impact of housing code enforcement upon house operating firm decision-making

In the field of planning and policy-making, there is often insufficient concern for the nature and patterns of decision-making in the private sector. It is felt that improved knowledge of these patterns would provide an additional significant input to aid policy-makers in the difficult task of assembling the most appropriate program from a host of available alternatives. To develop this theme, this thesis has focused upon private sector response to housing code enforcement as a tool for eliminating substandard housing and increasing the supply of standard housing for low income tenants. Two models of rehabilitation decision-making by absentee owners of multiple rental housing (i.e., house operating firms) are presented and operationalized. The first model assumes that a community does not enforce a set of minimum housing standards. Consequently, house operating firms are free to adjust their operating, replacement and remodelling expenditures, thereby raising or lowering the position occupied by their buildings in a distribution of rental housing quality. Since each position in this quality distribution generates a different level of rent, the firm must choose that position which maximizes profit from its building. In the case where minimum housing regulations are not enforced, this pattern of decision-making often implies the existence of a significant quantity of profitable substandard rental housing. Since firms in this instance are free to decide to operate their buildings at substandard levels without fear of prosecution, we have termed this the "unrestricted decision-making model." The second model, which we have described as the "restricted decision-making model," assumes that a housing code has been enacted and is strictly enforced. In this case, house operating firms owning substandard buildings have certain restrictions placed on their decision-making. These restrictions require that the firm either increase its expenditures on its building to raise the level of quality to a certain minimum standard or withdraw the building from occupancy. The result is that such firms face a potential loss in profit which they will attempt to minimize in their decision-making. An examination of the housing code enforcement experience of selected communities points toward a number of serious issues which must be resolved if such programs are to succeed in restricting house operating firm decision-making. These issues include administration, inspection, staffing, legal, land use and vacancy problems. All but the latter problem appear to be soluble, given the appropriate steps. However, under conditions of low vacancy rates in non-luxury rental housing, the strict enforcement of a housing code threatens to dislocate significant numbers of low income tenants. This undesirable outcome is to be expected according to the restricted decision-making model; however, it is contrary to the stated aims of code enforcement. To alter this outcome, it is contended that communities should concentrate on manipulating the important variables in the house operating firm decision-making process by introducing a range of policies into their code enforcement programs. In the final chapter of this thesis, then, certain policy alternatives are considered with respect to their potential impact upon the decisions of house operating firms, with the emphasis placed on stimulating rehabilitation where it might otherwise not occur.Applied Science, Faculty ofCommunity and Regional Planning (SCARP), School ofGraduat