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Rental Property Licensing and Role Inspection Program Copyright 2014 City of Dubuque Action Items # 7. ITEM TITLE: Rental Property Licensing and Role Inspection Program SUMMARY: RESOLUTION Approving the Increase in the Structure Fee for the Rental Licensing and Role Inspection Program SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s) ATTACHMENTS: Description Type ❑ Rental License Memo to MVM Staff Memo ❑ Rental Fee Resolution Resolutions ❑ Fee Structure Exhibit A Staff Memo THE CITY OF THE CITY OFDU`bu J Du BB E DUBSgaTE i3ii.� AFAmeIIII�IcaCb v Masterpiece on the Mississippi 2007.2012•2013 Masterpiece on the Mississippi' TO: Michael Van Milligen, City Manager FROM: Alvin Nash, Housing & Community Development Director DATE: March 10, 2015 RE: FY15-16 Rental Property Licensing & Inspection Fees INTRODUCTION This memorandum recommends an increase in fees charged for rental property licensing effective January 1, 2016 and, a rental inspection fee increase effective April 6, 2015. The reason for the increase is twofold first: the City can no longer subsidize the rental inspection program from the general fund category and second the amount of CDBG funds committed to inspection fees has been reduced due to funding cuts. Therefore, it is incumbent upon the staff in the administration to offset the cuts produce a plan that results in a balanced budget in which all costs are dedicated to the operation of the licensing and inspection program. BACKGROUND City Council's Policy Agenda for 2014-2016 includes Housing Code and Inspections as one of 7 High Priority agenda items. Following this designation and with the recent acceptance of the Voluntary Compliance Agreement with HUD, the Housing & Community Development Department has begun an internal review of the processes, policies, fees, code and ordinances that are currently in use. This review has uncovered several opportunities for improvement that relate to Housing Inspections and Code Enforcement. We are in the initial stages of a comprehensive overhaul of our services, code, and fee structure. The first step in this process is the evaluation of fees and penalties associated with Rental Property Licensing, Inspections, & Code Enforcement. When compared with five similar Iowa Cities, (Ames, Cedar Rapids, Davenport, Des Moines, and Iowa City) it was determined that Dubuque's fees were approximately 58% lower than the average and among the lowest in the state. Current citywide budget challenges have caused Housing Inspections to come under pressure to become largely self-sustaining and end the reliance on General Fund subsidies. This will, in effect, mean that Housing Inspection will begin direct billing for services provided, as opposed to being supported by property taxes, thus property owners who are renting properties will pay for the Rental Licensing and Inspection Programs, instead of charging all property owners. With that in mind along with the long range goals of the department, community, and city council, we are making the following recommendations related to the Rental License and Inspection fee changes to be implemented April 6, 2015 for the rental inspections and beginning January 1 , 2016 for the rental licensing. • Increase rental property licensing fees • Increase re-inspection fees and charge for 2nd and subsequent re-inspections • Provide Certificate of Structural Compliance (CSC) inspection (fee charged for new license applications) • Charge for dwelling and rooming unit inspections on existing units (NOTE: This will not be charged on units that have been inspected and approved for a Housing Choice Voucher (Section 8) or similar Assisted Housing program within 3 years prior to the unit being due for a licensing inspection.) • Charge Confirmed Complaint fee • Increase re-inspection fee • Increase enforcement of fees charged when inspector is unable to gain access to the unit. Upon completion of the first full inspection cycle following the proposed changes the Department would also like to consider implementation of a variable inspection cycle. This option would allow for increased inspection frequency on properties with a history of violations or other conditions. This also creates an incentive for property owners/agents to maintain properties so that they do not become subject to the more frequent inspections schedule. The positive effects of implementing inspection fees and utilizing penalty fees will give the Housing Department real opportunity to impact community change. Code enforcement can have a significant impact on crime, poverty, and quality