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HomeMy WebLinkAbout03/01/2005, STUDY SESSION 1 - RENTAL PROPERTY INSPECTION PROGRAM 1 council March 1,2005 j acEnaa Repout 1�N CITY OF SAN LUIS OBISPO FROM: Deborah Linden, Chief of Police Wolf Knabe,Fire Chief John Mandeville, Community Development Director SUBJECT: RENTAL PROPERTY INSPECTION PROGRAM CAO RECOMMENDATION 1. Review and discuss options for rental property inspections. 2. Provide staff with direction on which options to pursue, with a focus on full cost recovery regardless of which option the Council selects. REPORT-IN-BRIEF As part of the 2003-05 Neighborhood Wellness Major City Goal, staff researched different rental housing inspection programs in place in other communities, including an ordinance currently being used in the City of Azusa. San Luis Obispo has a significant number of rental units, including many in single-family and duplex dwellings. Except as noted below for fire safety inspections, these units are not currently inspected for compliance with fire safety regulations, Uniform Housing Code requirements or zoning designations unless a specific complaint is received. Members of the community, including representatives from Residents for Quality Neighborhoods (RQN), have expressed concern about the condition of the City's rental stock and compliance with City housing and zoning regulations. The Fire Department is currently doing all mandated inspections of rental properties containing three or more rental units. This program is in jeopardy due to staffing and budget reductions. The law allows the City to charge fees to offset the costs of a rental inspection program; however, the City currently does not do so. Staff has outlined several different rental inspection program options for the Council to consider. These include different versions of the existing Fire Department program, as well as an enhanced program that would provide for the inspection of single-family and duplex rental units. The fees for each program vary according to rental type. All the program options would remain under the management of the Fire Department and assume full cost recovery. Creating a comprehensive rental inspection program is not without its challenges. The most significant challenges include the need to identify all of the rental properties in the City and create a mechanism to collect annual fees from property owners. Staff would also expect significant stakeholder input from property owners, tenants and neighborhood associations. ( 1 Rental Property Inspection Fee Program Page 2 DISCUSSION Background During the 2003-05 Council goal-setting process, representatives from RQN expressed concern about the quality of rental properties in the City, and the existence of substandard and unpermitted rental units. RQN described an ordinance in effect in the City of Azusa that funds annual inspections of rental units by that city to ensure compliance with required housing code provisions. The inspections are funded by an annual fee paid by rental property owners. Council directed staff to further research the concept of a rental property inspection program as part of the Neighborhood Wellness Major City Goal and to return to Council with additional information. Staff from Police, Fire, Finance & Information Technology, Community Development and Administration worked together on this project. This report summarizes the results of the research and outlines five different program options for Council to consider. Current Situation Based on the results of the 2000 Census, there are approximately 11,500 rental units in the City out of 19,600 total housing units (58%). These include approximately 5,100 single-family and duplex units, and approximately 6,400 rental units housed in complexes containing 3 or more units (such as apartment complexes, condominiums, hotels and fraternity houses). There are concerns that residents of rental housing are often subjected to unsafe living conditions, and that some rental property owners .are not maintaining their properties in compliance with zoning regulations. The Police and Community Development Departments (Code Enforcement) receive about 50 reports annually of substandard rental housing conditions, illegally converted rental units (such as garages) and other violations of the Uniform Housing Code. Of these, about 36 per year appear to be valid, of which about 30 relate to single family residences. The following is a summary of the complaints received by Code Enforcement regarding substandard rental housing during the past 10 years: Number of Complaints and Violations Total complaints received 539 Confirmed violations 363 Average confirmed violations per year 36.3 Location of Confirmed Violations • in R1 &R2 Zones 85% • in R3 &R4 Zones 9% • in Commercial Zones 6% Although the average number of reported cases resulting in confirmed violations is relatively low, staff believes this number is not representative of the actual violations occurring. Staff spoke with student representatives and staff from Cal Poly and Cuesta who reported that many student renters are reluctant to report code violations because they fear retaliation by property � 'a Rental Property Inspection Fee Program Page 3 owners in the form of rent increases. Some students reported living in housing that is in significant disrepair. Neither college maintains statistics on the number of complaints made by student renters. Representatives of RQN and other neighborhood associations also have told