Rental community takes lead on code enforcement fees

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Pikes Peak region rental property owners and managers are uniting in an effort to enforce city codes to prevent scenes like this.

Pikes Peak region rental property owners and managers are uniting in an effort to enforce city codes to prevent scenes like this.

They weren’t about to wait for junk cars, old mattresses and weeds to rim their parking lots — or for seedy criminal elements, attracted by rundown conditions, to set up shop in vulnerable lower-rent apartments.

Even during a tough economy, with 10 percent-plus vacancy rates and rents approaching 2001 levels in some cases, area landlords and property managers decided possible city budget cuts and elimination of the Colorado Springs Police Department’s code enforcement staff were not optional.

The situation required immediate action, so, in a proactive move, representatives of the Apartment Association of Colorado Springs, the Institute for Real Estate Management and the National Association of Residential Property Owners approached Code Enforcement Administrator Ken Lewis earlier this year and proposed a $1 per unit per month registration fee to ensure continued city oversight.

The proposal also includes provisions for an educational course for landlords covering regulations and procedures, as well as the use of a code enforcement hotline to communicate complaints or issues to owners.

While the measure, scheduled for discussion during public meetings on July 14 and 15, might appear to be just another city-imposed fee, its benefits far outweigh any negatives, said local representatives of the multifamily industry.

“In the long run, it will keep our tenants safer, our property values higher and our rents lower,” said AACS Executive Director Laura Russman, admitting that a few of the organization’s members — including some out-of-state owners — might balk at increased costs.

United so far

Large or small, most landlords and their property managers appear ready to adopt the “user” fee.

“If we don’t act, the result could harm more than just apartment and rental owners. It would hurt the whole city, especially from an economic development perspective,” said Carmen Azzopardi, Apartment Association of Colorado Springs president and Griffis Blessing Multifamily Services Group manager. “What it really boils down to is that run-down or high-crime rentals breed more crime and lower property values. That would hardly be attractive to new businesses looking at our city.”

And while the proposed program could cost Griffis-Blessing as much as $54,000 annually, the alternative would be much worse, she said.

Grand West Properties’ Dana Lowry owns and manages 74 units in four buildings in central Colorado Springs. The self-imposed user fee would hit his bottom line hard — as much as $888 per year.

“Landlords here haven’t fared well since 2001, even though national economy did better through 2007,” he said. “As owners, we’ve had to dig into our pockets. And this isn’t a passive investment for me — this is how I make my living. Can I take the increase? Not really. You’re already looking at higher utility costs and rent concessions just to keep good tenants. But am I willing for the city to lose all code enforcement? No. As a small investor I know there are owners out there who aren’t good stewards of the properties. They hurt me, they hurt the entire city.”

NARPM and AACS member Carolyn Rodgers of All Seasons Realty said the initiative is added value for out-of-state landlords who often don’t know what’s happening on or around their properties.

“We manage about 425 single-family homes, and I don’t know that I’ve ever called Code Enforcement — they usually call us to let us know if a tenant has called them with a concern,” she said. “But I still believe there’s a need for it, especially for out-of-town owners. Otherwise, some neighborhoods could become rundown — or even dangerous.”

Results from elsewhere

Patterned after a similar “Good Landlord” program that originated in Utah several years ago, local apartment owners and managers hope the changes will pay measurable dividends.

Once approached by the multifamily owners and managers, Lewis did his homework.

He found that in cities like San Antonio, Cleveland, Buffalo and New Orleans, for example, similar user fees paid to code enforcement agencies resulted in an average 16.2 percent decline in criminal activity in rental communities.

In Salt Lake City, some higher crime neighborhoods saw as much as a 60 percent decrease in calls to police departments and code enforcement departments, said Tucker Neilsen, a spokesman for the Utah Apartment Association.

The worst offenders are seldom larger apartment complex owners.

“Most of the problems come from a very small number of rental units with absentee landlords who rent to known criminals,” he said. “Some don’t know it’s happening, but others know and don’t do anything about it.”

Neilsen said he didn’t know how cities can function without fee-based programs to make up for budget shortfalls and cuts to services.

“Landlords paying to register their units has to be better — and faster — than waiting for the voters or City Council to approve a tax that’s probably going to be higher than industry-driven fees,” he said.

Lewis said his department is ready to go, pending approval by City Council in August.

“We get about 65 percent of our calls — usually from tenants with a ceiling that’s fallen in, plumbing that hasn’t been fixed, no heat or scary neighbors,” Lewis said, adding that the $650,000 generated by the proposed per-rental-unit fee would cover the cost of eight officers who would serve multifamily dwellers and their owners. “The rest — the other 35 percent of our calls that come from single family owners — will have to come from other sources.”

One Response to Rental community takes lead on code enforcement fees

  1. As a landlord who depends on rental income I have a stake in this discussion. The big rental property management companies may be naive enough to believe that the $10 fee (yes it is $10 per unit per month unless you take the govt training course) will actually be used for code enforcement and that they will not be taxed more anyway, but I am not. This city govt is hungry for money and will stop at no \fee\ or COP to get what it wants. As proof, I fully expect the USOC deal to include a COP or \fee\. If the big rental boys get this \fee\ it will never go away and will grow over the years. You will have just opened the door for another revenue stream.

    Tim O'Donnell
    July 12, 2009 at 5:40 am