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Proposed Ordinance Amendment to Incorporate Rent Abatement and Escrow Accounts_REMOVED Copyrighted J une 7, 2021 City of Dubuque Action Items # 8. City Council Meeting ITEM TITLE: Proposed OrdinanceAmendmentto Incorporate RentAbatementand Escrow Accounts SUM MARY: City Manager recommending City Council approval of an ordinance amendment to allowfor all remedies allowed by the State of lowa for correcting code violations in rental properties. ORDINANCE Amending City of Dubuque Code of Ordinances Title 14 Building and Development, Chapter 1 Building Codes, Article J Property Maintenance Code, Section 14-1 J-2 I nternational Property Maintenance Code Amendments SUGGESTED Suggested Disposition: Receive and File; Motion B; MotionA DISPOSITION: ATTACHMENTS: Description Type Ordinance Amendment to I ncorporate Rent Abatement City Manager Memo and EscrowAccounts-MVM Memo Staff Memo Staff Memo Ordinance Ordinance Suggested Motion Wording Supporting Documentation Dubuque THE CITY OF � ui-Aseria cih DuB E , . � . , � II � Maste iece on tj2e Mississi i zoo�•zoiz•zois YP pp zoi�*zoi9 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Proposed Ordinance Amendment to Incorporate Rent Abatement and Escrow Accounts DATE: June 3, 2021 The Building Codes adopted by the City Council, combined with the Rental License Ordinance, dictate the fines, fees and penalties for noncompliance with building codes as well as the Rental Licensing Ordinance. The State of lowa Code allows cities several ways to encourage property owners to keep properties maintained and licensed when letting that property to another person (renting). The City of Dubuque Ordinance does not currently provide for all remedies that the State of lowa allows. The remedies not listed in the City Ordinances are; rent abatement and the establishment of an escrow account. With the proposed ordinance amendment, the City will be able to abate rent if a property owner fails to carry an active rental license, has failed to provide an essential utility service or failed to remedy a condition that poses a substantial risk to the health or safety of the tenant. Rent abatement means that the property owner is unable to recover any rent from a tenant until the situation is cured. The rent that is abated never becomes due/payable. If the City abates rent, notification will be provided to both the property owner/agent and the tenants affected. Additionally, with the proposed ordinance change, the City may set up an escrow account for a property that remains in non-compliance with city codes. Rent normally paid to the property owner, is instead paid to the City and placed in this escrow account. The escrow account is then used to abate the violations and bring the property up to code. Any money remaining in the escrow account after violations are remedied, is returned to the property owner. These remedies for violations allowed by the State of lowa will be helpful in gaining compliance for property owners that continue to ignore notice of violations and municipal infractions, and allows the City to help tenants live in a safe space by fixing the violations. These additional options for remedies do not preclude the City from using other remedies such as issuing municipal infractions, declaring a public nuisance, or petitioning for the title to a property. Housing and Community Development Director Alexis Steger recommends City Council approval of an Ordinance Amendment to allow for all remedies allowed by the State of lowa for correcting code violations in rental properties. I concur with the recommendation and respectfully request Mayor and City Council approval. � Mic ael C. Van Milligen MCVM:jh Attachment cc: Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Alexis M. Steger, Housing and Community Development Director 2 Dubuque THE CITY OF � AIFAmerica Cipl DuB E �����.��.�k � � ���'r II Maste iece on the Mississi i Z°°'�Z°1Z'z°13 � pp zoi�*zoi� TO: Michael C. Van Milligen, City Manager FROM: Alexis M. Steger, Housing and Community Development Director DATE: June 2, 2021 RE: Proposed Ordinance Amendment to Incorporate Rent Abatement and Escrow Accounts DISCUSSION The Building Codes adopted by the City Council, combined with the Rental License Ordinance, dictate the fines, fees and penalties for noncompliance with building codes as well as the Rental Licensing Ordinance. The State of lowa Code allows cities several ways to encourage property owners to keep properties maintained and licensed when letting that property to another person (renting). The City of Dubuque Ordinance does not currently provide for all remedies that the State of lowa allows. The remedies not listed in the City Ordinances are; rent abatement and the establishment of an escrow account. With the proposed ordinance amendment, the City will be able to abate rent if a property owner fails to carry an active rental license, has failed to provide an essential utility service or failed to remedy a condition that poses a substantial risk to the health or safety of the tenant. Rent abatement