By By JOHN EBY / Dowagiac Daily News
It was an extraordinary Monday at City Hall, what with pickets, a vote dividing council members at the first meeting to overflow the 1998 chamber and a 2 1/2-hour dialogue involving Mayor Donald D. Lyons and 16 citizens who spoke.
Council voted 4-2 to pass the controversial rental inspection ordinance. Mayor Pro Tem Wayne Comstock made the motion, joined by Councilmen Leon Laylin, Jack Alexander and Tom Zablocki.
Councilmen Bob Schuur and Darron Murray voted no.
The ordinance taking effect June 1 requires a one-time registration fee for each rental property. When a property changes owners it needs to be re-registered to the new owner and the registration fee paid.
Each of 1,002 rental properties will be inspected every other year.
For properties in "substantial" compliance on the initial inspection, re-inspection will be extended by an extra year to three years.
Standards to which properties will be inspected are existing codes.
Fees charged to the property owners will provide the funding.
The funding goal is to cover expenses.
There is a one-time registration fee of $15 per property.
If a property has more than one rental unit there will be an additional $5 for each unit. For example, Lyons said, if a building has six rental units there would be $15 charged for the first unit and $5 for each of the remaining five units for a total registration fee of $40 ($15+($5×5)=$40).
There is also an inspection fee charged at the time property is inspected. The inspection fee is $110 per property for each regular inspection. If there is more than one rental unit per property, the fee for each additional rental unit is $40.
Again using the six-unit rental property for example, the inspection fee would be $310 ($110+($40×5)=$310).
The first re-inspection is free.
If additional re-inspections are necessary after the first one, they will be $25 for the first unit and $20 for each additional unit. If none of six units passed initial inspection and all needed to be rechecked, it would initially be at no cost. But if two of the six units had not been repaired satisfactorily by the additional re-inspection, cost the second time would be $45 ($25+$20=$45).
As for costs passed on to renters, using the six-unit example and ignoring any re-inspection costs, which should not have to be incurred, the $310 cost is spread over the two-year inspection cycle (24 months) and the six rental units for a total monthly unit cost of $2.15 ($310/(24×6)=$310/144=$2.15/unit/month).
If the property is in substantial compliance and is granted a grace year, then the costs go down on subsequent inspections even further to $1.44/month/unit ($310/(36×6)=$310/216=$1.44/unit/month).
Lyons said if the $40 registration fee were also amortized over two years, that would add a total of 28 cents/unit/month for a total of either $2.43/unit/month or $1.72/unit/month.
The most expensive scenario is a single unit property that is not in substantial compliance and needs re-inspecting every other year. In that case, the cost per rental unit/month is $4.58 ($110/24=$4.58). If the property qualifies for a grace year, the monthly cost drops to $3.06 ($110/36=$3.06).
Large apartment complexes are at the least expensive end. For a 60-unit complex -- Hillcrest has 66 apartments -- inspected every other year, the cost per unit per month is $1.72. If a one-year bye is earned, the cost falls even further to $1.14/unit/month. "From this it can be seen tha the monthly cost per unit will range from a low of about $1/unit/month to a high of about $4.60/unit/month," the mayor said. "We believe that the costs being charged by this proposed ordinance, $2 to $5 per month, are fair and reasonable and are a very modest price for a renter to pay to be assured that their home is both safe and well-maintained. However, if there are substantially inadequate properties that may cost thousands of dollars to make them safe and sanitary, or if property owners see this as an opportunity to significantly increase rents and blame the city, then that is another matter entirely."
It's true only about half of Michigan towns have rental property inspection programs, Lyons acknowledged, but "we've spoken to a number of cities which do have similar ordinances and they all agree that those ordinances are an important tool for use in maintaining their neighborhoods. This City Council and administration are dedicated to improving all aspects of our community. An important part of any community is the condition of its housing. We feel that this ordinance will play an important role in assuring safe, sanitary, well-maintained housing for all of Dowagiac's citizens."
Three "critical criteria" the mayor identified for this program are:
It's assumed that after the first three years that the reduction in annual inspections as a result of the clean properties being given a grace year will allow elimination of the part-time position and a subsequent expense reduction. It will, however, reduce revenue as well.
It's true that not cooperating with inspections can lead to the city getting a warrant to enter the property. "For this ordinance to be effective, meaningful and fair, it must be mandatory for all rental units and there must be a way to assure that inspections take place," Lyons said. "It should be noted, however, that existing codes, even without adoption of the rental inspection ordinance, allow the city, with just cause, to obtain a warrant to inspect property."
Anyone who feels they are not treated fairly have the recourse of appealing to an independent five-member board comprised of non-city employees.
Those involved with certain federal and state programs that already require property inspection do not need city inspections on top of those. There is a provision in the ordinance providing for the city inspection to be waived if a comparable federal or state inspection exists. However, the waiver only applies to actual units that were inspected.
If someone had a 60-unit property and a random inspection was conducted on five, only those five units that were actually checked would qualify for the waiver. The remaining 55 units must still be inspected. Inspection fees are paid at the time it is performed.
