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Item 8FAGENDA ITEM # 8F OCTOBER 27, 2008 STAFF REPORT City of Atlantic Beach Commission Meeting AGENDA ITEM: Rental Inspection Report DATE: October 20, 2008 SUBMITTED BY: David E. Thompson, Asst. City Manager Dale Hatfield, Mayport Road Coordinator Mike Griffm, Building Official Mike Classey, Police Chief Alex Sherrer, Code Enforcement Officer Erika Hall, City Planner PURPOSE: The purpose of this report is to discuss the feasibility and desirability of implementing a successful rental inspection program for the City of Atlantic Beach. Our basic goal is to assure safe and healthy living conditions while improving the quality of rental housing in the community. At the conclusion of the report, staff will provide options and recommendations as to how to best address the problems associated with residential rental properties in the future. BACKGROUND: Most of the rental properties in Atlantic Beach aze maintained and operated in a lawful, professional manner. The majority of rental properties handled by professional property management companies aze typically self-regulated, and they typically set high standards relative to the selection of tenants and the condition of the properties. Many private landlords effectively manage neazby rental units where they can keep an eye on the tenants and the property. In most cases, the landlords and tenants live by established leases and agreements, and the quality of the housing remains high. However, it is the exceptional cases that have raised the issue of implementing controlled regulation for rental properties in Atlantic Beach. In the past, a number of residential rental properties have been found to be in very substandard and sometimes dangerous conditions. Some of the housing conditions were so unsafe and unhealthy that tenants had to be relocated and the buildings were eventually demolished. In some cases, the landlords were responsible through their neglect and lack of maintenance; while in other cases, the tenants virtually destroyed the buildings through abuse and carelessness. These extreme cases revealed that there were some deficiencies in the City of Atlantic Beach processes for identifying and addressing problems in rental housing. Extreme Cases Tenants: In some cases, tenants are desperate for immediate, inexpensive housing. These tenants can be exploited by landlords who will provide substandard housing to people with no deposits, background checks, or leases. People who are addicted to drugs, mentally ill, and/or engaged in other illegal activities aze particularly vulnerable to abuse. If the tenant complains about housing conditions, then the tenant is AGENDA ITEM # 8F OCTOBER 27, 2008 threatened with immediate eviction. As a result, desperate people live in unhealthy conditions because they feaz being kicked out on the street. Extreme Cases Landlords: Some citizens have become landlords due to financial necessity or as a consequence of the real estate market. As a result, they have no idea how to effectively screen applicants or how to manage rental property. In some cases, well meaning landlords have fallen victim to unscrupulous tenants who have great "sob stories." The new tenant is allowed to move in with no deposits, no leases, no background checks, and no rent paid. Although they promise the payment is just a few days away, the money is never collected by the landlord. Finally, the landlord concludes that the tenant must go, but the landlord has no idea how to evict the tenant. By the time the landlord completes the eviction process the landlord has lost many months of rental income while the tenant has lived rent free, and possibly damaged the housing. Although rental problems may exist in any part of the City, it is appazent that the Mayport Corridor is a higher risk area for substandard rental units due to the low income housing availability. It is this azea that typically generates the highest number of complaints from citizens and officials. In the past, the City has not taken proactive measures to address the problems with the rental housing. Landlord/Tenant disputes and disagreements have typically been handled as civil matters. This essentially means that the dispute is between 2 or more individuals, and the City has referred the cases to other agencies or organizations to resolve the disputes. Only in the most extreme cases have Atlantic Beach employees gotten directly involved in the resolution of such conflicts. As a result of this lack of regulation and enforcement, both landlords and tenants have been victimized on occasion. Options: Various local governments have implemented different types of rental programs after considering the unique factors that help define the communities. For example, a city that has universities and colleges with 40,000 rental units may promote a very aggressive rental inspection program. Conversely, a small, high income community with no "affordable" housing may choose to completely ignore the local rental properties and let the private home owners associations provide any regulatory oversight necessary. 1. Do Nothing: Doing nothing is always an option. However, due to some extreme cases that have arisen in the past, it appears that this is not feasible if we wish to reach our goal of safe and healthy rental housing. 2. Complaint-Based Rental Inspections: These programs can be effective in addressing rental inspection problems in a community. Essentially, this type of program establishes a process for accepting, investigating and resolving complaints in rental housing. 3. Complaint-Based Targeted Rental Inspection Program: The primary difference between this and #2 above is the focus of the program. A tazgeted program AGENDA ITEM # 8F OCTOBER 27, 2008 recognizes where the most prevalent problems exist, and the program focuses on the problem azeas. 