AGENDA #7a

 

BUDGET WORKING PAPER

 

 

TO:                  W. Calvin Horton, Town Manager

 

FROM:            Lance Norris, Director of Inspections

 

SUBJECT:       Budget Evaluation Report regarding the Scheduled Expiration of the Rental Licensing Program

 

DATE:             April 27, 2005

 

The purpose of this memorandum is to provide you with an evaluation report on the Rental Licensing Program. 

 

BACKGROUND

 

·         On June 12, 2000 the Council established a Rental Licensing Task Force and charged the Committee to provide the Council with recommendations about whether to enact a system of rental licensing for residential dwelling units in Chapel Hill, and what form such a system would take.

 

·         On March 26, 2001 the Rental Licensing Task Force presented recommendations for the Council’s consideration. 

 

·         On April 8, 2002 the Council adopted an ordinance to establish a program for the licensing of residential rental properties.  The Council stated its intent to review the Program within three years, and that the program would expire June 30, 2005 barring further action.

 

·         On January 24, 2005 the Council adopted a resolution directing the Town Manager to solicit applications for appointment to a Rental Licensing Committee, and to bring a proposed charge and timetable for this Committee to the Town Council on February 14, so that the charge could be adopted and appointments could be made in a timely manner.

 

PROGRAM DESCRIPTION

 

The purpose of the Rental Licensing Program as set forth by the Town’s Comprehensive Plan adopted in 2000 is to “…help to protect the character and the stability of the Town’s residential neighborhoods, while assuring renters that licensed rental units meet minimum housing standards.”  To meet that purpose the following issues were addressed:

 

To implement and maintain the Rental Licensing Program the Inspections Department staff, in cooperation with the Finance Department and the Clerk’s Office, fulfills the following duties:

PROGRAM PROGRESS REPORT

In the first year of the Rental Licensing Program 7,508 units were licensed by 774 landlords.  A total of 61 complaints were filed regarding rental properties.  Revenues were $77,700 and costs were $72,600.

In the second year 7840 units were licensed by 812 landlords.  A total of 73 complaints were filed regarding rental properties.  Revenues were $80,400 and costs were $72,000.

So far this year 7353 units have been licensed by 626 landlords.  A total of 51 complaints about rental properties were received through March 30, 2005.  Estimated revenues for 2004-2005 are $75,000 and estimated costs are $51,600.

PROGRAM EVALUATION

In April, 2004 the Council received a report from students in the School of Government Masters of Public Administration Program regarding the effectiveness of the Rental Licensing Program.  The report was created over a period of three months by a team of five MPA students.  Their analysis concludes that the program is difficult to evaluate beyond relative comparative data and citizen response. 

 

The report includes relative comparative data that is graphed to show the complaints made to the Town about rental properties.  The report also included results of a citizen survey.   The strengths and opportunities of the program from the report included the existence of the database, the increase in the capacity of the Inspections Department to enforce the ordinances, and the decline in rental noise complaints.  The weaknesses and threats of the program from the report indicated the limited utility of the database software, the capacity of the department being absorbed by the efforts needed to support the invoicing, licensing, and file maintenance, and the 94% of the tenants surveyed being unfamiliar with the program.

 

We believe that the licensing program is not required in order to achieve the goals of the Comprehensive Plan.  The program has not appreciably increased the awareness of Town Codes by tenants, as indicated by the survey.  The program has not increased our ability to resolve housing problems as indicated by our annual reports.

 

The number of rental property complaints processed annually both before and during the Rental Licensing Program is within a four percent range of change.  The workload involved in resolving rental housing complaints is no different from the initiation of the Rental Licensing Program.  In Addition, we believe that time required for rental licensing program administration reduces time that would otherwise be available for housing code enforcement.  These analyses are supported by the annual totals reported below:

 

COMPLAINTS REGISTERED 2002 THROUGH 2004

 

Inspections Department

Complaint Case Files

Per Calendar Year

Total*

Rental Specific

Percentage

specific to the

Rental Licensing Program

2002:  Year Prior to the Program

191

78

41%

2003

165

61

37%

2004

188

73

39%

* not including right-of-way signs removed 

 

 

RECOMMENDATION

 

We recommend that the Council allow the Rental Licensing Program to expire as scheduled on June 30, 2005.  In summary the Rental Licensing Program has achieved the goal of supporting itself financially but does not significantly address the Town’s Comprehensive Plan goals beyond the ability of the pre-existing code enforcement and ordinances. 

 

PROVISIONS FOR EMPLOYEES

 

The two individuals who are employed as the Code Enforcement Officer and the Administrative Clerk, whose positions are directly funded by the Rental Licensing Program, were fully aware that the program might expire in July of 2005 before accepting their positions with the Town of Chapel Hill. 

 

In January 2005, we met individually with both employees affected and explained that six months remained until the program could expire.  The employees were offered the opportunity for the employees to seek other employment both within and outside the Town due to the uncertainty of their positions.  Both have met with staff members of the Human Resources Department to gather information on other potential employment positions within and outside of the Town. 

 

The Administrative Clerk has already accepted a part-time permanent Administrative Clerk position with the Fire Department and began work in that Department on April 1, 2005.

 

ATTACHMENTS

 

1.      April 8, 2002 Council Adopted Ordinance Revising Chapter 9 of the Code of Ordinances to Establish a Program for the Licensing of Residential Rental Properties (p. 5)

2.      Spring 2004 MPA Study to Evaluate the Effectiveness of the Rental Licensing Program (p. 33)