Monday, July 29, 2013

Rental Health and Safety Pushed into 2014

By a vote of 6-0 (with Council Member Fleetwood absent) the Bellingham City Council agreed on June 17th to place the issue of rental licensing and inspections for discussion at the 2014 budget priority planning session. Largely because the City Council failed to place rental health and safety as a budget priority at its planning session for 2013, the Mayor was able to claim that the city did not have funds to start up any new program during the 2013 fiscal year without identifying offset funds from another program. Fiscally speaking, the Mayor is correct. She has to work with the budget that the Council approves. That being said, safety and health is an urgent consideration and such issues should not be delayed.  Click here to see the minutes of that council meeting. 

Above left you will find a copy of the motion that was passed asking the mayor to allocate resources to a health and safety program for rentals in the 2014 budget. I have argued previously to the council and the mayor that if we can afford $1.5 million per year to fund a museum department, we can find sufficient monies for start-up costs for a licensing and inspection program. After that, the program can easily be self-supporting from registration fees collected yearly from landlords. A mere $2 per month charge per rental unit, less than your simple latte at a downtown coffee shop, will bring in over $400,000 per year to run effective licensing and inspection of all of the city's 17,000 rental units. This will ensure long-term viability at an manifestly low cost.

That being said, there are several aspects of the council's proposal that I find troubling. Under section II "Outcomes or options to be included or considered" is (number 7) "Consider a self-certification option as part of any inspection program".  This option sounds reasonable until examined more closely. Such an option would require that a landlord sign and submit a certification that his/her rental units are in acceptable condition given a list of areas to be inspected, such as the electrical system, structural integrity, etc. I am not a landlord but even I would be very hesitant about signing such a document unless I had the advice of an expert who has already examined the rental unit. To do otherwise is to invite disaster in the way of a lawsuit should an accident happen in an area declared (by oneself as landlord) acceptable. No landlord, unless he/she happens to be a certified home inspector, has the knowledge to self-certify. So this "option" of self-certification effectively forces landlords to have their units inspected by a professional - and at their own expense. This defeats the purpose of an inspection program run by city inspectors which is provided for all landlords who pay low and reasonable fees to a common program.

Another problem with relying primarily on private inspectors for periodic inspections is that the city neither gains nor retains any institutional knowledge of the city’s rental units. Paper reports from private inspectors are no substitute for the experience of a city inspector whose employment is, for all intents and purposes, long term. The Mayor and the Planning Director will have no group of in-house code enforcement officers to whom they can go for experiential knowledge.

The use of private inspectors is allowed under law. In fact, this was one of the challenges to the Pasco licensing ordinance, that city inspectors would be the sole inspectors. The landlords there wanted the option to hire their own. They have that option now and is written into the state law passed a few years ago. I am not sure how that serves the landlords since, as I mentioned above, a properly structured program with a revenue neutral fee system (the program fees will pay for the program) will spread the cost of inspections over all landlords and result in much lower per inspection costs. The Mayor and the city council are underestimating the capability of a small team of city inspectors over time. Again, I bring up Pasco, a a city that has the institutional experience of these inspections that are based on an inspection checklist easily adoptable without re-inventing the wheel. We should also explore their cost data and performance data regarding the time necessary for an inspection of a unit. The Code Inspector in Pasco told me that one inspector could do 8-10 inspections per day.

Reliance primarily on private inspectors for the verification of our rental units is a de facto privatization of an inherently governmental function, that of health and safety. (Fire departments were once a private sector function and we know how that worked out.) Such a reliance invites collusion between the inspector and the inspected while depriving all landlords of a well supervised and even-handed inspection regime whose inspectors are accountable as city employees.   I have made these concerns available in an email to the Mayor who had expressed to me her desire to have an licensing ordinance that relies primarily on private, certified inspectors.  She has not, as yet, responded to my comments.

Item 8 Under section II "Outcomes or options to be included or considered" also gives me pause. It reads "Consider inspection of sample units as an 'audit' function". Although this may sound reasonable, this should not be an option at the outset of any safety and health program. An audit option may be adequate after an inspection program of all units has been operating for some time, however, Bellingham's rental stock HAS NEVER BEEN INSPECTED. This means that the likelihood of violations in thousands of units is very high. In fact, the two surveys run by Western Washington Students have demonstrated that very situation. (See these reports here and here). Audits will not do the job up front.

With respect to part III "Guidelines for Creating a Least-Cost Program" there appears to be some hidden agenda items in the several guidelines enumerated.   Here are my thoughts (in italics) following each of the numbered items:

1. Keep fees as low as possible to ensure that a program does not unduly impact the rental market.    The fee, although not having been set yet, has widely been spoken about as being about $2 per month per rental unit.  This cannot, in any sense, be construed as being "unduly" impactful.  Even a $3 per month/unit fee is not going to break the bank. So to what does this "guideline" refer?  The intent is unclear.  