4. Universal Rental Inspection Program: This type of program is designed to identify and inspect every rental property in the jurisdiction. This requires staff to identify every rental property in the jurisdiction, regardless of the condition or history of the property management at the various locations, and conduct inspections on some regular basis. In some communities, every rental property is inspected every year, while others only inspect a percentage of rental properties every yeaz. Pros and Cons 1. Do Nothing: a. Pros: i. It costs nothing and does not require expenditure of city resources. ii. The lack of change does not create any pazticulaz public turmoil or dissent. b. Cons: i. It does not address the problems or accomplish the goals. ii. The rental housing stock may deteriorate at an accelerated rate creating an increased blighting affect in some neighborhoods. 2. Complaint-Based Rental Inspections a. Pros: i. It only affects locations that aze alleged to have code violations. It does not require responsible and professional landlords or property managers to pay fees and schedule inspections that are unproductive and may be seen as unnecessary. ii. It should result in a more informed citizenry including tenants, landlords, and property managers. iii. Although this type of program will require the commitment of city resources, it is feasible that the workload could be managed within the existing staffing without hiring additional employees or requiring additional, universally applied fees. Extreme violations and repeat offenders may be assessed fines that may help to cover administrative costs. Many cities and counties throughout Florida pay for effective and efficient code enforcement staff through fines and penalties collected against code violators. iv. This type of program is less intrusive and less expensive than a universal program, and as such, it should be less controversial to the public. If the program does not reach its desired goals and AGENDA ITEM # 8F OCTOBER 27, 2008 objectives, then the City can always shift to a universal program at some point in the future. v. This type program does not give the appearance of overregulation. b. Cons: i. Tenants may not make complaints and they may tolerate living in "bad" housing conditions due to feaz that a complaint could result in retribution/eviction from the landlord. It is probable that some problem properties will be missed. ii. This will require staff to design a process for educating citizens, and for accepting, investigating, and resolving complaints. Such a process will require the dedication of city resources to manage the program. iii. Since all rental properties will not be inspected, the City will never be able to conclusively know that all rental properties are in compliance with City standazds. 3. Complaint-Based Targeted Rental Inspection Program a. Pros i. In addition to #2 above, this type of program will be more focused on the problem areas of the City. As a result, the City will not be expending unnecessary resources in azeas that clearly aze not in need of such scrutiny. And, the City will be able to focus the resources where the problems are most likely to exist. b. Cons i. In addition to #2 above, the City will be less likely to find substandard properties that may exist outside of the targeted azea. 4. Universal Rental Inspection Program a. Pros: i. By inspecting every rental property in the City, people can be assured that virtually 100% of the rental properties are up to the City standazds and codes. b. Cons i. This is the most expensive assignment of City resources. It will require hiring additional personnel for inspections and administration. ii. This is the most controversial type of rental program, and it is likely to meet with the most resistance from the community. Many will perceive the fees and inspections to be "unfair" to the responsible and professional property managers who have maintained and managed their properties without violations or incidents. AGENDA ITEM # 8F OCTOBER 27, 2008 iii. There is no data that "proves" that a universal program is more effective than acomplaint-based program. c. Other i. The costs of this program can be offset by implementing licensing fees. However, research has suggested that the fees established by local governments typically to not cover the costs of the universal programs. BUDGET: The impact on the City Budget may vary significantly depending on the course of action adopted by the City Commission. RECOIVIIVIENDATIONS: To address this problem, City staff members including Mayport Road Coordinator Dale Hatfield, Police Chief Mike Classey, Code Enforcement Officer Alex Sherrer, Building Official Mike Griffin, Principal Planner Erika Hall, and Assistant City Manager David Thompson compiled information on rental inspection programs throughout the country. They then attempted to determine the extent of the problem in Atlantic Beach primarily through anecdotal evidence and experience. After examining this information, the group came to the following recommendation for the City Commission: The group recommends aComplaint-based, Targeted Rental Inspection Program at this time. This program would utilize existing personnel and community resources to educate landlords about the best business practices for property management, and educate tenants relative to their rights to fair treatment and housing. It would also establish a systematic complaint process that should result in the inspection of problem rental properties by appropriate city staff members. Although the program will focus resources in the Mayport Corridor area, it will be applicable throughout the City. The program will be evaluated at six (6} months and one (1) year, and in the event that this program does not achieve the goals of the City, a universal inspection program may be recommended, ATTACHMENTS: See Addendum discussing Complaint-based, Targeted Program REVIEWED BY CITY MANAG~_~, ITEM NUMBER: