AGENDA #10
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Preliminary Recommendations for a Rental Licensing Program
DATE: January 14, 2002
The purpose of this report is to evaluate recommendations for a rental licensing program as presented to the Council by the Rental Licensing Task Force on March 26, 2001 (please see Attachment 1), and to propose an implementation plan.
We note that this item has been delayed due to the Council’s full agenda during the fall as a result of the Council’s discussions on the UNC Master Plan and the revision of the Town’s Development Ordinance.
The attached resolution would approve a process for implementing a rental licensing program including: (1) scheduling a public forum for January 23, 2002, to receive citizen comments on a preliminary rental licensing program; and (2) referring the preliminary recommendation to the Housing and Community Development Advisory Board and the Planning Board for review; (3) returning to the Council on February 25, 2002, for consideration of an ordinance.
The Town’s Comprehensive Plan adopted by the Council on
May 8, 2000, recommends that the Council implement a rental licensing program
as a tool that, “could 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.”
On June 12, 2000, the Council adopted a charge, timetable and Council representation for a Rental Licensing Task Force. The charge of the Task Force was to provide the Council with recommendations about whether to enact a system of licensing the rental of dwelling units in Chapel Hill and, if adopted, what form such a system would take. The Council determined the specific responsibilities of the Task Force to be:
1. Considering the rental licensing proposals that have been brought to the Council;
2. Identifying advantages, disadvantages, and implications associated with the proposals;
3. Considering additional alternative rental licensing models; and
4. Preparing a recommendation for the Council’s consideration.
The Task Force included representatives and residents of the Historic Districts and the Northside neighborhood, student and administration representatives from the University, property owners, and property managers.
On March 26, 2001, the Rental Licensing Task Force presented five recommendations for the Council’s consideration. The Task Force recommends that the Council consider a program that would:
1. Require each rental unit in Town to be licensed;
2. Amend the Housing Code to establish a Rental Licensing Ordinance to increase the duties of the Building Inspector to include maintenance of a data base;
3. Require property owners to complete an initial application and then annually certify that his or her property meets the Town’s Minimum Housing Code;
4. Create a database that would include contact information of property owners and/or the registered agent; and
5. Develop a fee schedule for licenses. The fee should not exceed the cost of implementing a licensing program; a graduated fee should be considered for licensees of multiple units.
The Rental
Licensing Task Force fulfilled its charge from the Council and no longer
exists.
DISCUSSION
We believe that there are three main goals of a rental licensing program: (1) to increase community standards; (2) to develop a greater sense of responsibility by renters; (3) to maintain and improve the quality of rental housing; and (4) to improve communication among the Town, property owners and renters regarding compliance with Town regulations.
Below is our evaluation of the recommendations presented by the Rental Licensing Task Force.
1.
Applicability
Task Force Recommendation: Each rental unit will require a license. In many instances, multiple property owners and / or operators will have multiple licenses.
Comment: Our preliminary recommendation is that all owners of rental property, including the Town, be required to obtain a rental license for each unit. We also agree that the license should be renewed annually and that owners annually pay the license fee. We offer one exception to the requirement for all owners of rental properties to obtain a license: if the owner were temporarily living out of Town and renting their unit with the intent of returning within twelve months. We believe that this exception may accommodate citizens that leave Town temporarily but intend to return to their home within a year.
Additional Option: The Council could also choose to exempt owners of accessory apartments from the rental licensing program. The Town’s Development Ordinance defines an accessory apartment as, “a dwelling or combination of dwellings on a single zoning lot consisting of two dwelling units, provided the floor area of one of the dwelling units does not exceed 50% of the floor area of the other dwelling unit, nor is greater than 750 square feet and further provided the dwelling’s exterior design and entry locations give the dwelling the appearance of a single family dwelling”.
2. Amendment to Housing Code
Task Force Recommendation #1: Amend the Housing Code in order to establish a Rental Licensing Ordinance.
Comment: We recommend that the Town Code be amended to include a Rental Licensing Ordinance that requires property owners to obtain a rental license. Penalties for not obtaining a license would also be included in this amendment.
Task Force Recommendation #2: Establish the fee for obtaining a rental license and describe the information that would be required on the Rental Licensing Application.
Comment: We propose the following fee schedule:
Dwelling Units Proposed
Per Lot License Fee (per unit)
1 to 4 $10
5 to 19 $ 8
20 or more $ 5
3. Application Form and Rental Duties
Information Sheet
Task Force Recommendation: That the Council adopt a “Rental License Application Form” a “Rental Duties Information Sheet”.