There are already impacts on the rental market every year as landlords raise their rates if for no reason other than they can do so.  After all, the market here is tight (low vacancy) and renters have little bargaining margin, if any at all.   [Perhaps the city council might want to take up that issue at a later date.]  Absent a declaration from the council, one might imagine this guideline would have to do with the cost of repairs to units in order for them to be habitable.  The rental industry has placed fear in the hearts of some council members that these inspections might occasion prohibitively expensive repairs in order for the units to be safe and healthy.  An odd position in that landlords already claim that there are only a few bad apples.  Also odd in that nobody is claiming that the council wants to use the International Building Code book in its entirety to seek out unconforming bannister or window heights and mandate expensive remodeling.  Council Planning Committee head, Jack Weiss, has stated this during several work sessions of the committee.

2. Consider a minimum three-year program with sufficient data collection mechanisms to provide information to Council for a program extension, if necessary.   There is no reason to take the time and effort to register and license rental properties for a three-year program that has to be re-authorized by a future council - even if it proves successful.  If we are to establish a rental health and safety program it should be permanent since rentals come and go as landlords come and go.  Constant surveillance is necessary.  The health department does not inspect a restaurant kitchen once and then abandon all further efforts to ensure the owner adheres to regulations.  In my conversations with the rental code enforcement officer in Pasco, he indicated that after the initial inspection of all the city's rental units, the inspector returned to previously inspected units after 2 years and found that some units had already begun to deteriorate. 

3. Focus attention on properties with violations to reduce burdens on other owners.  This guideline is totally inexplicable as I have said time and again in this blog.  Nobody has ever satisfactorily articulated how this methodology will play out.  The presumption is that the "bad apple" landlords will somehow be "outed" and that then the city can then "focus attention" on them.  With thousands of single family home rentals and small apartment buildings, there is no mechanism I can imagine that will magically expose the bad ones except an inspection of each unit.  Anything else relies on spot checks (that will miss dangerous units), complaint driven programs (the city's current ineffective ordinance) or self-certification (a poor method as I explained above).  

And just what are these "burdens" that will be place on the "other owners"?  That once every three years at the most they must open their units for inspection to ensure the health and safety of the tenants?  That they may have to actually spend money on repairs to protect those who are paying them money to live in a rental unit? That they have to renew a license each year?

4. Emphasize a program educational approach that helps prevent health and safety violations from occurring through encouraging proper and frequent owner self-inspection and maintenance. The emphasis ought to be on an inspection program that is supplemented by an educational element. The difficulty with any such education program, a poor substitute for code enforcement entering the property, is reaching the target audience. The landlords can be contacted through their professional organizations such as the Whatcom Realtors or the Northwest Rental Owners Association. There are no such groups available to reach tenants who are a very diverse population. Student renters can be reached through the various educational institutions and through student government bodies but even this presents a challenge in that every 3-4 years there is an entirely new cohort of thousands of young student renters as they pass through the university/college system.

There is still much in the way of discussion to be had on an effective program to license and inspect our rentals for the health and safety of the tenants.  This discussion should be an active part of the coming elections for city council.


Anonymous said...

I am a small time landlord (8 units) who does all his own maintenance and I strongly oppose yet another layer of Government regulations and fees.
My rentals rates are purposely below market because i dont feel right charging top dollar. Many of my tenants happily stay for years. I act immediately on any tenants concerns because I want my tenants to be happy and to maintain my investments.
You must know here are already ordinances and regulations in place to deal with all health and safety issues for all housing. A tenant or any citizen can go tho the authorities if they perceive a problem.
If you or big brother thinks its necessary to inspect our homes then it should include all residences instead of singling out just rental properties.
Another thing, I believe that what you claim would only be 2 or 3 per month will grow and grow and be another revenue stream that the city will depend on to make up for other city needs.
What happened to the "temporary" storm water fee incorporated some 15 or 20 years ago? Its still there now increased to $10.16 plus with an additional Lake Whatcom watershed fee of $10.28

About the inspectors themselves, I have experienced various levels of competence when having building permits inspected. Sometimes a inspector would get over zealous and find fault with something that had just passed inspection by another inspector. So I fear expensive, subjective and arbitrary going beyond the scope health and safety issues.

Zonemaven said...

Thanks for taking the time for commenting.

I would suggest that you also write to the health department to demand that they forgo inspections of all restaurants. When they no longer do inspections, then take your family out to dinner on a regular basis.

At that time you will feel like a tenant in Bellingham.