staff that they believe many violations are not reported by tenants, and that illegal rental conversions are much more common than reported. Unfortunately, other than the reported complaints and violations, there are no other known statistical measures of the extent of the problem. The Azusa Ordinance The Azusa rental housing inspection program, enacted in 1989, is based on an ordinance which requires that all rental housing in the City of Azusa be registered with the City and that it be inspected annually to insure that the property is being maintained. The properties are inspected for compliance with state and local laws involving property maintenance. Interior inspections are conducted only with the consent of tenants. Once an inspection is completed, the owner is notified of any deficiencies found and required to correct them in a timely manner. The program was created in response to complaints from tenants, other nearby rental property owners and residents about the lack of property maintenance on many rental properties, and the fact that the poorly maintained properties were having an adverse impact on property values. The City of Azusa has 6,500 rental units which accounts for approximately 50% of existing housing. Approximately ninety percent (90%) of the complaints received by the City involve rental housing and the failure of many owners to maintain their property. During the annual visits, inspectors look for various code violations such as abandoned cars, dead vegetation, accumulations of junk and debris, lack of building maintenance, graffiti, inadequate refuse facilities, illegal/unpermitted construction, dilapidated structures and substandard housing conditions. Inspectors contact tenants and ask if there are problems. In larger complexes, this is done on a random basis. Exterior areas are viewed for obvious violations and interiors are inspected if there is an apparent need. When violations are found, owners receive an inspection report showing the problems and location as well as a deadline for compliance. If corrective measures are not made by the re-inspection date, the owner is charged for any additional City staff time and expense in handling the violation. If the City receives a valid complaint about a property between inspections, the owner is charged for City staff time and expense associated with investigating the violation. However, if the property is registered, City staff calls the owner about the complaint in order to save the owner some direct cost charges. What Are Other Communities Doing? Numerous other cities have developed rental inspection programs that include the inspection of single family rentals, including Berkeley, Buena Park, Carpinteria, Riverside, San Pablo and Santa Ana. They have either established a set annual fee or charge an hourly rate to offset the cost of the program. The frequency of inspections ranges from annual to every three years. The programs typically mandate an interior inspection of each unit, except Riverside, which settled on an exterior property maintenance program that applies to all properties. i - 3 � I Rental Property Inspection Fee Program Page 4 Possible Options for Implementation of a Rental Inspection Program Staff has reviewed the various rental inspection programs currently in place in other cities, and also considered our immediate need to provide the fire inspections required by law. Although there are a number of ways to address this issue, staff is suggesting the Council consider the following five options. Option 1: Basic Program State-mandated inspection program that the Fire Department is currently doing, but with cost recovery. Option 2: Expanded Program Some expansion to our currently mandated program.. Option 3: Enhanced Program Further expansion of the basic program even more to include inspections of rental properties consisting of single-family residences and duplexes. Option 4: Something In-Between Any other program Council might wish to explore, such as one that still addresses single-family and duplex rentals, to a lesser or greater degree than outlined in option 3. Option 5: Status Quo Retention of the current level of inspection but without cost recovery. As discussed below, staff is supportive of any of the options except for this one. Given the City's existing cost recovery policies, and the fiscal challenges facing us in delivering core services that have no cost recovery options, we believe that cost recovery for these services is warranted. OPTION I - Cost Recovery for the Current Mandated Fire Department_Rental Property Inspection Program(what we ace doing now): The City's Fire Department currently conducts annual inspections of all rental dwelling properties containing three or more rental units. There are approximately 500 of these properties with a total of about 6,400 rental units. These properties include apartments, hotels, motels, bed &breakfast facilities, hostel facilities, senior facilities and sorority and fraternity houses. These inspections are required by California Health & Safety Code, Section 17921. The purpose of these inspections is to ensure the safety of these facilities from a solely fire safety perspective in accordance with State requirements. A typical fire safety inspection at this type of facility would include checking fire alarm systems, fire sprinkler systems, fire extinguishers, common areas for fire hazards, exiting, and fire access issues (see Attachment 1). Inspectors do not examine the interior of all units. They typically spot check vacant units with the cooperation of the owner or manager and conduct interior inspections if violations are suspected. 