Comment: We recommend that the application form require owners to submit contact information including name, address and telephone number. The application also would requests that the owners provide the name, address and telephone number of any registered agent empowered to act for the owner. We would also ask for additional contact information (i.e. cellular phone number, pager number, email address) that would be available to the tenants and the public, but this additional information would not be required. We would also recommend that property owners annually self-certify that their property meets the Town’s Minimum Housing Code. We concur with the Task Force’s recommendation for the Town to distribute a Rental Duties Information Sheet to owners of rental property.
4. Creation of a Database
Task Force Recommendation #1: Create a database that would include all of the information obtained from the applications.
Comment: We agree with this recommendation. We would also recommend that the database track complaints.
We recommend that the Town purchase a software program that would allow us to establish and maintain the necessary data for a rental licensing program. Once the database is established, the Town’s existing system could annually generate a bill to remind property owners to renew their license and re-certify the compliance with the Town’s Minimum Housing Code. The Inspections Department would be responsible for regularly updating the database.
Task Force Recommendation #2: The Town-maintained database would be accessible to the public via the Town’s web site.
Comment: The information collected would be available through the Town’s website and hard copies would be made available at Town Hall and the Library.
5. Fee Schedule
Task Force Recommendation:
The fee should not exceed the cost of implementing a licensing program, and a graduated fee schedule should be considered for licensees of multiple units.
Comment: We agree with the Task Force’s recommendation that the fees should cover the cost of implementing the program, and that a graduated fee schedule should be considered. The cost for implementing the program would be reviewed annually. Estimating that the cost to operate the rental licensing program is approximately $80,000, we propose a fee schedule that we project would generate about this amount of revenue.
Projected Revenue
The fee schedule below is based on a sliding scale and is designed to cover administrative cost of implementing the program.
Estimated
Dwelling Units Proposed Number of Projected
Per Lot License Fee
(per unit) Rental Units Revenue
1
to 4 $10 4,270 $
42,700
5
to 19 $
8 4,475 $ 35,800
20
or more $
5 1,420 $ 7,100
Total 10,165 $ 85,600
Rental licensing fees would be due upon submittal of rental license application or receipt of the rental license renewal statement. Please see Attachment 2 for an explanation of how we estimated the number of rental units.
We also recommend that the staff annually review the fee schedule to make any necessary adjustments.
Projected
Expenditures
We recommend a 2002-2003 fiscal year budget increase of approximately $82,000 to add a Zoning Enforcement Officer, a part-time Administrative Clerk (20 hours per week), and a temporary Administrative Clerk (twenty hours per week). A Zoning Enforcement Officer would inspect rental property on a complaint basis to insure compliance with the Town minimum housing code and zoning ordinance, notify owners of corrective actions necessary to comply and issue violation notices. The person in this position would also work with neighborhood organizations and property managers to improve communication with the Town and understanding of relevant codes.
A part-time Administrative Clerk would provide information to the public about the licensing program and services and assist with the maintenance of the rental licensing database. A temporary contract Administrative Clerk would provide data entry services during the first six months of implementing the program.
Year 1 Costs
Zoning
Enforcement Officer $38,000
(salary and benefits)
1
Part-time Administrative Clerk $16,500 (salary and benefits)
1
Temporary Contract Administrative Clerk $ 7,800 ($15 per hour, 4 hrs per day
for
26 weeks)
Database
System Development $ 8,000
Computer
Equipment (two computers) $ 5,000
Office
Furniture $ 3,000
Vehicle Expense $ 4,000
Total $82,300
Year 2 Costs
Zoning
Enforcement Officer $38,000
(salary and benefits)[1]
1
Part-time Administrative Clerk $16,500
(salary and benefits)1
Web
Access Implementation $ 7,000
Computer
Equipment $ 1,700
Vehicle Expense $ 4,000
Total $67,200
6. Evaluation
Task Force Recommendation: Reconvene the Task Force in three years to evaluate the effectiveness of the complaint driven program and evaluate whether or not to consider implementing a mandatory system of inspections for all rental units.
Comment: If a rental licensing program is approved, we recommend that in three years the Council appoint a committee to evaluate the effectiveness of the program.
PROGRAM IMPLEMENTATION
If the program was approved as part of the Town’s 2002-2003 budget, and a Zoning Enforcement Officer, part-time Administrative Clerk and temporary contract Administrative Clerk were hired, the proposed start date for the Rental Licensing Program would be January 2003. Between July and December 2002, we would develop an inventory of rental properties and notify the property owners of the Rental Licensing Ordinance. We would also be developing educational materials for both landlords and renters. We would send rental property owners a copy of the Rental Licensing Ordinance, the Town’s Minimum Housing Code, an application form, rental duties information sheet, information about Town policies and ordinances relevant to trash collection, noise control and parking. We would also inform property owners that we would expect them to comply with the new Ordinance within 3 months.
