Business Journal Article Addresses Fallout of the City's RRI Ordinance To Date

I was recently interviewed by Business Journal reporter Sean Ryan regarding the fallout of the dismissal of three landlords' lawsuit against the City of Milwaukee regarding the unconstitutionality of its Residential Rental Inspection (RRI) program. My most recent post on the subject can be read here.

On October 1, 2010, The Business Journal published its article entitled "Judge Upholds Milwaukee Home Inspection Program. Reporter Sean Ryan spoke with the primary plaintiff, Joseph Peters, Alderman Nik Kovac (sponsor of the ordinance), Todd Weiler (of the Department of Neighborhood Services) and myself for the article.

I found Mr. Weiler's comments to be very noteworthy. He was quoted as saying that to date DNS has inspected over 800 properties in the two target areas (Lindsey Heights on the north side and the UWM-area on the east) and that during those inspections 8,550 violations were found. Apparently 1/2 of the the properties inspected -- or 400 -- had no violations at all.

I wonder if all 8,550 of the violations that were found -- and which the landlords were cited for -- pertained to life-safety issues? If you will recall, life safety issues were the "alleged" original impetus behind the ordinance being introduced.

In speaking with several landlords that I know who own proeprties in the target areas, I was informed that the violations that they were cited for involved very minor issues -- such as peeling paint on the outside of a building, torn screens, and failure to paint some wood that had been properly sealed but not painted. The lead plaintiff, Jospeh Peters, was quoted in the article as saying that the Orders To Correct that he received on his 10 buildings also involved very minor repairs - such as torn screens.

Just how many of the 8,550 violations dealt with life safety issues? How many illegal attic bedrooms were found? How many poorly maintained second story porches that could collapse at any minute were identified? Don't forget the overloading of circuits by the improper use of extension cords - how many of those were found?

If you will recall the testimony that was offerred by both Alderman Nik Kovac, who sponsored the ordinance, and Art Dahlberg, Commissioner of the Department of Neighborhood Services, at the public hearing before the ZND Committee way back when, the focus of this program was to make these affected properties safe and prevent unnecessary deaths.

I'm not sure how many lives have been saved as a result of the RRI ordinance to date, but at least we wont have to worry about any of those deadly torn screens, inherently dangerous unpainted wood, and the lethal peeling paint on the outside of a duplex.

Not sure about you but I feel a lot safer already.

This ordinance is now being shown for what it really is -- not an attempt to save lives and improve properties -- but rather an way for the city to get inside one's private property without the need to obtain a warrant or even receive a tenant complaint, a way to make additional money (through the required filing fees and reinspection fees), and a way to further harass landlords that are having a difficult enough time making ends meet.

Sometimes I just wish that all of the landlords in the city of Milwaukee had the ability to just walk away from their rental properties. I wonder if the city would then realize, once all the landlords are gone and there is no one to own or operate rental housing, that we provide a much needed service and that most of us do a good job of providing that service. Would they try to work with us then . . . . ?

Hearing on Landlords Lawsuit vs. City To Be Held This Wednesday, September 22nd

The hearing on both the Landlords' and the City's cross motions for Summary Judgment will be held this Wednesday, September 22nd, at 10 am. The hearing will take place before Judge Timothy Witkowiak at the Milwaukee County Courthouse.

This hearing could be the final hearing on this lawsuit (barring any appeals) which involves three Landlords suing the City and asking the Court to declare the Residential Rental Inspection (RRI) program unconstitutional as currently written.

Both parties have completed their briefing on the issues. I have reviewed all of the briefs (hundreds of pages, trust me : ) and am looking forward to attending the hearing at which the judge could issue an oral decision.

If you are interested in attending and want to get up to speed here is a link to all of the posts that I have written on this subject.

Update On Landlords' Lawsuit Against City of Milwaukee and Its Rental Inspection Ordinance

There has not been a lot of media reporting on the lawsuit brought by three landlords against the City of Milwaukee and its rental inspection ordinance so I thought I would take the time to update you on its status.

If you are unfamiliar with the basics of the lawsuit you should refer to my earlier post on the topic.

The City of Milwaukee has filed a Motion To Dismiss the Landlords' lawsuit. Essentially the City is arguing that the lawsuit against it should be dimissed because the City was not provided the proper notice of the landlords' claims prior to the lawsuit being filed. In Wisconsin, if a person wants to sue a government entity - which would include the City of Milwaukee -- the law states that prior to the lawsuit, the government entity must be served with a Notice of Claim. The City then has 120 days to review that Notice and either attempt to settle the claim or deny the claim. If the City does not deny the claim within the 120 days it will be deemed denied anyway. After the 120 days have passed, a person then has 6 months in which to file the lawsuit. If more than 6 months passes then the person would be precluded from filing the lawsuit.

