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A. Residential Licensing Program UpdateEngineering Create an environment for innovation and change -- building on our strengths, Phone: 952.227.1160 MEMORANDUM CITY OF TO: Todd Gerhardt, City Manager C litll�11t1�SE • Review Rental Licensing Program Finance FROM: Kate Aanenson, AICP Community Development Director 7700 Market Boulevard PO Box 147 DATE: May 23, 2011 y�J Chanhassen, MN 55317 created, how it is working and potential modifications to the current ordinance. Park & Recreation SUBJ: Review of Rental Licensing Program Administration BACKGROUND Phone: 952.227.1100 Fax: 952.227.1110 One of the priorities in the City Council's Key Financial Strategies was to review the Recreation Center 2310 Coulter Boulevard rental licensing program. The strategy is stated below: Building Inspections and welfare. As a part of the rental licensing ordinance, a Conduct on Premise Phone: 952.227.1180 Competitiveness Fax: 952.227.1190 to rental properties. The two issues were developed independently but have come Engineering Create an environment for innovation and change -- building on our strengths, Phone: 952.227.1160 creativity and skills. Fax: 952.227.1170 • Review Rental Licensing Program Finance Phone: 952.227.1140 Fax: 952.2227.110 Following is a discussion of the how and why the rental licensing program was created, how it is working and potential modifications to the current ordinance. Park & Recreation Phone: 952.227.1120 BACKGROUND Fax: 952.227.1110 The rental licensing program was adopted in part to ensure that all rental dwelling Recreation Center 2310 Coulter Boulevard units meet building codes, are properly maintained, and protect public health, safety Phone: 952.227.1400 and welfare. As a part of the rental licensing ordinance, a Conduct on Premise Fax: 952.227.1404 requirement was also enacted to protect public safety and abate repeated police calls to rental properties. The two issues were developed independently but have come Planning & together in the fact that a condition of the rental licensing is that the property be atural Resources Phone: l Res rce maintained. Under City Code Chapter 10, disorderly violations are any activity or Fax: 952.227.1110 conduct on rental property, which unreasonably annoys, injures, and endangers the safety and health of those living in and around the rental property. Disorderly acts Public Works include loud parties or noise disturbances, disorderly conduct, alcohol violations, 7901 Park Place prostitution, gambling, weapons violations, and illegal drugs. If law enforcement Phone: 952.227.1300 officials respond to three or more nuisance violations of the same or similar nature Fax: 952.227.1310 within a 365 -day period of time at a rental dwelling unit, then the rental license for the unit in violation may be revoked or suspended. Senior Center Phone: 952.227.1125 Fax: 952.227.1110 The ordinances are based on models from other communities and from the "International Property Maintenance Code" used by building officials throughout the Web Site United States. www.ci.chanhassen.mn.us Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow Todd Gerhardt Rental Licensing May 23, 2011 Page 2 of 7 Conduct on Licensed Premises The objective of the ordinance is to serve as a problem - solving tool, and to aid in reducing chronic nuisance and disorderly behavior that occurs on rental properties. The ordinance is designed to assist landlords when dealing with problem tenants, therefore reducing excessive use of police resources and maintaining the quality of life in and around rental properties. In 2000 the City initiated a voluntary crime -free multi - family housing program. The City's Crime Prevention Specialist works with multi - family building owners and managers to reduce crime in apartments. Two projects participate in the program. Between October 2003 and January 2010, a total of 53 violations were documented. The most recent violation citation issued was on January 1, 2010. Of the 53 violations documented, four were "second- strike" violations that occurred at the same unit /property within 365 days. There have not been any "third- strike" violations documented. The most effective component of this ordinance has been having a process to track and notify landlords when the police have responded to a nuisance or disorderly complaint on their property. When the property owners are unable to monitor the property, such as when they live out of state, the tracking process is especially helpful as a means to notify them when a crime has occurred on their property. Upon being notified of violations, the feedback from landlords has generally been that of appreciation for the information. DISCUSSION With today's economy there is the potential for more rental units because homeowners who have not been able to sell have chosen to rent their property instead, or the properties become bank - owned and are subsequently rented. In addition, the City's housing stock is aging. The rental license is tied to the property maintenance code thus helping to preserve