Upon receipt of the application, the property owner would list the address of the property, the number of tenants living in the dwelling, the number of parking spaces provided, on-site and through on-street permits, and contact information. Landlords would certify the distribution of a copy of the “rental duties” information sheet to each tenant. The Inspections Department would make this information available to the public at Town Hall and/or via the Town’s website.
Property owners would be required to annually apply to renew their rental license and self-certify that their property meets the Town’s Minimum Housing Code.
CITIZEN COMMENTS
In a letter dated October 11, 2001, the Triangle Apartment Association submitted an alternate proposal for the Council’s consideration (please see Attachment 3). The Association proposes a program, “whereby there would be a registration of rental housing owners, and not a licensing which would thereby provide a database and resource for resolving matters satisfactorily.” The Association proposes charging a flat fee for a rental license, and not a per unit fee as proposed by the Task Force that would adversely affect housing affordability.
We concur with the Task Force’s recommendation of imposing a per unit fee, and that the fees should cover the cost of operating the program. We believe that the program proposed by the Triangle Apartment Association is similar to the program proposed by the Task Force and the staff. We do not agree with the Association’s statement that a per unit fee would adversely affect the housing affordability. Under the proposed program, owners of more than 20 units, such as those represented by the Triangle Apartment Association, would only be charged $5 per unit. We do not believe that this cost would have a significant impact on the cost of rental housing. We believe that a rental licensing program would improve the Town’s enforcement of existing regulations.
SUMMARY
We propose a self-certifying and complaint driven rental licensing program consistent with the recommendations presented by the Rental Licensing Task Force that would include the following components:
· Require each rental unit to have a rental license.
Exception: License not required if the owner were temporarily
living out of Town and renting their unit with the intent of returning within
twelve months.
·
Require each rental license to be renewed annually
·
Require rental licensing fees to be paid
annually.
·
Adopt the following fee schedule during the
2002-2003 budget process:
Dwelling Units Proposed
Per Lot License Fee (per unit)
1 to 4 $10
5 to 19 $ 8
20 or more $ 5
· Establish a “Rental License Application Form” and a “Rental Duties Information Sheet”
·
Create a database that would include all of the
information obtained on the applications and track complaints.
We recommend that the Council refer the recommended program to the Housing and Community Development Advisory Board and the Planning Board for review. We also recommend that the Council schedule a public forum on January 23, 2002, to receive citizen comments on the proposed program.
NEXT STEPS
We recommend the following next steps to the Council:
· Refer the preliminary recommendation to the Planning Board for review on January 15, 2002;
· Refer the preliminary recommendation to the Housing and Community Development Advisory Board for review on January 22, 2002;
· Schedule a public forum for January 23, 2002, to receive citizen comments on the preliminary rental licensing program;
· Return to the Council on February 25, 2002, for consideration of an ordinance.
If the program were approved in February, the Council could consider the program during the 2002-2003 budget process. If funds were appropriated in the 2002-2003 Town budget, we believe we would begin the hiring process in July 2002 and implement the program by January 2003.
MANAGER’S RECOMMENDATION
That the Council adopt the attached resolution to schedule a public forum on January 23, 2002, and to refer the preliminary rental licensing program to the Housing and Community Development Advisory Board and the Planning Board for review.
ATTACHMENTS
1. March 26, 2001 Memorandum from the Rental Licensing Task Force (p. 10).
2. Explanation of Method Used for Estimating the Number of Rental Units (p.26).
3. October 11, 2001 letter from the Triangle Apartment Association (p. 27).
A RESOLUTION TO APPROVE A PROCESS FOR IMPLEMENTING A RENTAL LICENSING PROGRAM (2002-01-14/R-15)
WHEREAS, the Town’s Comprehensive Plan adopted on May 8, 2000, recommends that the Council implement a rental licensing program as a tool that “could 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”; and
WHEREAS, on June 12, 2000, the Council charged the Rental Licensing Task Force to provide the Council with recommendations about whether to enact a system of licensing the rental of dwelling units in Chapel Hill, and what form such a system would take; and
WHEREAS, on March 26, 2001, the Rental Licensing Task Force presented recommendations for the Council’s consideration;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council adopts the following process for implementing a rental licensing program in Chapel Hill:
· Refer the preliminary recommendation and the Planning Board for review on January 15, 2002;
· Refer the preliminary recommendation to the Housing and Community Development Advisory Board for review on January 22, 2002;
· Schedule a public forum for January 23, 2002, to receive citizen comments on the preliminary rental licensing program;
· Return to the Council on February 25, 2002, for consideration of an ordinance.
BE IT FURTHER RESOLVED that if the program were approved in February, the rental licensing program would be considered during the 2002-2003 budget process.
This the 14th day of January, 2002.