The reasoning behind what is called the "Notice of Claim" statute (Sec. 893.80, Wis. Stats.) is allegedly to allow the government an opportunity to settle a claim in order to avoid expensive litigation. A secondary reason for the requirement is to provide the government with enough information so that it can budget accordingly for settlement or litigation.

As a quick aside: I have sued a government entity on behalf of a client in the past so I am familiar with the Notice of Cliam statute. In my opinion the government does very little during the 120 days after it is served notice. The typical reaction is to ignore the claim and not even take the time to deny it but rather to allow the 120 days to pass after which the claim will be automatically denied. In fact, I would even go so far as to say that based on my experience that the government typically ignores the Notice of Claim that is served upon it just to see if the aggrieved person will actually file a lawsuit. It costs very little to file a Notice of Claim (which often is done without the assistance of an attorney) but it is expensive to file a lawsuit. The government has little to no interest to pay money to someone unless it knows the individual who filed the claim is serious. Essentially the Notice of Claim statute is a "legal hoop" that the government makes you jump through to see how high you will jump. There may little to no reason for you to jump, but nontheless, jump you must.

So the City of Milwaukee is arguing that the plaintiff landlords' didn't file the Notice prior to filing the lawsuit and therefore their lawsuit should be dismissed.

In its response brief, the plaintiffs argue that a formal notice of claim need not always be served as there are exceptions to this requirement. The plaintiff landlords rely on a recent Court of Appeals decision, Kuehne v. Burdette, which held that the Notice of Claim statute does not always require a formal notice of claim to be served nor is it always required for a plaintiff to wait 120 days before filing a lawsuit against the government.

The plaintiff landlords make three key arguements in their brief in opposition to the City's motion to dismiss:

1. Because the City's Rental Inspection Ordinance became law on January 1, 2010 -- just 22 days after it was passed by the Common Council -- and because the nature of the lawsuit is to determine whether or not the ordinance is constitutional, the plaintiffs were unable to comply with the notice of claim statute.

2. The City had actual notice of the claim even if a formal notice of claim was not served on it.

3. The City sufferred no prejudice as a result of the plaintiffs filing the lawsuit without first filing a formal notice of claim.

The plaintiffs' first argument is very similar to the one made in the Kuehne case. In Kuehne, five residents of a town filed an injunction against the Town of Ledgeview in order to prevent it from holding a referendum on whether or not the town should incorporate. The court in Kuehne stated that the notice of claim statute probably did not apply in the context of the lawsuit because it is illogical that a town can use lack of notice as a defense when the Town by its own actions made compliance with the notice of claim statute impossible.

The plaintiff landlords argue that the exact same situation in Kuehne is at play in the lawsuit against the City of Milwaukee. The City adopted the new ordinance and Mayor Barrett signed it into law 22 days later. If the plaintiffs had been required to file a notice of claim the City would have been under no legal obligation to respond to the notice until approximately May 1, 2010. By that time the rental inspection ordinance would have been in effect for a minimum of 4 months without a court being allowed to examine the constitutionality of the ordinance. The City can't use the notice of claim defense in order to allow it to move forward with its unconstitutional ordinance.

The plaintiffs' second argument is that they City had actual notice of the claim because the plaintiffs, through the actions of the AASEW, advised the City of its concerns and objections to the proposed ordinance as eary as October 29, 2009. On October 29th yours truly sent a letter to the Common Council pointing out the various constitutional problems with the ordinance. Additionally, the AASEW's attorney (who is also the attorneyfor the plaintiff landlords) also sent a letter to the City Attorney on the same date setting forth the myriad of problems with the proposed ordinance. Additionally there were numerous communications between the AASEW, its attorneys, and the alderman that sponsored the ordinance (Nic Kovac) and the DNS Commisioner. So the City had actual notice of the plaintiffs' claims approximately two months prior to the filing of the lawsuit. By contrast, in the Kuehne case the plaintiff gave notice to the Town on the same day as the lawsuit was filed and the Court of Appeals found that notice to have been sufficient.

Finally, the plaintiffs argue that the City was not prejudiced by the lack of a formal notice of claim. If the purpose of the notice requirement is to allow a government entity time to potentially resolve a claim, the fact that the AASEW 9of which the plaintiffs are members) notified the City of the problems with the ordinance and even met to discuss the potential problems, demonstrates that the City had the opportunity to resolve the issue if it wanted to. In essence the City is arguing that the plaintiff should be required to jump through the legal hoop for the sake of jumping rather than because the jumping serves an actual purpose.

The City was allowed the opportunity to have the last word so it did file a reply brief to the plaintiffs' brief in oppostion to the motion to dismiss.

I would point out that even if the City should prevail on its motion to dismiss, all that this will do is cause delay. A notice of claim has already been filed and served on the City (just in case) and another lawsuit will be filed if needed. So essentially the City's motion, if successful, will just delay things rather then address the underlying issue -- whether or not the rental inspection ordinance is constitutional as written.

A hearing on the City's motion to dismiss is scheduled to be heard before Judge Timothy Witkowiak on May 21, 2010 at 9:30 am in room 412 of the Milwaukee County Courthouse. The hearing, as most legal proceedings are, is open to the public. For those of you unable to attend, I will provide you with an update hopefully during the week of June 1st after I have returned from my upcoming wedding and honeymoon.

Milwaukee's New Vacant Building Registration Ordinance Is Here

I need to apologize. I have spent much of my time these last several months following and providing information about the city of Milwaukee's new Residential Rental Inspection ordinance and as such I have inadvertantly failed to let everyone know about another of Milwaukee's new ordinances that will affect rental property owners.

I was talking with a client of mine last week prior to the 1:30 pm eviction return calandar in small claims court and he mentioned that the city recently served him with notice that he is in violation of the city's new Vacant Building Registration ordinance. He was told that his rental property was vacant and that he didn't register the property with the city as required and that he must now open his property up for an interior inspection by the Department of Neighborhood Services (DNS). Interesting twist is that my client's rental property is not vacant nor has it ever been vacant. The unit is occupied by a tenant under a valid written rental agreement.

On January 1, 2010, Milwaukee's new Vacant Building Registration ordinance went into effect. Essentially the ordinance states that the owner of any building that is vacant for more than 30 days must register the property with DNS and submit to a mandatory - warrantless - interior inspection of the rental property. The ordinance also requires the owner to secure the building, maintanin the lot, exterior of the property, and interior of the property during the time that it is vacant.

Upon first glance this seems like a reasonable ordinance. A valiant attempt by the city to insure that vacant buildings do not become dilapidated and attract criminal activity, injure individuals, or further depress Milwaukee's neighborhoods. I have no problem with that. Upon closer review of the ordinance however you will note the many requirements -- similar to the city's Residential Rental Certificate ordinance -- that are open to multiple interpretations and therfore open to abuse, which in the end, can and most likely will, be used to the detriment of rental property owners.

I will not attempt to explain or detail the entire Vacant Building Registration ordinance as it is over 6 pages long. I would like to touch on some key parts of the ordinance and note some concerns.

This new ordinance applies to all residential and commercial properties that have been vacant for more than 30 days. There are some exceptions. It does not apply to single family homes or owner-occupied duplexes (as long as the owner has resided in the duplex at least 3 of the last 9 months and the owner intends to continue living in the duplex). Also excluded from the ordinance are condominiums and rental units as long as their vacancy rate does not exceed 95%. Also excluded is property that is currently in the foreclosure process and property that is actively being renovated.

This ordinance will apply to your rental whether or not you are actively showing the property to prospective renters and regardless of the condition of the property. So within 30 days of the property becoming vacant you must fill out a city application and file it with DNS. Additionally you must allow DNS to conduct an interior inspection. If the city finds any violations you will be cited.

Your intial application will be good for a period of 6 months and will cost you nothing (assuming the city does not cite you for any violations). If your property remains vacant for more than 6 months then you must reapply and pay a $250 fee. If DNS determines, at the time of renewal, that your property is not compliant then the fee will increase to $500. If your property continues to be in violation at the time of any subsequent renewals then you may be charged a fee (in increasing increments of $250) up to a maximum of $1,000. If you don't pay the fees they will be assessed against the real estate as a "special charge."

During the inspection, DNS will see if your property meets their minimum requirements. You can read a summary of those requirements at DNS' webpage dedicated to this new program.

Just as with the Residential Rental Certificate ordianance, DNS has the unfettered ability to draft and apply rules and regulations which are not required to be incorporated into the ordinance. These rules and regulations can change at any time and do not have to be published.