means that the property owner is unable to recover any rent from a tenant until the situation is cured. The rent that is abated never becomes due/payable. If the City abates rent, notification will be provided to both the property owner/agent and the tenants affected. Additionally, with the proposed ordinance change, the City may set up an escrow account for a property that remains in non-compliance with city codes. Rent normally paid to the property owner, is instead paid to the City and placed in this escrow account. The escrow account is then used to abate the violations and bring the property up to code. Any money remaining in the escrow account after violations are remedied, is returned to the property owner. These remedies for violations allowed by the State of lowa will be helpful in gaining compliance for property owners that continue to ignore notice of violations and 1 municipal infractions, and allows the City to help tenants live in a safe space by fixing the violations. These additional options for remedies do not preclude the City from using other remedies such as issuing municipal infractions, declaring a public nuisance, or petitioning for the title to a property. RECOMMENDATION I respectfully request City Council adopt the proposed Ordinance to allow for all remedies allowed by the State of lowa for correcting code violations in rental properties. cc: Crenna Brumwell, City Attorney 2 Prepared by: Crenna M. Brumwell, Esq. 300 Main Street Suite 330 Dubuque IA 52001 563 589-4381 ORDINANCE NO. - 21 AMENDING CITY OF DUBUQUE CODE OF ORDINANCES TITLE 14 BUILDING AND DEVELOPMENT, CHAPTER 1 BUILDING CODES, ARTICLE J PROPERTY MAINTENANCE CODE, SECTION 14-1J-2 INTERNATIONAL PROPERTY MAINTENANCE CODE AMENDMENTS NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. Section 14-1 J-2 of the City of Dubuque Code of Ordinances is amended to read as follows: 14-1J-2: INTERNATIONAL PROPERTY MAINTENANCE CODE AMENDMENTS: The following additions, deletions, modifications, or amendments of the International Property Maintenance Code, 2018 edition, adopted in section 14-1 J-1 of this article to read as follows: Section 103.5. Fees. Amended to read: 103.5. Fees. The fees for activities and services performed by the housing and community development department will be established by the city council. Any unpaid penalty, fine, fee or interest shall constitute a lien on the real property and may be collected in the same manner as a property tax. The City shall send a notice of intent to file a lien to the owner of the housing by first class mail to such owner's personal or business mailing address. Section 106.5. Abatement of Violation. Amended to read: 106.5. Abatement of Violation, Escrow Established. A. Abatement of Violation. The imposition of the penalties herein described shall not preclude legal action by the City to restrain, correct or abate a violation, or to prevent illegal occupancy of a building, structure or premises, or to stop an illegal act, conduct, business or utilization of the building, structure or premises. B. Escrow System Established. 1. Pursuant to the authority granted in lowa Code 364.17, the City hereby creates an escrow system for the deposit of rent which will be applied to the costs of correcting violations of the codes applicable to residential rental housing in the City of Dubuque. 2. No rent shall be recoverable by the owner or lessor of any dwelling which does not comply with the codes applicable to residential rental housing in the City of Dubuque until such time as the dwelling does comply with the applicable codes. 3. If other methods have failed, the code official may contract to have work done as necessary to remedy violations of the applicable codes at a residential rental property, the cost of which shall be assessed to the owner or lessor and constitute a lien on the property; or be paid using the funds deposited into the escrow system for the cost of correcting violations. 4. Escrow Order and Payment Requirement: An escrow order will be sent by U.S. Mail to the owner or lessor and the tenant. Upon receipt of an escrow order, tenants shall pay their rent to the city which will hold the funds in escrow towards repairs. When rent is placed in escrow the owner or lessor may not recover rent from the tenant. The effective date of the escrow order is seven (7) days from the date of the order. The owner or lessor may appeal an escrow order to the Housing Appeals and Mediation Board. If, at hearing the Housing Appeals and Mediation Board adjusts or overturns the escrow order the funds shall be released to the owner or lessor and shall be payable within fourteen (14) days. 14-1 J-3: RENTAL LICENSES: J. Suspension And Revocation Of Rental License: 1. Causes: The City Manager may, for good cause, suspend or revoke a rental license for a rental unit, and in the case of a multi-family dwelling, suspend the license as to one or more rental units for a period not to exceed one year for any of the following: a. Conviction, judgment, plea of guilty, or finding of guilt of the licensee for violation of any provision of the Property Maintenance Code; b. Misrepresentation by the licensee of any material fact in the application for a rental license; c. Refusal by the licensee to permit inspection of the licensed rental unit(s) by authorized City personnel; d. Nonpayment of the fee for renewal of the rental license; e. Failure to attend the Successful Rental Property Management Class; f. Failure to perForm a required criminal background check on an applicant for tenancy after July 1, 2011; or g. Failure of a priority category to comply with an inspection schedule or pay inspection fees. Tenants will be relocated from the rental unit at the priority category's expense. 