NEIGHBORHOOD SERVICES MEMORANDUM January 29, 2013

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1 NEIGHBORHOOD SERVICES MEMORANDUM January 29, 2013 TO: FROM: SUBJECT: City Council Kelly Mack, Neighborhood Development Specialist Discussion and Direction to Staff on Landlord Registration & Rental Property Inspection Program Background At the request of Council President Voskuil, Neighborhood Services has prepared this brief background memorandum and started gathering information on landlord registration and systematic rental property inspection programs to determine whether the City Council has interest in staff further pursuing either of these concepts. Neighborhood Services has spent several years successfully implementing new strategies in an attempt to help increase the quality of the housing stock in the City of Janesville. Re-inspection Fees, Citation Authority, Nuisance Abatement, and the Chronic Nuisance Premises Ordinance are a few of the tools that the Property Maintenance staff use to gain compliance regarding code violations. In 2012, Property Maintenance conducted 5,356 inspections based on 1,586 complaints. These inspections were largely conducted by two full time Property Maintenance Specialists and one Part Time Property Maintenance Specialist. Property Maintenance Specialists enforce minimum housing standards as required by the City Ordinance. It is not uncommon for Inspectors to receive complaints about significant life-safety issues such as non-functioning plumbing, unsafe wiring, lack of smoke detectors and carbon monoxide alarms, and lack of adequate heat or no heat. The primary goal of landlord registration and property inspection programs is to upgrade and maintain the condition of residential rental units so that they meet and comply with the provisions of the City of Janesville Ordinances as well as safety, health, fire and building requirements. In addition, the program is intended to provide a more efficient system for compelling both absentee and local landlords to correct violations and to maintain, in proper condition, rental property in the City of Janesville. These programs would expand upon existing pro-active efforts resulting in consistent inspections city-wide. The over health of our residential communities is a necessary component of business recruitment and economic development in Janesville. 1

2 Analysis Of the thirteen comparable cities, five currently have landlord registration and/or rental property inspection programs and an additional 6 are actively working on instituting new programs. While all of the programs vary to a certain degree, these programs generally consist of some type of registration and information gathering process. Most require a physical address and a contact person for the owner as opposed to a PO Box and a business name or LLC. This gives the inspection staff a specific point of contact for a particular property. Property Maintenance staff spend a great deal of time trying to track down a responsible party for properties that list a business or a LLC as the property owner. The time that it takes to locate an owner could be spent addressing other complaints and violations. Meanwhile tenants are left to deal with the code violation until the property owner can be located. Some programs require that owner designate a local (with thirty miles) responsible party. There are many properties owned within the City of Janesville by people who do not reside in Janesville or even in the State of Wisconsin. These individuals are generally more difficult to contact once a violation is discovered. A second part of the landlord registration programs is systematic inspections of all rental units. Again, the frequency of inspections varies by municipality. Some programs require an annual inspection while others attempt to inspect every property once every three years. In one program, once a unit passes two annual inspections, it is not inspected the subsequent three years unless a complaint is filed. This allows Property Maintenance Specialists to focus on the properties that tend to have the greatest violations and reward those property owners who maintain their property to code complaint standards. The frequency of inspections is dictated by the total number of rental units and the staff assigned to this program. The cost to run this type of a program is passed on to those who own and operate the rental units. This fee structure varies greatly by municipality. Some programs charge one flat fee per rental unit. Other programs charge one flat fee for registration and one for the inspections. One program allows for a reduced per unit fee for multi unit buildings if all of the inspections are scheduled at the same time within one building. This allows for greater efficiencies for the inspector and a cost saving to the building owner. In the 2013 budget proposal, staff included an enhancement to the Property Maintenance budget that would allow for such a program to occur in Janesville. This enhancement is attached. The enhancement assumes a once every three year interior inspection and an annual exterior inspection. The cost would be $30 per rental unit. Staff estimates approximately 9,900 rental units within the City 2

3 of Janesville. This program would require four additional staff to administer the program. Advantages of implementing a landlord registration and rental property inspection program include: 1. Improved quality of rental housing resulting in an increased stock of safe, affordable rental housing. 2. Reduction in complaints about significant life-safety issues such as nonfunctioning plumbing, unsafe wiring, lack of smoke detectors and carbon monoxide alarms, and lack of adequate heat or no heat as items will be addressed with landlords through the inspection process. 3. Stabilize property values for those properties adjoining rental properties in residential areas by maintaining a minimum property standard. 4. More timely resolution of complaints because inspection staff will have a central point of contact. 5. The costs of the registration and inspection services are paid by those using the services, rather than all general taxpayers. Disadvantages of implementing a landlord registration and inspection program include: 1. Added cost to rental property owners for registration and inspection services. 2. Added cost to rental property owners who are required to make repairs to their units to comply with minimum housing standards. 3. Potentially added cost to rental property owners who may be required to obtain a management company or local representative. If directed to further review landlord registration and development of a specific proposal for implementing such a program in Janesville, staff will further analyze programs being used in our peer cities to determine best practices, meet with other staff members (police dept., fire dept., building services) and members of the rental property community who have an interest in maintaining rental properties, meet with other staff to explore billing options, and refine the estimated budget based upon the recommended program. It is roughly estimated that 48 additional hours would be allocated to completing this analysis and proposal. 3

4 At this time, staff would like direction from the City Council on whether to further explore landlord registration and rental property inspection programs, and come back at a later date with a specific recommendation and implementation plan. City Manager Recommendation The City Manager concurs with the Neighborhood Services Department statement that we are looking for direction on whether to move forward in the evaluation of this program. Due to the time requirement for full investigation, implementation if the Council provides that direction, and public involvement, I am seeking direction on whether this is a program the Council desires staff to further evaluate. cc: Eric Levitt, City Manager Jennifer Petruzzello, Neighborhood Services Director 4

5 2013 BUDGET ENHANCEMENT BUDGET: Property Maint. City-Wide Pro-Active Inspection Program EXPENDITURES PROPOSED COMMENTS Acct: PERSONAL SERVICES 01 Salaries 150,351 2 FTE Property Maintenance I, 1 FTE Property 02 Hourly Wages Maintenance II, 1 FTE Customer Service 06 Health Retirement FICA Life Fringe Distribution 15 Training 2685 Property Maintenance Program-UW Madison 18 Special Payments Acct: CONTRACTUAL SERVICES 24 Telephone Phones 51 Vom Rental VOM-Three Vehicles Acct: SUPPLIES & MATERIALS 60 Office Supplies Misc Supply & Material Acct: CAPITAL OUTLAY 99 Other/Misc. Capital Outlay New Computers TOTAL CHANGES 270,014 REVENUES PROPOSED COMMENTS $297,000 This assumes $30 per unit fee for rental properties-approx 9900 rental units in Janesville. ACTIVITIES: PROPOSED COMMENTS ELEMENT COST:

6 SIGNIFICANT EXPENDITURE, STAFFING & PROGRAM CHANGES: The addition of three Property Maintenance Inspectors and one Customer Service position would allow for the systematic exterior inspection of all residential properties in the City of Janesville once per year. The interior of all residential rental properties would be inspected at least once every three years. Rental Property Owners would be required to register with Neighborhood Services and pay a $30 annual fee per unit. ADDITIONAL COMMENTS: This type of program is farily common in Wisconsin. The requirement for systematic interior and exterior inspections would help to stablize Neighborhoods that are deteriorated or are at risk of deterioration.