Let me just provide you with two situations that clearly fall under the purview of this new ordinance but which I feel should not require any city involvement whatsoever. By no means are these the only two problematice examples that I foresee -- there are many.

First, assume that you own a duplex and you currently have a tenant in the lower unit but because the upper tenant just broke the lease you upper unit is empty. The upper unit is in pretty good shape but requires repainting and some minor repairs to get the unit into move-in condition for the next tenant. Also assume that you were just assigned a new project at work that is taking up most of your time - you are working late and on weekends. While you would like to repaint the unit, make the minor repairs, start advertising the vacancy, and showing it to prospective renters, you just do not have the time. You remain very busy at work for more than 30 days. Under the new ordinance you now have a "vacant building" and you must register the property and allow it to be inspected.

My second example has actually happened to me on several occassions. I was in the process of trying to locate a new tenant for the lower portion of my duplex. Just as the city suggests, I have written screening criteria which any applicant must meet in order to become my tenant. My screening criteria is quite stringent. I follow the adage that it is better to have a vacant unit then to accept any "warm body" as a tenant. Because I also work a full-time job, I am not free to show the property to interested renters every day. As a result of both my stringent criteria and my schedule, my lower duplex remains vacant for over 30 days. Under Milwaukee's new ordinance I would need to register my duplex with the city and take time out of my day to allow an inspector to inspect my property.

NOTE: I have spoken with DNS Commissioner Art Dahlberg and confirmed that my above examples (which I have crossed out) are inaccurate. If you have a duplex and only 1 unit is vacant then you do not fall under the purview of the new ordinance. You would only fall under the purview of the new ordinance if both units of the duplex were vacant for 30 days -- as you would now have more than a 95% vacant property. So I have had to revise my examples.

First, assume that you own a single family home that you operate as a rental property and your tenant just broke his/her lease and as such the property is now vacant. The property will need a little bit of work (minor repairs and some painting) before you can turn it over. Also assume that you were just assigned a new project at work that is taking up most of your time - you are working late and on weekends. While you would like to repaint the unit, make the minor repairs, start advertising the vacancy, and showing it to prospective renters, you just do not have the time. You remain very busy at work for more than 30 days. Under the new ordinance you now have a "vacant building" and you must register the property and allow it to be inspected.

My second example happens to many of my clients that have stringent screening criteria that applicants must meet before they can become tenants. They are in the process of renting out a single family rental unit or both units of a duplex. Just as the city reccomends they use a written screening criteria which any applicant must meet in order to become a tenant. Following the adage that I often teach at my seminars, that it is better to have a vacant unit then to accept any "warm body" as a tenant, my clients often have periods in which their rental units are vacant. Sometimes becasue my clients work a full-time job outside of being a landlord, they not free to show the property to interested renters every day. As a result of both their stringent screening criteria and their busy schedules, their single famuly rental or both units of their duplex remain vacant for over 30 days. Under Milwaukee's new ordinance they would need to register their rentals with the city and take time out of my day to allow an inspector to inspect their property.

I suppose things could be worse. You could be standing in my client's shoes - the guy I mentioned earlier -- and have just been served with a notice from the city that you are in violation of its Vacant Building Recording ordinance. My client is now placed in the difficult position of having to decide whether to ignore the city's notice and risk the possibility of a fine and the future wrath of DNS or capitulating to the city and allowing it to inspect his unit despite the fact that it is occupied by a tenant and the city has no legal right to set foot in his rental property. What would you do?

DNS Has Started To Implement The New Residential Rental Certificate Program

As many of you know the City of Milwaukee's new Residential Rental Certificate Program ordinance went into effect January 1, 2010.

It is my understanding that the letter notices, along with a date for the inspection of your rental unit/s, the application, were all mailed out to affected landlords during the week of Dec. 28th -- so those of you in the two designated areas should have received your mailing by now - Merry Christmas.

In anticipation of the many questions about the Residential Rental Inspection (RRI) Program the Department of Neighborhood Services (DNS) has added a new FAQ page to its website regarding the program. The web page also contains a link to a map of the two affected areas, a link to the RRI Application form and a link to the Pre-Inspection Checklist.

MILWAUKEE'S RESIDENTIAL RENTAL CERTIFICATE PROGRAM VOTE PUSHED BACK 1 CYCLE

The Common Council did not vote on the passing of the city's proposed Residential Rental Certificate Program earlier today as was planned. Instead the Comon Council voted 9-5 to hold the proposed ordinance for 1 cycle (1 month) for further review.