the value of our housing stock. Finally, the number of complaints regarding rental units has increased; however, to date there has not been a revocation by the three - strike rule. The Conduct on Premise requirement has been an effective tool to get the responsible party to monitor behavior. Rental Licensing and Conduct on Premise Members of the rental housing community and Chanhassen residents made up the advisory committee that reviewed and provided input on the conduct on premise portion of the ordinance. Participating staff were Crime Prevention Specialist Beth Hoiseth, Sgt. Dave Potts and the City Attorney. Staff and committee members met to resolve concerns with the proposed ordinance. Property Maintenance The licensing of rental properties requires compliance with the property maintenance code. The property maintenance code requires all property to be maintained, not just residential property. The code was developed using the "International Property Maintenance Code 2000" and making Todd Gerhardt Rental Licensing May 23, 2011 Page 3 of 7 modifications where appropriate to the City of Chanhassen. The ordinance covers exterior and interior maintenance. Rental Licensing Fee The fee for licensing a rental unit is $50 every two years. The fee charged is needed to cover the costs of administration of the ordinance. On October 14, 2002, Ordinance 340 was adopted adding Article IV to Chapter 7 of the City Code for Property Maintenance, and Ordinance 341 was adopted adding Article VII to Chapter 10 of the City Code for Rental Dwelling Licenses. On December 8, 2003 the rental license fee was revised to institute two -year licensing per Ordinance 358. LICENSES, UNITS AND INSPECTIONS Rental License Data: • Total Units in 2010 — 956 • We license every two years. 0 2009 rental licenses issued — 104 Number of units in 2009 — 697 0 2010 rental licenses issued — 102 Number of units in 2010 — 259 • Total licenses left in the program as of May 13, 2011 — 219 (We have people drop in and out all the time.). • Inspections for 2009 — 150 • Inspections for 2010 — 150 (These are estimates; about half required a second /third inspection). The 2010 Census does not have the tenure for the number of rental dwelling in the city available. Year Licenses Units Fees 2003 58 447 $22,350 2004 39 38 $1,900 2005 89 519 $25,950 2006 29 418 $20,900 2007 82 656 $32,800 2008 56 145 $7,250 2009 104 697 $34,850 2010 102 259 $12,950 FREQUENTLY ASKED QUESTIONS City staff receives numerous questions regarding who needs a rental license and how a renter is determined. Todd Gerhardt Rental Licensing May 23, 2011 Page 4 of 7 1. What is the definition of a rental dwelling? A rental dwelling means any dwelling with one or more living units. A single - family home can be a rental unit if any room or portion thereof contains living facilities, including the provisions for sleeping, eating, cooking and sanitation for more than one family. It does not include hotels, motels, hospitals and homes for the aged. The key to a rental unit is that the owner of the residence does not live on premise or has created a separate dwelling unit in the home. 2. What is the definition of a family? Family means one or more persons occupying a premise and living as a single, relatively permanent housekeeping unit, as distinguished from a group occupying a boarding house or a hotel. 3. What is considered renting? When one receives payment in exchange for the use of one's property by another, or one that pays rent for the use of another's property; a tenant. 4. What constitutes a dwelling unit? Dwelling unit means one or more rooms which are connected together as a single unit constituting complete, separate and independent living quarters for one or more persons, physically separated from any other room or dwelling unit which may be in the same building and containing permanent cooking, eating, sleeping and sanitary facilities for the exclusive use of a single family maintaining a household. 5. What is a considered a rental dwelling unit? The term "rental dwelling" shall mean any rental dwelling with one or more living units. "Rental dwelling" does not include hotels, motels, hospitals and homes for aged. 6. What is house sitting vs. renting? House sitting is when a property owner has someone stay at their home while they are away for an extended period of time. Generally, such a situation is not considered renting. 7. If I have a roommate, do I need a rental license? How is roommate defined? You do not need a rental license if the owner of the home lives on the premise and the dwelling is functioning as a family unit. Rooming unit. Any room or group of rooms forming a single habitable unit occupied or intended to be occupied for sleeping or living, but not for cooking purposes. Todd Gerhardt Rental Licensing May 23, 2011 Page 5 of 7 Family means one or more persons occupying a premise and living as a single, relatively permanent housekeeping unit, as distinguished from a group occupying a boarding house or a hotel. 