Landlord Registry: Harmful or Helpful? 03/07/19 12:53:48 PM
The abandoned Yale Park Apartments sit vacant in North Omaha after a raid last September left hundreds of people homeless. The living conditions at Yale Park set off a debate over rental housing inspections at both the state legislature and city council. (Photo by Scott Stewart)
Landlord Registry: Harmful or Helpful?
By Scott Stewart
The Daily Record
A raid of the Yale Park Apartments in North Omaha last fall has sparked a statewide discussion about the appropriate role of government in rental housing.
Hundreds of Myanmar refugees were placed into emergency shelters after the apartment complex was deemed uninhabitable in September. Nearly a hundred complaints were filed by residents, who had been living alongside bedbugs, rodents and mold. A majority of units were found to have gas leaks.
Restoring Dignity, a refugee advocacy group involved with the inspections and subsequent evacuation of residents, describes Yale Park as the “tipping point” of a housing rights movement in Omaha. Several legislative proposals, both at the municipal and state levels, have sought to improve housing conditions by instituting inspections or otherwise strengthening tenant rights.
“Unsafe housing is pervasive in our low-income housing market, leaving countless members of our community with no option but to endure squalid conditions just to keep a roof over their families’ heads,” Hannah Wyble, founder and executive director of Restoring Dignity, said in a news release.
Opponents of those proposals have argued there aren’t many bad actors in the community and that an inspection requirement would be ineffective, costly and ultimately result in higher rent for those most in need of affordable housing, which could increase homelessness or the need for government subsidies.
The Metropolitan Omaha Property Owners Association, which represents about 500 independent rental property owners, instead encourages using existing remedies, such as code enforcement complaints and notification of needed repairs under the Nebraska Residential Landlord Tenant Act.
“The vast majority of landlords are good stewards of their properties,” association president John Chatelain said in an opinion piece sent to The Daily Record and other Omaha media outlets. “There is a place for government oversight in our industry, but there is already ample regulation to protect the interests of everyone involved.”
Those remedies can be challenging for renters. The Landlord Tenant Act, for example, allows a tenant to give “notice” demanding required repairs. If those repairs aren’t made in 14 days, the renter can terminate their lease 30 days after giving the notice.
The renter may also be able to sue for damages or seek a court order to make repairs, if they can afford to access legal services.
Renters without the resources – the money, time and risk tolerance – to access the legal system may not have as many options and may opt to tolerate substandard conditions instead.
Gary Fischer, general counsel at Family Housing Advisory Services Inc., said renters often fear eviction and retaliation, and he said they shouldn’t have the responsibility to ensure adequate oversight of Omaha’s rental market.
“For those who cannot afford to move, the potential that they could find themselves without shelter or in debt, is not worth the risk of filing a complaint,” Fischer said in a news release.
Housing advocates have called on the City of Omaha to create a landlord registry and begin periodically
inspecting rental units. Advocates have pointed to other cities, such as Minneapolis, as well as to Iowa’s requirement that cities of 15,000 or more people have rental inspections. La Vista also has a program that advocates say could serve as a model for proactive inspections in Omaha.
However, inspection programs in La Vista and Council Bluffs have faced scrutiny. La Vista’s inspections lagged to the point of being nearly nonexistent in 2014 after a period of turnover and litigation, although they’ve since resumed, and Council Bluffs recently was ordered to refund more than $230,000 in inspection fees to landlords after a court found the fees collected exceeded the city’s expenses.
Litigation seeking to halt La Vista’s program did establish that Nebraska cities have the right to inspect
rental housing. The Nebraska Supreme Court ruled in 2013 that a city could inspect rental dwellings without creating a similar program for owner-occupied dwellings. The court found “the record supports La Vista’s concern that tenants are reluctant to report maintenance problems.”
Furthermore, the court found in D-CO Inc. et al. v. City of La Vista that “La Vista’s concern with unsafe conditions in rental housing and the reporting problems unique to these properties would exist even if many or most rental property owners properly maintained their properties.”
Omaha city officials have indicated a willingness to consider mandatory inspections. State Sen. Justin Wayne of Omaha introduced LB 85, which would compel Omaha to create a landlord registry and rental inspection program.
Wayne said in early February that he would delay action to give city officials time to devise their own program, but the bill could still move forward this session. Priority bills can still be designated through March 19, and the legislative session is scheduled to run through early June.
A major objection to creating a proactive inspection program in Omaha – beyond ideological arguments about the role of government or concerns over unintended consequences – is the cost to hire more inspectors and how much that would be passed along to landlords and, ultimately, their tenants.
The exact amount the program would cost is contested. LB 85 would allow for less frequent inspections for housing units that lack a history of code violations as well as the use of random sampling when inspecting housing complexes. The city would need to hire more inspectors, but how many would depend on how many inspections were made, how often they took place, how many inspections each person could complete and overall compliance rates with the registration and inspection processes.
The cost for an inspection program would be offset by fees, which would likely be collected annually when landlords register their properties with the city. Landlords have said additional overhead costs to accommodate inspections, as well as registration fees, likely would be passed along in rent increases.
Council Bluffs currently charges annual registration fees of $35 for single-family dwellings, $70 for a duplex or $25 plus $17.50 per unit for multifamily dwellings, according to the city’s website. La Vista charges annual fees of $50 for single- family dwellings or $6 per unit for multifamily dwellings, according to the city’s website. Both cities charge fee for repeated re-inspection of properties after violations.