The proposed ordinance, which would require all rental property owners in the UWM-area and Lindsay Heights neighborhood on the north side of Milwaukee to pay an $85 fee per unit fee and submit to an internal inspection of in order to be able to rent out their property, passed out of the ZND committee last week by a vote of 3-2. The proposed ordinance was to be voted on by the Common Council earlier today.

In response to the setback of having the proposed ordinance pass out of committee the AASEW, who represents approximately 680 landlords in Milwaukee and the surrounding areas, retained legal counsel to review the ordinance for procedural and drafting errors. Errors were found and were communicated to the City Attorney. The AASEW wrote to the President of the Commom Council and the various council members and pointed out its many concerns with the ordinance as written.

Prior to a vote being taken as to whether or not the ordinance should be passed, a motion was made by Alderman Donovan to hold the ordinance for one cycle (1 month) to further review any problems and concerns. This motion passed by a vote of 9-5. It is assumed that the ordinance will be revised and then referred back to the ZND committee for an additional public hearing.

I will keep you advised as to what happens next.

For additional information on the proposed Residential Rental Certificate Program please refer to my earlier post.

Read Tom Daykin, of the Journal Sentinel, blog post about this change of events here.

Milwaukee's Residential Rental Certificate Program Is On It's Way To The Common Council

On Tuesday, October 27, 2009, Milwaukee's ZND (Zoning, Neighborhood and Development) committee voted 3-2 to send the proposed ordinance to the Common Council for a final vote. The proposed ordinance, referred to as the Residential Rental Certificate Program, would require all rental property owners in 2 targeted areas of the city to apply for a certificate in order to continue renting out their property. The cost would be $85 per unit and would require the landlord to allow a warrantless interior search/inspection of his/her property in order to obtain the certificate. To read more about the proposed ordinance you should read my prior post on the topic.

A 2 plus hour hearing was held at which time the Department of Neighborhood Services Commissioner Art Dahlberg explained his reasoning for initiating the program and outlined the basic tenets of the ordinance. Sponsors of the ordinance including Aldermen Kovac, Wade, and Davis, spoke in favor of the program and offered their reasons for supporting the ordinance.

A large crowd turned out for the hearing and as a result an overflow room with a live feed had to be opened to accomodate all of the people in attendence. The public was allowed to provide comments, concerns, and criticisms of the proposed program and approximately 20 individuals spoke out.

Landlords and tenants in opposition to the ordinance pointed out several issues including: (1) a "disqualifying violation" was not clearly defined and as such could easily lend itself to arbitrary and capricious decisions by an inspector, (2) an owner of a large multi-unit rental property could be required to pay several thousands of dollars in fees, (3) the fact that the concerns for which the ordinance was allegedly created could be addressed by enforcing existing laws, and (4) issues of additional costs to landlords in an already horrible economy.

Alderman Michael Murphy requested that Commisioner Dahlberg investigate the issue of a sliding fee scale for larger multi-unit facilities and indicated that if that issue was addressed he would vote in favor of the ordinance next week. Also in favor of the ordinance was Alderman Wade and Alderman Bauman. The chair of the committee, Alderman Witkowiak voted against the ordinance arguing that the timing of the ordinance was poor and that it should not be instituted during this difficult economy. Alderman Witkowiak also felt that without a clearer definition of a "disqualifying violation" and the issue of sliding fee scale for multi-unit properties not addressed in the ordinance that this program should not pass to the Council for a vote. Alderman Zielinski also voted against the ordianance but failed to speak during the entire hearing.

There will be no further public hearings prior to the Common Council's vote next week which makes communicating with your aldermen even more crucial at this juncture. As I mentioned previously, this ordinance has been "fast-tracked" through the legislative process and if passed should be up and running by the new year.

You can read Journal-Sentinal columnist Tom Daykin's blog on the hearing here.

City of Milwaukee's "Residential Rental Certificate Program" Is Unveiled

Well I have finally been able to get my hands on a preliminary copy of the city of Milwaukee's proposed mandatory rental inspection ordinance. The ordinance is sponsored by Alderman Kovac, Wade, Davis and Hines. The ordinance refers to the proposed program as a "Residential Rental Certificate" program. The program is really just a variation on "landlord licensing" and mandatorty rental inspection programs. I would encourage you to read the enitre proposed ordinance, but I have also set forth the key points below:

- This will be a 5 year pilot program.