2. Opportunity To Appeal: Prior to any suspension or revocation under this subsection, the City Manager must give notice in writing to the property owner, manager, or licensed real estate professional and provide for an opportunity to appeal. 3. Period Of Revocation Or Suspension: During the period of revocation or suspension, a unit for which the rental license was suspended or revoked may not be relicensed. 4. Notice To Licensee: The City Manager shall cause to be issued to the licensee a notice that the license is suspended or revoked, setting forth the reason(s) therefor. The notice shall be sent by certified United States mail to the licensee at the address on file with the City Manager. 5. Appeal: The licensee may appeal the decision of the City Manager to the Housing Board of Appeals. An appeal must be filed, in writing, within twenty (20) days from the date of the notice of suspension or revocation. 6. Notice To Tenant: Upon suspension or revocation the City Manager must give written notice of the suspension or revocation of the license to each tenant, requiring the tenant to vacate the premises within a time frame determined by the City Manager if determined necessary. Any tenant who fails to vacate the premises after such time shall be subject to penalties under title 1, chapter 4 of this Code. 7. Relocation Of Tenants: If suspension or revocation of a rental license is the responsibility of the property owner, manager, or licensed real estate professional, as determined by the City Manager, then any displaced tenants shall be relocated at the property owner, manager, or licensed real estate professional's expense and the City Manager is authorized to assess the rental property for any costs incurred by the City. L. RENT ABATEMENT: 1. The code official may order rent abated when the code official determines that the owner or lessor has, after issuance of a notice of violation of this chapter: a. Failed to provide an essential service (water, sewer, electricity, heat); b. Failed to remedy a condition that poses a substantial risk to the health or safety of the tenant; or c. Rented a dwelling unit without a rental license including renting under suspension or revocation. 2. A rent abatement order means that the owner or lessor may not recover rent from the tenant. Rent shall be abated until the condition for which rent abatement was ordered has, in the judgment of the code official, been remedied. 3. The code official shall provide a copy of the rent abatement order to the owner or lessor at the address on the rental permit and to the tenant by U.S. mail and by posting the entrance door to dwelling unit. Notice of termination of the rent abatement order will be given in the same manner. Section 2. This ordinance shall take effect upon publication. Passed, approved, and adopted this day of , 2021. Roy D. Buol, Mayor Attest: Adrienne Breitfelder, City Clerk EFFECT OF AMENDMENT 14-1J-2: INTERNATIONAL PROPERTY MAINTENANCE CODE AMENDMENTS: The following additions, deletions, modifications, or amendments of the International Property Maintenance Code, 2018 edition, adopted in section 14-1 J-1 of this article to read as follows: Section 103.5. Fees. Amended to read: 103.5. Fees. The fees for activities and services performed by the housing and community development department �n,� ",,;'�;^^ �o^,;^o� ,�o^��+mo^+ will be established by the city council. Any unpaid penalty, fine, fee or interest shall constitute a lien on the real propertv and mav be collected in the same manner as a property tax. The City shall send a notice of intent to file a lien to the owner of the housinq bv first class mail to such owner's personal or business mailina address. Section 106.5. Abatement of Violation. Amended to read: 106.5. Abatement of Violation, Escrow Established. A. Abatement of Violation. The imposition of the penalties herein described shall not preclude leqal action bv the City to restrain, correct or abate a violation, or to prevent illegal occupancy of a building, structure or premises, or to stop an illeqal act, conduct, business or utilization of the buildinq, structure or premises. B. Escrow Svstem Established. 1. Pursuant to the authority qranted in lowa Code 364.17, the Citv hereby creates an escrow system for the deposit of rent which will be applied to the costs of correctinq violations of the codes applicable to residential rental housinq in the City of Dubuque. 