14 1 Rental Property Inspection Fee Program Page 5 The following Fire Department staff and vehicles are currently dedicated to the rental inspection program: 1. 0.5 Full-time Equivalent(FIFE) Fire Marshal: Oversees the program and does inspections. 2. 1.5 FTE Fire Inspectors: Conduct the inspections. 3. One City vehicle: The vehicle is shared by the employees to conduct field inspections. Option 1 Cost Recovery Fees California Health & Safety Code Section 13146.2b provides cities the legal authority to charge property owners to recover the reasonable costs of providing these annual inspections. The City does not currently charge for these inspections. Under Proposition 218, the Council is authorized to set these types of fees; voter or property owner approval is not required. In an attempt to establish a fair and equitable fee schedule, staff researched other communities in California who have already implemented rental inspection fee programs. These cities include Santa Ana, Albany, Santa Monica, Union City, Milpitas, Pasadena and Santa Fe Springs. Many of these cities have fee-for-service programs based upon the number of rental units. Staff is proposing that the cost recovery fees differ according to the type of rental property being inspected. Some types of properties have on-site maintenance personnel and historically have fewer violations, while others require more frequent or in-depth inspections to ensure compliance with Uniform Housing Code provisions. The following suggested fee schedule reflects these differences, and would pay for the current program; I. Apartment Rental Units $3.34 per month per unit ($40.10 per year per unit) Administrative Fee of$65.00/year per facility Explanation of Fees The inspections of these facilities are mandated by law. Apartment inspections are very time consuming and often require follow-up inspections. Per unit and administration fees are set so that full cost recovery is attained and includes the administration of the program as well as actual time spent on inspections and follow-up. 2. Hotels, Motels, Bed& Breakfast Facilities, and Youth Hostel Facilities 1-50 units - $200/year per facility > 50 units- $400/year per facility ExRllanation of Fees These types of facilities frequently have maintenance personnel available 24 hours a day, and historically, have fewer code violations than other types of rentals. Senior Facilities 1-25 units - $200/year per facility 25-74 units - $300/year per facility >74 units - $500/year per facility Explanation of Fees These facilities have on-site maintenance staff 24 hours a day. " S i Rental Property Inspection Fee Program Page 6 4. Sororities/Fraternities Flat fee - $475/year per facility Explanation of Fees Sororities and fraternities traditionally have a high number of code violations requiring numerous reinspections. These fees are set at a level designed to pay for the existing basic Fire Department program. Option 1 Fee Revenue and Program Costs The following table reflects the projected revenue these levels of fees would generate in one year, as well as the costs of the staff and equipment currently being used for the program: OPTION 1 —BASIC RENTAL PROPERTY INSPECTION COST-RECOVERY FEE PROGRAM REVENUES Apartments Number Fee Total Units—Base Rate Per Unit 6,408 $40.10/Unit $256,900 Facilities—Admin. Rate Per Facility 481 $65/Facility $ 31,300 $288,200 Hotels.Motels.Bed&Breakfasts.Youth Hostel Units Facilities 1-50 19 $200/Facility $ 3,800 >50 13 $400/Facility $ 5,200 9,000 Senior Facilities Units Facilities 1-25 2 . $200/Facility $ 400 26-74 2 $300/Facility $ 600 >74 2 $500/Facility $ 1,000 2,000 Sororities/Fratemities Facilities 11 $475/Facility $ 5,200 5,200 Total Revenues $304,400 EXPENDITURES 0.5 FTE Fire Marshal $56,300 1.5 FTE Fire Inspector III 157,300 Ongoing Costs 3,200 Amortized Vehicle Costs 5,200 Indirect Costs 82,400 Total Costs $304,400 Option 1 Pros and Cons Pros 1. Full cost recovery for the basic rental inspection program that the Fire Department is required to do by law and is currently doing. 2. Consistent with adopted user fee cost recovery policies (Attachment 4) 3. Reduces fiscal impact to the General Fund. 4. Fair and reasonable costs for services provided. Cons 1. Does not provide for any inspection of single-family and duplex rental units. t - Cv Rental Property Inspection Fee Program Page 7 2. Fire Department is struggling to effectively fulfill their mandate with the employees currently assigned. OPTION 2 — Some Expansion of the Current Mandated Fire Department Basic Rental Property Inspection Program(with full cost recovery): Currently, the Fire Department is having difficulty meeting the legal mandate to provide inspections of rental dwelling properties containing three or more rental units. The loss of an Administrative Assistant position in 2003-05 due to budget reductions, as well as the lack of a dedicated funding mechanism, has put the sustainability of the program in doubt. The Fire Department believes it could more effectively and efficiently meet the State mandate by adding a full-time Administrative Assistant and one additional vehicle for the Inspectors to use for their inspections. The Fire Marshal would continue to dedicate 50% of his time to supervise the rental inspection program and conduct inspections along with the existing 1.5 FTE Fire Inspector IIIs. The Administrative Assistant is needed to handle all the program's administrative and public education aspects. The expanded program would involve the employees currently assigned to conduct rental inspections of properties containing three or more rental units, plus the added positions described in the previous paragraph. The total positions and vehicles needed to effectively conduct the inspection program would be: Current Resources 1. 