- The targeted area includes the UWM area on the city's east side and the Lindsay Heights neighborhood on the city's north side. These areas were selected because the city believes the areas need to be monitored to prevent deterioration. Allegedly these two areas include older housing stock, have a high density of rental properties, have a higher percentage of complaints, and have high tenant turnover. The city feels that frequent inspections of the rental properties in these two areas are needed to maintain safe, decent, and sanitary living conditions.

- Every rental unit in the selected areas must apply for and receive a rental certificate before the owner is allowed to rent out the unit.

- The ordinance includes duplexes and larger multi-unit rental properties. Owner-occupied duplexes are excluded.

- The owner must also complete, sign and submit an application to the city that will include the owner's legal name, the address of the rental property, the owner's phone number, and the owner's date of birth.

- A fee of $85 must accompany each rental unit application.

- Prior to the city issuing a rental certificate the unit will be subject to an internal and external inspection by the Department of Neighborhood Services (D.N.S.).

- DNS will conduct the inspection within 60 days of receipt of the application.

- The owner must notify the tenant at least 2 days in advance of the inspection.

- A fee of $50 will be imposed if DNS is unable to gain access to the unit for inspection.

- If during the inspection DNS finds a "disqualifying violation" (defined as a condition that affects safe, decent and sanitary living conditions or other conditions that violate the city building code, building maintenance code or zoning code) the unit will be issued a 1 year certificate.

- Any violation identified during the inspection must be abated within a reasonable amount of time (to be determiend by DNS).

- If conditions are found that are determined to constitute an imminent danger to health and safety, DNS shall order the condition to be remedied and may limit or prohibit occupancy where approporiate.

- DNS shall reinspect the unit as necessary to determine if any "disqualifying violations" have been remedied. A reinspection fee may be charged.

- If no disqualifying violations are found the unit will be given a 4 year certificate.

- A temporary certificate can be given for up to 30 days if the disqualifying violations do not constitute a hazard to the occupants of the rental and if a plan to correct the violations is submitted and approved by DNS.

- After the certificate expires the owner will be required to renew the certificate and submit to another inspection and pay another $85 fee per unit.

- If after the issuance of a 4 year certificate, DNS determines learns that there is a building or zoning code violation, the 4 year certificate can be revoked and the city can choose to replace the 4 year certificate with a 1 year certificate.

- If at any time after the issuance of a 4 year certificate or a 1 year certificate, DNS determines that there are building or zoning code violations that are critical and constitute an unsafe or unfit condition, the city can revoke the certificate.

- Any violation identified after a certificate has been issued must be abated within a reasonable amount of time (to be determiend by DNS).

- Any person who purchases a rental unit in the targeted areas must apply for a rental certificate and pay the accompanying fee within 30 days of the purchase.

- Any person that sells a rental unit in the targeted areas must notify the purchasor of the property that a residential rental certificate is required by the city.

- An owner that fails to apply for a residential rental certificate will be fined $100 for the first infraction. If the owner fails to respond to a subsequent notices by the city the fine will increase to $150.

- Residential rental inspection fees will be charged against the owner's real estate and will be considered a "special charge."

If you would like to contact your alderman you can find contact information here.

UPDATE ON MILWAUKEE'S PROPOSED MANDATORY RENTAL UNIT INSPECTION PROGRAM

A friend of mine was at a meeting this morning with the City of Milwaukee's Budget Director and learned some more information on the City's proposed mandatory rental unit inspection program.

First, the proposed ordinance is in the final stages of drafting and will be released in the near future.

Second, it will be a 5 year pilot program in the UWM area only.

Third, there will be a fee of $40 per landlord and a $35 per unit inspection fee.

Fourth, the pilot program must be approved by the city's common council each and every year in order for it to continue.

Fifth, if a rental unit passes its 1st inspection then the unit will receive a 4 year compliance certificate and will not need to be reinspected until the 4 years expires.

NOTE: MUCH OF THIS INFORMATION IN THIS POST IS NO LONGER ACCURATE - TO FIND OUT WHAT THE ACTUAL ORDINANCE STATES GO TO MY NEW POST ON THE SUBJECT.

