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Home My WebLink About10F - Report on Rental Licensing and Inspection Programs MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: JANUARY 5, 2009 10F JANE KANSIER, BUILDING AND TRANSPORTATION SERVICES DIRECTOR CONSIDER APPROVAL OF A REPORT ON RENTAL LICENSING AND INSPECTION PROGRAMS Introduction The purpose of this agenda item is to describe the various options for a rental certification program and the implications of each of those options, and to receive Council input with respect to the objectives you would like to achieve. Historv On October 20, 2008, the City Council directed staff to look at options available for rental licensing fees and services the City can offer landlords, including annual inspections, fees and the ability to do criminal background checks. Current Circumstances We have estimated there are approximately 1,000 rental units in the City of Prior Lake, or about 12 percent of our housing units. This number is based on the County Auditor's records for the number of non-homesteaded properties. This number does not distinguish between those with more than one home, or homesteaded properties which may have rental units, so there may be more or less rental units. The City of Prior Lake does not currently have a rental inspections or property maintenance ordinance in place. The City does participate in the Crime Free Multi-Housing Program. Unlike many other communities, the City does not have a police officer dedicated to this program, so our participation is minimal and can best be described as very basic community oriented policing. Sergeant Stanger is the primary contact for this program. He describes his participation as getting to know the property managers of the larger properties, working with them to identify problems and patterns, and providing information when possible. If asked, the police are able to share whatever public information is available on a prospective tenant. While this approach is more reactive than proactive due to staff constraints, Sergeant Stanger does report a decrease in the number of calls we receive at these locations. Staff surveyed many area communities on rental licensing and inspection programs and property maintenance ordinances. We found there are a wide variety of programs, ranging from full-scale services to registration only to property maintenance. Full-scale rental and property maintenance ordinances require licensing for all rental units, annual or biannual inspections of both the interior and exterior of the units, landlord training and tenant conduct requirements. Larger cities with a high number of rental properties, such as Rochester, St. Louis Park, and Brooklyn Park, have adopted this type of program. Brooklyn Park has even www.cityofpriorlake.com ~~ee9Mpt~9'800:;~~~t%~~ 7.4245 adopted the International Property Maintenance Code, which contains a very comprehensive list of both interior and exterior maintenance requirements. Some communities, such as Bloomington, Golden Valley and Northfield, have adopted a similar version with less stringent requirements. For example, the Bloomington program includes annual licensing and inspections, but does not have a tenant conduct component. Fees for these programs range from $70 to $145 plus $9 per unit. Some cities have adopted a sort of hybrid rental certification program. The City of Burnsville for example, requires licensing for rental units, but only does inspections on a complaint basis. The program includes a property maintenance component and a tenant conduct component. There is no fee for this registration. If an inspection results in a violation, there may be a fine attached. The City of New Prague adopted an ordinance requiring registration of all rental units, but does not do any inspections or charge a fee for the registration. Other communities have focused their efforts on property maintenance ordinances rather than rental licensing. These ordinances typically address property appearance issues such as parking, structure appearance and other maintenance. These ordinances generally apply to all residential properties, and do not address rental units specifically. Mendota Heights has adopted such an ordinance. Each of the various approaches has advantages, disadvantages and a different impact on the City's resources. The table below is my attempt to identify each of these factors. Model Advantaqes Disadvantages Full-Scale . Inventory and track rental . Requires additional units enforcement and . Health and safety: administration Inspections ensure units are . Start-up costs maintained properly associated with . Occupancy can be controlled tracking all rental and monitored based on size units of unit . Costs to landlords . Helps to address other issues . City may play associated with rental ombudsmen role properties (e.g., noise and between tenants parking) and landlords . Proactive approach . Not likely to be financially self- supporting Hybrid . Inventory and track rental . Reactive approach units . Start-up costs . Ordinance in place to address associated with issues that may occur tracking all rental . Enforcement based on a units complaint basis . City may play . Little or no cost to landlords ombudsmen role R\Council\2009 uo Dce Impacts . Requires additional staff or contract with another city or private agency . A Housing Board of Appeals would be required to handle appeals and interpretation questions · Requires new ordinance . Requires new ordinance · A Housing Board of Appeals would be required to handle appeals and interpretation between tenants questions and landlords . Not likely to be self- supporting Property . Addresses cosmetic and . Does not track or . Requires adoption of Maintenance exterior issues inventory rental units a property Only . Requires little additional . Does not address maintenance enforcement issues specific to ordinance . No additional staff required rental properties . No cost to property owner . Reactive approach . Applies to all properties, not iust rental units Maintain the . No additional costs to City . Does not track or . No impact to City Status Quo . No new ordinance required inventory rental units . Does not address issues specific to rental properties . Reactive approach ISSUES: Before making a decision about whether or not to move forward with one of the approaches or selecting the preferred model, the Council may want to consider a series of questions to aid them in determining their specific goals. 1. Who should this program apply to? . Rental residential properties . Owner occupied residential properties . Rental commercial/industrial properties . Owner occupied commercial/industrial properties . Institutional properties (churches, schools, municipal facilities) . All of the above 2. What is the Council trying to accomplish? . Assure rental units are compliant with all aspects of the current City Code? . Assure that rental units comply with key life-safety code elements (e.g., fire and carbon monoxide alarms, fire extinguishers)? . Assure that new tenants have no record of previous police encounters? . Assure that existing tenants have no police/code enforcement encounters? . Assure that landlords are providing safe housing? . Assure that all properties are maintained in order to pro? .3. How does the Council want to accomplish these goals? . Staff . By contract . Owner obligation . Jointly with other cities 4. Should the program be self-sustaining? If not, what program should e cut to make this new service possible? 5. Is the program proactive or reactive? Once the City Council's goals have been identified, the staff can prepare a follow- up agenda report with proposed alternative models and processes for R\Council\2009 05 09\rental agenda repcrt DOC implementation. FINANCIAL IMPACT: The cost of additional review is primarily in staff time. The overall costs of a change will depend on the program chosen by the City. Should the City Council choose to enact a full-scale program, an additional staff person to administer the program, conduct inspections, and so forth will be necessary. We estimate the cost of an additional staff person at a minimum of $60,000 per year. This would place the fee for a rental certificate at a minimum of $60 per unit. An additional inspector would have the crossover benefit of additional code enforcement, but the cost does not include additional police time that may need to be spent on such a program. ALTERNATIVES: The Council has the following alternatives: 1. Determine the specific goals it desires. 2. Do nothing. RECOMMENDED As per the City Council's discussion. MOTION: ~ ReVi~Y: fI , .~ Frank Boyles,fity R:\CoUllcil\2009 Reports\OI 05 09\rel1tal agenda