To those who complain that their property won't pass code and would require several thousand dollars of repairs to bring it into compliance at a cost that would be passed on to tenants who are having trouble making their payments now, Lyons responded, "The community has been very loud and clear in their calls for improvements in our neighborhoods. When a neighborhood has a substandard housing unit, it negatively impacts th ehousing values and, ultimately, the quality of life in the entire neighborhood. While it's unfortunate that people have financial problems, substandard, unfit, housing is not an appropriate solution to those problems. The negative impact on a neighborhood by substandard housing is simply too great to continue. Quite frankly, if your business plan depends upon your properties being substandard in order to make money, we'd prefer that you divest yourself of your property holdings in Dowagiac. That's being as blunt as I can be. There's no way to sugarcoat that issue."
Lyons offered an unscripted "personal aside. Over my 5 1/2 years as mayor, I have heard probably more than any other single complaint from constituents of substandard properties in their neighborhoods. Are all of them rental properties? No, they're not. I understand that, but probably the majority of them are. I've also stood on my front steps at 8 o'clock on a cold winter night and explained to a TV camera crew why two young boys died in a house fire. Would they have been saved if our rental property inspection ordinance had been in place" in January? "Think about that when you're complaining. It had a tremendous impact on me."
A sentiment that cropped up again and again among those who otherwise objected to the proposed ordinance as an "intrusive" privacy violation was to go further and regulate and inspect owner-occupied dwellings. "There are several important distinctions between the two," Lyons pointed out. "Rental properties are a commercial enterprise. Where public health and safety are an issue in commercial ventures, local governments clearly have the legal authority to regulate those ventures. Local goverments do not have the legal authority to enter a private, owner-occupied facility without reasonable suspicious or just cause. The other issue is that, as a general rule, rental properties tend to have more health, sanitation and maintenance issues that negatively impact a neighborhood than do owner-occupied dwellings."
Another frequent question is, "Why are you doing this at all? You know who the good landlords are and who the bad ones are. Why don't you just go after the bad ones and leave the good ones alone?"
The mayor answers, "It's important that any regulatory effort apply equally to everyone within the regulated class. People change and circumstances change. What may be a good property today may be run down and in need of repair in five years. A discretionary philosophy is also dangerous because it opens city employees up to charges of discrimination because they chose to inspect one property and not another. Think of this in the same way as the health department inspecting restaurants. Restaurants are registered, licensed, pay a fee and are regularly inspected to insure public health and safety. This is no different. Besides, knowing that you will be inspected is an incentive to make sure that your property is well-maintained. If the certainty of an inspection is removed, so is much of the incentive for improvement. An additional consideration is the improvement both in property values in general as neighborhoods improve and the extra value implied in any given property that has a history of clean inspections."
Building Official James Bradford estimated Dowagiac contains 30 houses "in serious trouble." Fifteen "probably could be sold and would be easily repairable. The other half, due to "the extent of damage," could be demolished. "It's a small number. I can assure you that the last thing I will do in my capacity is go to my boss and tell him I have 15 or 20 living in the streets. That's not going to happen. Landlords are going to fix it up or they're not going to rent it under this code."
Glenda Gibson, a member of the Rental Association, recalled a fall meeting advising landlords of a $35 charge for regisration and inspection. "I'm wondering what happened between then and now that you've jumped it up three times that much."
City Manager Bill Nelson said the figure that 39 percent of Dowagiac's housing stock is rentals comes from the 2000 Census.
Bill Lorenz said, "I support the goal of improving the city. I can't argue with that. What I do argue with is the particular ordinance you're trying to use. It's an absolutely terrible implementation for improving the city. You're forcing inspections on all apartments -- whether they need it or not. Mr. Bradford said he thinks there are about 30 bad properties. You're going to inspect 1,000 to go after the 30. That doesn't make sense. Go after the bad ones. I disagree with internal inspections where they're not warranted. If the building looks bad on the outside, you can kind of assume it's not so good on the inside. I would support inspections for cause -- not for the sake of inspections. Go after the ones tha need it." "It's grossly unfair the way fees are being imposed," Lorenz added. "You're singling out landlords and imposing fees on them when the benefit is to the landlords and all the other residents of the city. Everybody is benefiting from improving the properties of this city. Therefore, you distribute the fees over the entire city. It's unfair to single out a small segment of the population and then benefit everybody. The other thing I don't like this ordinance is the use of a two-step process on the fees. First, you pass an ordinance saying you're going to charge us, but don't tell us how much. Next, you're telling us you'll adjust fees as required so you break even. You've already pointed out that by the third year you're going to have to cut staff. Should we believe that? Does the city cut staff?"
Lorenz also reiterated his contention that the rental inspector "is a half-time job at best, but the key items are the inspections are unnecessary and you ought to go after properties that need inspection and you can do it for cause. I don't think anyone would have a problem with that. Go after the bad landlords."
County Commissioners James Sayer, R-Dowagiac, and Minnie Warren, D-Pokagon Township, both attended due to the amount of feedback from their constituents. "Some renters are terrified," she said. "They want to know what beautifying the city has to do with the inside of their house. They feel like it's an invasion of privacy. The other question is, if landlords do not repair their property and it's condemned, where are the tenants going to be relocated?"
Cedar Sands' representative from Lansing oversees 11 properties -- nine in Michigan -- and three do inspections. None require a fulltime position. In Centreville, 48 units were inspected in half a day.
The ordinance is being revised so compliance certificates do not need to be posted.