8. Is having a boarder require a rental license? Is this different from a roommate? The city does not have a boarding house permit. You are allowed to have roommates as long as you are living as a family unit without separate kitchen facilities. Let for occupancy or Let. To permit, provide or offer possession or occupancy of a dwelling, dwelling unit, rooming unit, building, premises or structure by a person who is or is not the legal owner of record thereof, pursuant to a written or unwritten lease, agreement or license, or pursuant to a recorded or unrecorded agreement of contract for the sale of land. Operate. As used in this article, the term "operate" means to charge a rental charge or other form of compensation for the use of a unit in a rental dwelling. Family means one or more persons occupying a premise and living as a single, relatively permanent housekeeping unit, as distinguished from a group occupying a boarding house or a hotel. 9. Would we require a rental license if it met the definition of a boardinghouse, i.e., three or more boarders /roommates? The city does not have a boarding house permit. You are allowed to have roommates as long as you are living as a family unit without separate kitchen facilities. Family means one or more persons occupying a premise and living as a single, relatively permanent housekeeping unit, as distinguished from a group occupying a boarding house or a hotel. Rental dwelling. As used in this article, the term "rental dwelling" shall mean any rental dwelling with one or more living units. "Rental dwelling" does not include hotels, motels, hospitals and homes for aged. Rooming unit. Any room or group of rooms forming a single habitable unit occupied or intended to be occupied for sleeping or living, but not for cooking purposes. 10. How would the city determine if a property was producing income or renting to non - homesteaded or to family member? This is probably the most difficult thing to enforce. If some state that they are not renting their home or is renting to a family member, they are not required to get a license. This can lead to neighbor complaints regarding maintenance and conduct on premise. Todd Gerhardt Rental Licensing May 23, 2011 Page 6 of 7 ENFORCEMENT What are the City's options if someone does not apply for a license or comply with other requirements of the ordinance? While the city requires a rental license, getting landlords to comply with the licensing requirement and maintenance responsibility is something else. Currently, there are numerous properties that the city is trying to get the owner to acknowledge requests for rental licensing. Some are given a provisional license and we are trying to set up an inspection or a re- inspection. There are also numerous properties that the city will be mailing letters to that staff believes are rental properties. When a property owner denies that they have rental property, the city must prove that they are renting the property in order to require an application and payment of fees. Many owners state that their children are living in the property and they are not paying rent. Others state that they have roommates with whom they share household expenses. Based on City Code language, it can be argued that a property must be issued a provisional license as soon as they make application and pay their fee. Provisional licenses were intended as a transition when the ordinance was adopted. Should this part of the ordinance be deleted? Section 20 -219 (1) Provisional license. Dwellings required to be licensed, which are existing and in operation prior to the effective date of this ordinance (January 1, 2003), may continue to operate with a provisional license. A provisional license will be issued upon receipt of application and payment of fees. The provisional license shall be valid until a license is issued or it is determined that license requirements have not been met and the city will not issue a license. To more effectively enforce the rental license requirement, the City will need to develop a definitive interpretation of a rental unit. A second issue with the current ordinance is that any landlord who does not comply with the rental license regulations must first be brought to City Council to have their rental license revoked. Section 10 -225 (d) After a hearing the city council may suspend or revoke the license if they deem it necessary to protect the public health, safety or general welfare. Unless we receive voluntary compliance, the city will need to take the property owner to district court to get compliance with the ordinance. RECOMMENDATIONS 1. Modify and eliminate any ambiguity in the definitions. Todd Gerhardt Rental Licensing May 23, 2011 Page 7 of 7 2. Eliminate provisional license. A license should only be issued after an inspection and compliance with the ordinance. 3. Revocation Process. The revocation should be administrative and then if appealed would go to the city council. 4. Enforcement and compliance. The ability to not issue a license and notify owners that they are in violation with the city code would lead to greater compliance. g: \plan\ka \financial strategies\rental license.doc