"Landlords Feel The Loathing" - Accurate Article On Landlords' Plight Published in Milwaukee Journal-Sentinel Today

Several weeks ago I received a telephone call from Journal Sentinel reporter Patrick McIlheran. Mr. McIlheran told me that someone had referred him to my blog and after reading some of the posts that he wanted to speak with me as he was in the process of putting together a piece about how the state and the city seem to make the business of landlording more and more difficult. I was more than happy to assist Mr. McIlheran as this topic comes up regularly during my interactions with clients, and at the the Apartment Association of Southeastern Wisconsin meeting. Truth be told, most business - not just rental property owners - wonder why the city makes doing business here so difficult and unappealing.

After speaking with Mr. McIlheran, I referred him to a colleague of mine, Tim Ballering, owner of Affordable Rental Associates, LLC and past president of the AASEW. Tim owns and manages hundreds of units in Milwaukee and has been a landlord almost as long as I have been alive (just kidding Tim ; ). It goes without saying that Tim could give Mr. McIlheran some necessary background and perspective that I could not.

Mr. McIlheran's piece entitled "Landlords Feel The Loating" was published in today's paper. You can also read it online at JSOnline.

It is a very good article. Please be sure to take the time to read the article and to email or call Mr. McIlheran and thank him for taking the time to present an accurate story on landlord's present plight. In light of the soon to be proposed Milwaukee ordinance that will require landlords to submit to mandatory inspections of the interior of their rental units, Ms. McIlheran's article could not be more timely.

Why Milwaukee's Mandatory Rental Inspection Program (a.k.a. "Landlord Licensing") Is Not Needed and Is A Bad Idea.

Here are a few of the reasons why the City of Milwaukee's soon-to-be proposed ordinance requiring mandatory rental inspections (a.k.a. "Landlord Licensing") should not be passed.

For more background information on this proposed new ordinance please read my earlier post entitled " Milwaukee To Propose Landlord Licensing and Mandatory Interior Inspections of Rental Property."

There Are Better Ways To Spend Milwaukee’s Limited Money - The city of Milwaukee has no money and as such the city is threatening to close libraries, not hire additional police officers, not pay overtime to police officers, cut back on the number of firemen assigned to each ladder company. Under this new ordinance the city will spend money which would be better spent on more police officers and other safety issues rather than hiring more building inspectors.

Tenant’s Right to Privacy – Under this new ordinance rental properties would be subject to search by building inspectors. Tenants will have building inspectors walking through their apartments and looking at everything. This is unnecessary and intrusive. It should be the tenant’s decision to call the inspector if the landlord has failed to make a repair. Tenants’ right to privacy in their own home is a basic American right.

Increased Cost of Rent for Tenants – The current rental property owner already pays ever-increasing real estate taxes and municipal fees. Under this proposed ordinance rental property owners will have to pay a fee to the city for being a landlord – possibly having to pay a fee per each rental unit owned. Landlords will not be able to absorb that additional cost, especially when they are barely making ends meet in today’s tough economic times. As a result the additional charges for this program to landlords will most likely be passed on to tenant living in those rental properties.

Landlord Licensing Will Cause More Harm Than Good – A study conducted in 2003 by the LaFollette Institute for the City of Milwaukee, concluded that any form of landlord licensing would not work in Milwaukee. The study indicated that any benefits would be uncertain at best and at worst would have negative effects on the housing market and the availability of affordable housing. It said that any such program would be expensive and would cause more problems than it would solve. To read the entire study click here.

Denying An Owner The Right To Rent Out His/Her Property Is Too Great A Power To Give a Building Inspector – Under the new program the city will have the ability to deny a rental property owner a certificate of compliance if the property does not pass muster. Without the certificate of compliance the landlord will not be allowed to rent out his property. This is too great of a power to give a city bureaucrat. Even nuisance properties require that a lawsuit be filed and that a court order closure of that property before the owner is prevented from renting it out. Under this ordinance a building code inspector would be able to close down a rental property for infractions much less severe then those that are required to close down a nuisance property. A city building inspector could use this power for improper reasons to penalize a landlord who is out of favor with City Hall. In other cities and in Milwaukee there have been “rogue” inspectors who abuse their authority. To read about such examples click here. And here. And here.

The Foreclosure Crisis Is Putting Property Owners Under Stress – With falling rents and declining property values due to foreclosures – and the financial difficulties due to unemployment etc. – the rental housing market is severely stressed. This proposed licensing program will discourage further investment. It will hurt rental owners, tenants, and even neighborhood home owners as rental units become “board-ups.”

