Q&A With Wayne Hartman, Councilman Seeks ‘Level Playing Field’ On Rental Front

Q&A With Wayne Hartman, Councilman Seeks ‘Level Playing Field’ On Rental Front

OCEAN CITY — Since his election to the Ocean City Council in 2014, Wayne Hartman has yet to really grab an issue by the proverbial horns and lead the Mayor and Council through the path of consideration towards resolution.

Yet Hartman, who bought his first property in Ocean City at age 19 and owns more than 40 units in the resort, feels that he is the person that has the expertise needed to lead the charge to fix the town’s summer housing shortage, and perhaps more importantly, help increase enforcement of the city’s longest struggles with overcrowding enforcement.

Hartman sat down with The Dispatch to talk about why he believes common sense is what will solve a complex issue.

Q: Why did you want to become an elected official and has anything that has happened since election night surprised you thus far?

A: I think what surprised me the most is the amount of time it takes to do the job well. The reason why I ran is because, from the outside looking in, I thought there were many areas where there could be huge improvements financially. Once I was elected, and I went through my first budget process, I realized how lean they were.

Probably leading up to my desire of being elected, there may have been some times as the property values were increasing, the tax rate wasn’t being held in true with constant yield and maybe there was some excess spending. By the time I came in office, the number of employees had been reduced by 100 employees, or 15-20 percent, and a lot of things had already taken place. What I realized is that things are running very well, and there is very little low hanging fruit, if any. And any savings that we are seeing now is because we are taking advantage of technology, or taking advantage of low interest rates right now to re-finance debt. This is a good time to do capital projects right now because money is historically low as far as interest rates. Any improvement we make is going to be through tweaking what we are already doing.

Q: Like I said, you bought your first property in this town at the age of 19, and at one point you had more than 40 units. Are there misconceptions about the property game in town? If you talk to people on the street, they would probably say something to the effect ‘if you own property in this town, there’s a lot of money in it.’ Tell me about your business, not as an elected official. Do you believe that the property game has gotten more lucrative or more difficult, and are there misconceptions about it?

A: I think that, like any business, it’s not a game, it’s a business. Like any business, it’s gotten tougher. The margins are smaller and some of the costs have certainly increased. Real estate is a way to earn an income, but it’s very slow. I own multiple properties so you can make a little here and a little bit there and you can put together a salary. Fortunately, my wife is a pharmacist, and a lot of what I make in the properties I reinvest in them. Some people tell me I over-improve them, but to me, I’m maximizing the occupancy rate, not the number of people per se, but the amount of time that it’s occupied, eliminating some of the maintenance and other things, so my business model is a little different.

I own close to 40 individual units and a lot of my properties are multi- family. I don’t have any properties in the single family district. I would personally live in any one of my properties. I take that much pride and care in them to the quality that I would put my family in any of them. I think that’s the true litmus test that any landlord should have. If they would be willing to put their family there then it should be okay to put someone else there. If they can’t say yes to that, then I don’t think you should be offering that property.

Q: I know early in your career, as a property owner, you were very much involved in the summer or seasonal rentals. Since you were elected, I know you have changed your direction and improved some of your properties and gone away from the summer-seasonal rentals and you’ve moved on to this more year-round family style rental. Tell me about that move. Was it purely a business move, or did it have anything to do with the fact that you now hold an elected office?

A: Well, it’s several reasons. When you hold an elected office, it definitely takes a lot of your time, and when you are doing seasonal rentals it takes a lot of your time. You are dealing with more individuals. What I was doing was buying older seasonal properties and adding to it my ability to improve them myself. Once you improve them to the point where they are suitable for year-round, meaning insulated, new windows, new doors, central heating and air conditioning, you can offer them year round.

When you offer something year-round it levels out the level of work, and there’s no longer that March, April, May rush. It levels out the amount of time and spreads out the income over the course of the year to pay the expenses. When you get it to that point, the year-round rent is equal to if not sometimes better than the seasonal rent. The other thing that’s changed is the number of franchises or flag hotels where we have a year-round population.

When the economy tanked, a lot of the year-round employees left the area. With the economy improving, there is a need for people here year-round and I think an important part of Ocean City is maintaining the year-round base and having a place where people can live all season long, and support the local businesses and convenience store. That’s what we need to get back. I love riding down St. Louis Avenue in January and seeing lights on in buildings. That’s what we need to get back to.

