure that government knows best? Are all regulations fine by you anon? Can the government overstep or are they always right?

Eric: yes, finding good tenants is an issue as well. But at this time, it is the least of my worries.