Rental Property Owners Are Already Over-Regulated – With all of the regulations imposed on rental property owners you need to be a lawyer in order to sort through them all and understand them. There are hundreds of laws and regulations imposed by the federal government (EPA, HUD) the state (Department of Commerce, Consumer Protections, Wisconsin Statutes etc,. and the various municipalities (Building Inspector, Health Department, Public Works). More regulations of rental property owners and their rental properties are nor necessary nor are they desirable.

Please refer to www.rentalinspectionprogram.com for more information on this topic.

Milwaukee to Propose Landlord Licensing and Mandatory Interior Inspections of Rental Property

The city of Milwaukee is planning on introducing a new ordinance that will require rental property owners in certain parts of the city to license their rental properties and submit to mandatory interior inspections by the Department of Neighborhood Services (DNS).

Many of the AASEW board members have been having regular monthly meetings with the new DNS Commissioner Art Dahlberg. During a recent meeting Mr. Dahlberg informed us that in the near future he will be pushing for some form of residential rental inspection program (a.k.a "Landlord Licensing") for portions of the city. During a meeting with Alderman Bob Donovan it was confirmed that this program was in the works and that the city's forthcoming budget already has money earmarked for the program.

Under this program DNS would target certain areas of the city which they consider to be "blighted" or which will soon become "blighted" if something is not done. Other factors that would be considered in determining what areas to target would be the age of the housing stock, the percentage of rental units to owner occupied properties, and the history of complaints in the neighborhood. Mr. Dahlberg indicated that the area of the city that would most likely be addressed first would be the east side near UWM due to the large number of illegally converted dwelling units and poorly maintained properties.

The goal of the program would allegedly be for the owners and the city building inspectors to work together to better the rental housing stock with the building inspectors becoming a resource for rental property owners.

While the specific details were not provided to me, any proposed program will most certainly contain provisions such as the following:

- A requirement that all rental property owners in the targeted area pay a fee to the city for each unit that they own.

- A requirement that rental property owners allow the city building inspectors to conduct mandatory inspections of the interiors of each of their rental properties that are located within the targeted area.

- If no code violations are found then the rental property would receive a certificate of code compliance which would allow the owner to rent out the unit for a period of time until the next mandatory interior inspection would be required.

- If code violations were to be found in the rental property then the owner would be denied a certificate of code compliance (thus preventing the unit from being rented) until the violations were corrected. Depending on the the number and severity of the violations, the rental property owner would be required to submit to an increased number of interior inspections during the ensuing months until the city would determine that the rental property was safe.

While this new program would only focus on the UWM area initially, other areas of town were also mentioned (the north side of Milwaukee for instance) as being targeted eventually. It is fairly obvious that the end goal would be to have all rental properties within the city under this program.

I personally am not in favor of this program and I can't imagine that many landlords would be. If passed this new ordinance will be yet another regulation on rental property owners - a group that is already overly regulated. I can't imagine that tenants are going to enjoy this invasion of their privacy either. Not to mention that the additional costs to landlords will most likely be passed on to the tenant by increased rents. I also personally have difficulty with the fact that the city regularly threatens to cut the number of police, refuse overtime for police, eliminate the number of firemen at ladder companies, and close libraries, but yet they are willing to provide additional money for the hiring of more building inspectors.

While the alleged goal of this residential rental recording program is to improve the quality of the housing stock in the city I can't help but think that it will also be a source of revenue for a city that allegedly is broke.

This proposed ordinance will be addressed in more detail in my future posts.

To read why this program is not a good idea click here.

To read the text of a study conducted by the LaFollette Institute in 2002 on whether or not Landlord Licensing should be implemented in Milwaukee click here. To read a summary of the the study concluding that Landlord Licensing would casue more harm then good if implemented in Milwaukee click here.

For more information go to www.rentalinspectionprogram.com

DNS COMMISSIONER TO SPEAK AT JUNE AASEW MEETING

I hope that AASEW members and non-members will all come out in force to attend the AASEW's June membership meeting on June 15, 2009. Our main speaker will be the Department of Neighborhood Services new Commissioner Mr. Art Dahlberg. We are not yet certain what Mr. Dahlberg's speaking topic will be at this time but check back to this Blog for updates. Mr. Dahlberg has been more than willing to meet with the AASEW, its Board of Directors, and landlords in general to assist in fostering a good working relationship between the City and rental property owners.

The AASEW's meeting are always held on the 3^rd Monday of each month - and held at the Best Western Midway Hotel located at 1005 S. Moorland Rd. in Brookfield.