Omaha Together One Community, a member organization of the rental housing advocacy coalition, has recommended Omaha charge $50 per year for single-family dwellings and $20 per unit for multifamily dwellings. The organization says that would generate about $2.1 million per year for code enforcement, which the group says would be adequate to pay for enough inspectors to meet LB 85’s requirements.
Dave Fanslau, planning director for the City of Omaha, estimates inspections could cost between $3.5 million and $4 million a year. An annual inspection program, going beyond LB 85’s mandate, would cost nearly $11 million a year, he said in Jan. 22 testimony to the Legislature’s Urban Affairs Committee.
Omaha has about 196,000 housing units, according to a 2017 estimate by the U.S. Census Bureau. About 77,000 of those are occupied by renters, with several thousand vacant rental units on the market. It is unclear how many of those units would be inspected each year, though, or how many would participate in registration, even if they’re compelled to do so by the threat of a fine or other legal repercussions.
Advocacy groups recently launched a new website, WeDontSlum.com, to collect photos and stories from renters living in substandard properties in Omaha. Renters can also use the hashtag #wedontslum to spotlight examples of substandard conditions on social media. Wyble, of Restoring Dignity, said the groups want to spotlight the “widespread, devastating nature of this problem.”
The website – which references the Greater Omaha Chamber of Commerce marketing slogan “We Don’t Coast” – doesn’t identify specific rental properties or landlords to maintain anonymity for those contributing examples. Its aim is to apply pressure to so-called slumlords and encourage reforms.
Gerald Reimer, co-founder of Urban Village Development, told lawmakers in Jan. 22 testimony that he believes that an inspection program could actually end up incentivizing slumlords by making it more expensive to conduct business legitimately. He compared mandatory inspections to requiring everyone report to a probation officer, even if they never committed an offense, as part of a plan to reduce criminal activity.
“I don’t believe that mandatory inspections will make a difference in preventing unscrupulous landlords
from renting unlivable or unsafe properties,” Reimer told the Legislature’s Urban Affairs Committee. “To the contrary, it may increase the problem because it will make it more profitable for the slum landlords that already play on the periphery or boundaries of our system.”
The City of Omaha plans to move forward with considering a registration program outside the mandate proposed by LB 85. Omaha Mayor Jean Stothert asked the Law Department in February to draft a rental inspection ordinance, the Associated Press reported. Stothert’s plan would create a free registration system for landlords and would target inspections at landlords with outstanding code violations.
Some Omaha City Council members have also asked for other ordinances to be drafted for alternative approaches, including modeling a registration and inspection program on La Vista’s system, according to OTOC.
A group calling itself the Nebraska Landlord-Tenant Com-mission held a news conference recently asking for a halt to those efforts. Kenneta Wainwright, the group’s founder, called on city and state legislators to not create a registry – or at least delay the proposal for a year – and instead focus on improving the existing relationship between Omaha landlords and tenants.
“It will deter people from working together,” Wainwright said of a registry, the consequences of which she compared to the subprime mortgage crisis that triggered the Great Recession in late 2007.
Regardless of what happens with the proposed inspection program, other changes may also stem from the fallout after the Yale Park raid.
The Omaha City Council recently delayed considering a tax-increment financing package for a proposed apartment renovation project because of serious concerns about the conditions at some of the landlord’s other properties. The city hadn’t previously considered landlords’ previous history of substandard conditions when evaluating proposed future projects.
Council members Pete Festersen and Brinker Harding said at a Jan. 29 meeting that the city is looking at creating a policy for evaluating past experiences and projects for TIF applications, especially since many projects are brought forward by single-purpose limited liability corporations that have no clear history.
“There is much more that needs to be hashed out,” Harding said. “You could have different partnerships,
different ownerships, different percentages of ownerships – it might be some similar relationships between corporations or LLCs, but I think those are things that could be hashed out.”
State senators also are looking at other potential housing reforms this legislative session.
The Legislature’s Judiciary Committee planned to consider several housing bills. Those bills would prevent landlords from evicting tenants for being victims of domestic violence (LB 395); would repeal a prohibition on judges
granting continuances in eviction proceedings without extraordinary cause and the payment of accrued back rent (LB 396); would require landlords to return the balance of tenants’ security deposits within 14 days (LB 433); would extend the notice requirement for evictions from three days to seven days and establish a “right of redemption” for tenants (LB 434); would create a rebuttable presumption of retaliation
for six months after a tenant makes a good-faith complaint of a housing code violation or noncompliance
with a lease agreement (LB 435); and would prohibit discrimination
by a seller or landlord on the basis of sexual orientation, gender identity or citizenship status in any real estate transaction or lease (LB 689).
The push to expand housing rights, or further regulate property owners, extends beyond Omaha, too.
Renters Together, a Lincoln tenant advocacy group, has been organizing legislative testimony and has called for an expansion of Lincoln’s inspection program. An amendment to LB 85, however, would drop its application to Lincoln – having it only apply to cities of the metropolitan class, namely Omaha.
The debate over how to address substandard housing is likely to remain a topic of discussion for public officials, lawmakers and advocacy groups in the coming months, as proposals are clarified and reforms, if any, are ultimately put up to a vote by elected officials at the state and local levels.