2. No rent shall be recoverable by the owner or lessoree of any dwellinq which does not comply with the codes applicable to residential rental housing in the City of Dubuque until such time as the dwelling does complY with the applicable codes. 3. If other methods have failed, the code official mav contract to have work done as necessary to remedy violations of the applicable codes at a residential rental property, the cost of which shall be assessed to the owner or lessoree and constitute a lien on the property; or be paid using the funds deposited into the escrow system for the cost of correctinq violations. 4. Escrow Order and Pavment Requirement: An escrow order will be sent by U.S. Mail to the owner or lessor and the tenant. Upon receipt of an escrow order, tenants shall pav their rent to the city which will hold the funds in escrow towards repairs. When rent is placed in escrow the owner or lessor mav not recover rent from the tenant. The effective date of the escrow order is seven (7) days from the date of the order. The owner or lessor may appeal an escrow order to the Housinq Appeals and Mediation Board. If, at hearing the Housing Appeals and Mediation Board adjusts or overturns the escrow order the funds shall be released to the owner or lessor and shall be payable within fourteen (14) days. 14-1 J-3: RENTAL LICENSES: J. Suspension And Revocation Of Rental License: 1. Causes: The City Manager may, for good cause, suspend or revoke a rental license for a rental unit, and in the case of a multi-family dwelling, suspend the license as to one or more rental units for a period not to exceed one year for any of the following: a. Conviction, judgment, plea of guilty, or finding of guilt of the licensee for violation of any provision of the Property Maintenance Code; b. Misrepresentation by the licensee of any material fact in the application for a rental license; c. Refusal by the licensee to permit inspection of the licensed rental unit(s) by authorized City personnel; d. Nonpayment of the fee for renewal of the rental license; e. Failure to attend the Successful Rental Property Management Class; f. Failure to perform a required criminal background check on an applicant for tenancy after July 1, 2011; or g. Failure of a priority category to comply with an inspection schedule or pay inspection fees. Tenants will be relocated from the rental unit at the priority category's expense. 2. Opportunity To Appeal: Prior to any suspension or revocation under this subsection, the City Manager must give notice in writing to the property owner, manager, or licensed real estate professional and provide for an opportunity to appeal. 3. Period Of Revocation Or Suspension: During the period of revocation or suspension, a unit for which the rental license was suspended or revoked may not be relicensed. 4. Notice To Licensee: The City Manager shall cause to be issued to the licensee a notice that the license is suspended or revoked, setting forth the reason(s) therefor. The notice shall be sent by certified United States mail to the licensee at the address on file with the City Manager. 5. Appeal: The licensee may appeal the decision of the City Manager to the Housing Board of Appeals. An appeal must be filed, in writing, within twenty (20) days from the date of the notice of suspension or revocation. 6. Notice To Tenant: Upon suspension or revocation the City Manager must give written notice of the suspension or revocation of the license to each tenant, requiring the tenant to vacate the premises within a time frame determined by the � City Manager if determined necessary. Any tenant who fails to vacate the premises after such time shall be subject to penalties under title 1, chapter 4 of this Code. 7. Relocation Of Tenants: If suspension or revocation of a rental license is the responsibility of the property owner, manager, or licensed real estate professional, as determined by the City Manager, then any displaced tenants shall be relocated at the property owner, manager, or licensed real estate professional's expense and the City Manager is authorized to assess the rental property for any costs incurred by the City. L. RENT ABATEMENT: 1. The code official may order rent abated when the code official determines that the owner or lessor has, after issuance of a notice of violation of this chapter: a. Failed to provide an essential service (water, sewer, electricity, heat� b. Failed to remedy a condition that poses a substantial risk to the health or safety of the tenant; or c. Rented a dwellinq unit without a rental license includina rentinq under suspension or revocation. 2. A rent abatement order means that the owner or lessor may not recover rent from the tenant. Rent shall be abated until the condition for which rent abatement was ordered has, in the judqment of the code official, been remedied. 3. The code official shall provide a copy of the rent abatement order to the owner or lessor at the address on the rental permit and to the tenant bv U.S. mail and bv postinq the entrance door to dwelling unit. Notice of termination of the rent abatement order will be qiven in the same manner.