Q: In recent weeks, you have been out in front of this conversation about not only unlicensed rentals in this town, but also the housing shortage that we are facing for our J-1 visa students/international students. A few weeks ago, you told me that the housing shortage is a definite concern and if not handled the right way, it could quickly become a crisis. We are talking just before the council considers some proposed tweaks to the town’s occupancy law, which has been in place since the late 70’s. Talk about your hopes about where that conversation will go and what you are pushing for.

A: First of all, we have a diverse council, and when I look at different conversations, I try to look at who is the expert in that area. This is an area that I would hope the council respects my opinion on. I certainly don’t want to change the square footage requirement from 40 square feet. The way the code is interpreted right now, a closet space is not being included. A closet serves the room, and it makes the room safer. It allows for people to put suitcases out of the way so they can properly exit in the case of an emergency. If we didn’t have that closet, then there’s going to be a piece of furniture there so it doesn’t free up the floor space; because that closet is going to be replaced with a particle board piece of furniture that may not stay upright in the event of an emergency and someone fleeing out and could hinder the situation even worse.

All I’m trying to do is have a common sense approach to this. It’s part of the room. If you define a bedroom, it includes walls and a closet, although the code doesn’t require a closet. To me, it’s just one of those things that make sense.

Q: I know you are essentially trying to bridge the gap with the potential for overcrowding in a room, while at the same time, trying to help landlords meet the full capacity of what those rooms can allow by law.

A: Some people do it right and some people do it wrong, no matter what the ordinance is. The people who are going to do it wrong are going to choose to do it that way to maximize whatever they are getting out of it. So, as part of this, I’d like to see the council move to changing the current penalty for overcrowding from one fine of overcrowding and base it on the number of people.

So, if there are five people in a room, the landlord can roll the dice and maybe the fine is $500. After a week, it’s break-even so let’s go for it. Whereas, if we change the fine to per person, then that owner has to think, ‘is this worth it’ as it’s no longer profitable to do it that way, and hopefully we fix the situation. And I think the enforcement part has to be kept separate.

When we see pictures of horrible scenarios, it’s unfortunate that those even exist. But no matter what the ordinance is, those will still exist until enforcement happens and those situations are eradicated.

Q: But, isn’t it safe to assume that landlords who willingly break the law and overcrowd units, are extremely versed in the fact that the city has only three inspectors?

A: So, PRESS (Property Review and Enforcement Strategies for Safe Housing) came back in the last year or two, and I think that’s the key to maximizing the efficiency of these inspectors. It’s not tougher enforcement, it’s just increased communication. So now, when the police department is out on a noise violation, and they can see that a place is visibly overcrowded, a simple referral to the building department notifies all those people.

Our building inspectors aren’t out there knocking door to door looking for these situations, so it’s increased communication that’s going to be the key to maximizing their effectiveness. If the landlords are thinking that, and they look at the number of overcrowding citations that were written last year, as opposed to previous years, I have to attribute that to PRESS. I’d say 95% of those referrals came from the police department, and I think that’s the way it’s supposed to work. If that continues, we can eliminate the problem.

Q: I remember when you were campaigning, you would often say that you were a small business guy, and weren’t a huge fan of a lot of government involvement. You wanted to empower the business community to right itself and help itself thrive. So, with these proposals of increased fines per count of overcrowding, or some of the forward stances you’ve taken on unlicensed rentals in town as far as penalties go. If a councilmember would have proposed this when you were just a business owner, would you have deemed that to be government getting in the way?

A: I think everyone understands that a business license is required. We aren’t asking for anything that is going to cost more, we just want people to do it right. When you have some people playing by the rules, and some not, you don’t have a level playing field. To me, that’s a detriment to the players in it, especially to those who are doing it right.

There are a lot of things that government can do that could put layers on this and make it more cumbersome and make people want to run away from it. That’s not at all what I’m trying to do. I think what we are trying to do is create a level playing field. Anyone who is in business, and trying to do it right, should welcome this.

Q: Give your assessment about where we are right now in regards to the housing shortage related to the seasonal workforce. Will there be fewer foreign students because there is simply fewer places to put them, or has the past few weeks gotten us a little bit closer to a resolution?

A: It’s not an immediate fix. Earlier, you talked about profit, and profit is a part of any business. If it was so profitable and worked so well, as opposed to all these hotels that we are seeing built, we’d see student housing or seasonal housing being built everywhere and that’s just not happening. What we are seeing is seasonal housing that’s being converted to higher and better uses. Will we have enough housing? It seems like it always works out. It’s a complex situation to resolve.