Rent Abatement and Escrow PolicyCity of Dubuque
City Council Meeting
Consent Items # 16.
Copyrighted
December 6, 2021
ITEM TITLE: Rent Abatement and Escrow Policy
SUMMARY: City Manager recommending the City Council receive and file the Rent
Escrow Policy and the Rent Abatement Policy, ensuring the public has
notification these policies are in effect.
SUGGESTED Suggested Disposition: Receive and File
DISPOSITION:
FIN ik[O]:ILyil21zIII &]
Description Type
Rent Abatement and Escrow Policy Guidelines-MVM City Manager Memo
Memo
Staff Memo
Rent Abatement Policy
Rent Escrow Policy
Staff Memo
Supporting Documentation
Supporting Documentation
THE CITY
DUOF
B TEE
Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Rent Abatement and Escrow Policy
DATE: November 23, 2021
Dubuque
All -America City
IN
2007.2012.2013
2017*2019
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.
On October 18, 2021, the City of Dubuque adopted an ordinance amendment, allowing
the City 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 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 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. In most situations, the escrow will reimburse the costs of the
improvements, so tenants do not have to wait for improvements to be made.
The adopted ordinance includes a requirement that a policy be adopted for rent
abatement and for rent escrow that is filed in the Inspection and Construction Services
Division and is available to the public.
City staff met with the Dubuque Area Landlord Association Executive Board in October
2021 and provided the draft policy for rent escrow to solicit input. No input was received
at the meeting or from the Board thereafter.
City staff also sent the draft policy to the Chamber of Commerce to distribute to local
banks for additional input. The only input received to date was thanking City staff for
allowing them to provide input throughout this process.
Without any concerns raised with the policy, City staff adopted the attached documents
as the final policies for rent abatement and rent escrow.
Housing and Community Development Director Alexis Steger recommends the City
Council receive and file the Rent Escrow Policy and the Rent Abatement Policy,
ensuring the public has notification these policies are in effect.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Y
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
DUB E
Alf -America City
Masterpiece on the Mississippi
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TO: Michael C. Van Milligen, City Manager
FROM: Alexis M. Steger, Housing and Community Development Director
DATE: November 22, 2021
RE: Rent Abatement and Escrow Policy
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.
On October 18, 2021 the City of Dubuque adopted an ordinance amendment,
allowing the City 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 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 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. In most situations, the escrow will reimburse the
costs of the improvements, so tenants do not have to wait for improvements to be
made.
The adopted ordinance includes a requirement that a policy be adopted for rent
abatement and for rent escrow that is filed in the Inspection and Construction
Services Division and is available to the public.
City staff met with the Dubuque Area Landlord Association Executive Board in
October 2021, and provided the draft policy for rent escrow to solicit input. No input
was received at the meeting or from the Board thereafter.
1
City staff also sent the draft policy to the Chamber of Commerce to distribute to
local banks for additional input. The only input received to date was thanking city
staff for allowing them to provide input throughout this process.
Without any concerns raised with the policy, City staff adopted the attached
documents as the final policies for rent abatement and rent escrow.
RECOMMENDATION
I respectfully request City Council receive and file the Rent Escrow Policy and
the Rent Abatement Policy, ensuring the public has notification these policies are in
effect.
2
RENT ABATEMENT POLICY GUIDESHEET
A property owner may be subject to a rent abatement order if any of these conditions have been met:
• Rental unit lacks an essential service (water, sewer, electricity, heat)
• Rental unit has conditions that poses a substantial risk to the health or safety of the tenant
• Rental unit lacks a rental license, or the license has been suspended or revoked
Notice
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.
Process/Procedures for Rent Escrow
The determination to initiate a rent abatement based on the above requirements being met will reside with the Deputy Code Official and/or Building Official.
Termination of Rent Abatement Order
The rent abatement order will be officially terminated, and written notice of termination provided only when the conditions leading to the abatement of rents has been corrected.
RENT ESCROW POLICY GUIDESHEET
Basis Used to Abate a Violation and Recover Costs Through Rent Escrow
A property owner may be subject to the escrow of rent to abate a building code violation once all the following conditions have been met:
• Property Owner received a Notice of Violation(s) • A Court Order has been issued regarding the violation
• Property Owner received a Municipal Infraction for the violation(s) • The Court Order has expired and the violation remains
Notice
Notice of the escrow must be provided to the property owner, tenant and first lien holder in writing and must inform them of all appeal rights and that failure to appeal will constitute a waiver of all
rights to an appeal (14-day appeal period per ordinance)
Process/Procedures for Rent Escrow
The determination to initiate a rent escrow based on the above requirements being met will reside with the Code Official.
PRIOR TO RENT ESCROW DETERMINATION
RENT ESCROW DETERMINATION
ESCROW COLLECTION AND CLOSURE
Court Order Issuance —Triggers notification to First Lien
Cost to fix violation(s) is determined based on in-house estimates
Schedule Repair:
Holder that a court order has been issued, and failure to
• Contractor will be hired on a cost and qualification basis^
comply may lead to the escrow of rent received.
Escrow may be used if:
• Access to the property will be coordinated with Property
• Estimate = Less Than 3 months of Fair Market Rent*
Owner, Tenant or through Search Warrant/Court Order
• Rent amount can be reasonably determined and collected
when required
• Rent Abatement conditions have NOT been met
• Repair will be made immediately — escrow will be
collected for reimbursement over time.
*If cost to repair is greater than 3 months of FMR, escrow determination is made by the
^The City of Dubuque will follow the established administrative policy to receive
Code Official for extenuating circumstance
three estimates for work as able. The lowest quote will only be accepted if prior
workmanship has been demonstrated.
Court Order Expires (typically 30 days after issuance):
Determination Letter Posted on Entry Door to Unit/Property and Sent
Collection of Rent:
to:
Compliance with Orders, results in no further action
The City of Dubuque will collect rent directly from tenants.
• Property Owner
Non -Compliance moves Property to Rent Escrow
• Tenant
Any non-payment of rent by a tenant will be reported to the
Determination of Feasibility
• First Lien Holder
property owner within 7-days of non-payment.
Additional Municipal Infractions may be issued during the
A request for appeal filed within 14 days of the order, will stay the
Release of Escrow:
determination of escrow period.
escrow order until the appeal is heard.
Once the repair cost has been recovered, and the violation has
An order of rent escrow does not preclude the City from filing
The appeal may be filed by the Property Owner or First Lien Holder
been corrected per the Code Official, the remaining escrow will
a Contempt of Court for failing to comply with a Court Order.
be released to the Property Owner or the First Lienholder if an
Assignment of Rents are required to be filed with the City of Dubuque
Assignment of Rents has been filed.
prior to, or within, the 14-day appeal window to be applicable.
Tenant will be notified of the release and obligation to pay rent
to Property Owner or First Lienholder.