of life in a city. Community developers have found the long-term success of their revitalization work often depends on clean up and redevelopment of problem properties in the neighborhood. These properties can deter investors, frustrate existing residents, and contribute to an environment of fear, disorder and crime. Effective code enforcement is part of a balanced neighborhood revitalization plan that can prevent and reduce the number of problem properties while increasing awareness and access to community resources. If changes for the department are recommended, other opportunities for improvement include: • Implement International Property Maintenance Code (IPMC) as recommended by University of Iowa 2012 study. • Improve nuisance complaint response and assume responsibility for all housing related complaints (owner occupied and rental alike). • Develop criteria and implement a variable inspection cycle so that targeted enforcement may occur where necessary and likewise quality property maintenance/management would be rewarded. • Improve data collection and sharing with other departments so that the highest quality services can be provided with minimal duplication of services. (e.g. increase efficiencies by reducing independent department/inspection visits to a property). DISCUSSION The maintenance level budget recommendation proposes a fee increase to generate $156,885 in revenue from rental licensing and inspection fees. The budget below (without the recommended fee increases) represents the current fee structure at current staffing levels. The General Housing Program employs 4.2 FTE employees. There are 2.2 FTE General Housing Inspectors'. Fiscal year 2016 expenses are estimated at $498,166 and revenue without the fee increases is projected as follows: $156,885 Licensing and Inspection Fees $149,740 General Fund $191 ,541 CDBG $498,166 Code Enforcement Budget Community Development Block Grant (CDBG) currently funds about 43% of the General Housing budget. HUD provides guidance for the use of CDBG funds for code enforcement activities. HUD Notice CPD-14-016 cautions against shifting existing code enforcement efforts to CDBG to relieve pressure on general fund budgets. Federal regulations prohibit using CDBG for general government expenses. Therefore, any adjustments made to expenditures as a result of increased fee revenues should reflect in both General Fund and CDBG allocations for the cost of code enforcement. The budget below projects the total General Housing program revenue including recommended fee increases. Expenses are estimated at $498,166 and revenue is projected as follows: $406,800 Licensing and Inspection Fees $ 4,000 Abandoned building license fees $ 50 Appeals board application fees $ 500 IA District court fines $ 0 General Fund 86,816 CDBG $498,166 Code Enforcement Budget To adhere to General Fund reductions and HUD regulations, this projection recommends $0 in General Fund and $86,816 CDBG to fund the Code Enforcement activities. The improvement level request maintains the 5 year inspections cycle, with an opportunity to move to a variable inspection cycle to more effectively address and correct code violations at marginal properties. BUDGETIMPACT The improvement level budget and recommended fee increases will result in total projected revenue of$498,166. The improvement package will maintain the 5 year inspection cycle and allow for a variable inspection cycle to addresses marginal properties. This projects $0 General Fund and $86,816 CDBG expenses. The improvement level budget projects $498,166 for Code Enforcement Costs. Please see attachment A which compares current and projected fees. ACTION STEP It is recommended that City Council adopt the attached resolution, which will increase the fee structure for the rental licensing and inspection program effective April 6, 2015, for the rental inspections and beginning January 1 , 2016, for the rental licensing. The resolution also adopts a certificate of structural compliance inspection, the dwelling unit inspection fee, the rent rooming unit inspection fee and the confirmed complaint inspection fee. RESOLUTION NO. 77-15 A RESOLUTION APPROVING THE INCREASE IN THE STRUCTURE FEE FOR THE RENTAL LICENSING AND ROLE INSPECTION PROGRAM WHEREAS, the Housing and Community Development Department is requesting an increase in the structure licensing and rental fees in order to self - sustain the General Housing Code Enforcement Department; and WHEREAS, the effective date of licensing fees is January 1st 2016 and the effective date of rental inspection fees is April 6th 2015; and WHEREAS, the following increase in the licensing and rental fees are hereby proposed. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the license fee for structure be increased from $12 to $25; Dwelling unit be increased from $12 to $20; Rooming unit be increased from $3 to $10; Section 2. That the penalty fees be as follows: late payment penalty fee be increased from 10% to $25; a. The No show fee (CGI) would remain the same; b. The Re -inspection fee for 3rd and subsequent re -inspections be decrease from $25 to $40; c. The Re -inspections fee for 2nd and subsequent re- inspections be increased from zero to $70; d. Addition room re -inspection fee for 3rd and subsequent re- inspections be decreased from $5 to zero; e. Confirmed complaint inspection with penalty to $85. Section 3. That new dwelling unit inspection fee will now be $70 at the time of inspection; new rooming unit inspection fee will now be $40 at the time of inspection. Section 4. Adoption of this Certificate of Structural Compliance, (CSC) inspection for new rental property inspection during which additional documentation and inspection work is completed including sketch of basic floor plans to be maintained the property record establish record of all habitable space establish maximum occupancy at the successes successfully passing CSE inspection a certificate of structural component to be issued. CSCs are transferable to new owners. Section 5. Adoption of the dwelling unit inspection fee which is charged in accordance with inspection and only in use when inspected. This fee is waived if this unit has been inspected by the City of Dubuque's Housing Inspectors in the past two years for housing choice voucher section 8 participation. Section 6. Adoption of the rooming unit inspection fee which is charged similar to the dwelling inspection fee. Section 7. Adoption of the confirmed complaint inspection fee which is charged only in cases when the following has occurred, one the tenant has provided written proof of maintenance request to property owner and or registered agent, two, tenet has allowed acceptable time for the property owner agent to make necessary repairs and three, city inspector has verified to the complaint has not been repaired and is a housing code violations. Section. 8. This resolution requires that all penalty fees charged are subject to appealed through the housing code board of appeals. Passed, Approved and Adopted this 12th day of March, 2015. Attest: Trish L. Gleason, Assistant City Clerk D. Buol, Mayor FEE STRUCTURE CURRENT & PROJECTED WITH INSPECTION STAFFING LEVEL OPTIONS FEE TYPE DUE CURRENT FEE PROPOSED FEE Structure - Licensing fee Annually $ 12.00 $ 25.00 Dwelling Unit - Licensing fee Annually $ 12.00 $ 20.00 Rooming Unit- Licensing fee Annually $ 3.00 $ 10.00 Late payment penalty Penalty only 10% $ 25.00 No show fee (CGI) Penalty only $ 50.00 $ 50.00 Re-inspection fee for 3rd and subsequent re-inspections Penalty only $ 25.00 $ 4.00 Re-inspection fee for 2nd and subsequent re-inspections Penalty only N/A $ 70.00 Additional room re-inspection fee for 3rd and subsequent Penalty only $ 5.00 N/A New rental fee (CSC inspection)* 1st inspection only $ 40.00 Dwelling Unit - Inspection fee** When inspected $ 70.00 Rooming Unit- Inspection fee*** When inspected $ 40.00 Confirmed complaint inspection Penalty only $ 85.00 *CSC (Certificate of Structural Compliance) Inspection = New rental property inspection during which additional documentation and inspection work is completed including: Sketch up of basic floor plans to be maintained in property record, establish record of all habitable space (e.g. bedroom count, locations, unfinished areas, ect), establish max occupancy. After successfully passing CSC Inspection a Certificate of Sturctural compliance will be issued. CSC's are transferrable to new owners. ** Dwelling unit inspection fee is charged in accordance with inspection and only in years when inspected. This fee is waived if the unit has been inspected by City of Dubuque Housing Inspectors in the past 2 years for HCV(Section 8) participation. *** Rooming unit inspection fee is charged similarly to the dwelling inspection fee. **** Confirmed complaint inspection fee is charged only in cases when the following has occurred: 1 - Tenant has provided written proof of maintenance request to property owner and/or registered agent, 2 -Tenant has allowed acceptable time for property owner/agent to make necessary repairs 3 - City inspector has verified that the complaint has not been repaired and is a housing code violation NOTE: All penalty fees charged are able to be appealed through the Housing Code Board of Appeals.