0.5 FTE Fire Marshal: Oversees the program and does inspections. 2. 1.5 FTE Fire Inspector III positions: Conduct the inspections. 3. One shared vehicle used to perform inspections. Added Resources 4. 1.0 FTE Administrative Assistant: Responsible for computerized data entry, tracking, scheduling, filing, and public education associated with the program. 5. One dedicated vehicle used to perform inspections. Having dedicated Fire Department staff, funded through program fees, would allow the inspection program to operate with consistency and efficiency, and would ensure that the City is in compliance with current State inspection.mandates. Option 2 Fee Revenue and Program Costs The following table reflects the projected fees, associated revenue, and program costs for one year. The fees have been increased slightly to pay for the additional staff added under this expanded program: I - �1 Rental Property Inspection Fee Program Page 8 OPTION 2-EXPANDED RENTAL PROPERTY INSPECTION FEE PROGRAM REVENUES Apartments Number Fee Total Units—Base Rate Per Unit 6,408 $55.43/Unit $355,200 Facilities—Admin. Rate Per Facility 481 $65/Facility $ 31,300 $386,500 Hotels,Motels_.Bed&Breakfasts.Youth Hostel Units Facilities 1-50 19 $200/Facility $ 3,800 >50 13 $400/Facility $ .5,200 9,000 Senior Facilities Units Facilities 1-25 2 $200/Facility $ 400 26-74 2 $300/Facility $ 600 >74 2 $500/Facility $ 1,000 2,000 Sororities/Fratemities Facilities 11 $475/Facility $ 5,200 59200 Total Revenues $402,700 EX_ P_ _E_N_D177JRES 0.5 FTE Fire Marshal 569300 1.5 FTE Fire Inspector 111 157,300 1.0 FTE Administrative Assistant 67,600 Ongoing Costs 3,900 Amortized Vehicle Costs 8,700 Indirect Costs 108.900 Total Costs $402,700 Option 2 Pros and Cons Pros 1. A more effective program and consistency with our user fee cost recovery policies. 2. Fully complies with legal mandates. 3. Results in lower General Fund subsidy of these mandated regulatory activities, thus mitigating cuts in other areas that have no user fee opportunities. Cons 1. Does not provide for any inspection of single-family and duplex rental units. OPTION 3 -Enhanced Rental Inspection Program (with full cost recovery): In addition to the 500 properties (containing 6,400 dwelling units) that currently fall under the Fire Department's basic rental property inspection program, there are approximately 5,100 single-family and duplex dwelling units in the City's rental housing stock. Neither the basic (option #1) nor the expanded (option #2) fire inspection programs address problems.with single family and duplex rental properties, nor the need to expand the scope of inspections beyond fire safety issues. A potential solution to these concerns is to enhance and expand the basic program to include all rental dwelling units and. to provide an opportunity for more review of living conditions and maintenance of zoning compliance. The California Fire Code (Section 103.3.1.1) allows local governments to authorize the Fire Chief/Fire Prevention Bureau to conduct inspections of non-mandated rental units. In addition, the Code (Section 103.1.2) also gives the Fire Department "right of entry"to make inspections and enforce any provisions of the Code. i - g Rental Property Inspection Fee Program Page 9 An enhanced rental inspection program would provide inspection of all residential rental properties, including duplexes, town-homes and single-family residences (SRF's) that are not owner occupied. The goals of the enhanced program would be to: 1. Ensure compliance with State law for the inspection of rental properties containing three or more rental units. 2. Ensure the safety and habitability of single-family and duplex rental units by checking for violations of the Uniform Housing Code, local zoning regulations and State Health and Safety and Fire codes. 3. Locate illegal rental units, including unpermitted conversions and unregistered rental properties. 4. Improve the quality of life for renters and nearby homeowners by ensuring a safe and well maintained rental stock. Inspections would be slightly different than the State mandated inspections of apartment units outlined above under the basic and expanded programs. In addition to determining compliance with the fire safety checklist, the inspectors would also review properties for compliance with the Uniform Housing Code and local zoning regulations. Basically, City staff would look for substandard conditions and ensure that minimum habitability standards are satisfied. These standards dictate that tenants have adequate sanitation, such as hot and cold running water, proper ventilation, adequate disposal of wastes, protection from the elements and a permanent source of heat. Additionally, the City would check for construction without a permit, converted garages or other structures, and compliance with High Occupancy Use Regulations. In the event the inspectors discover unrelated suspected criminal activity during an inspection, they would notify the appropriate authorities. Inspections would be performed annually for properties containing three or more rental units (per the State mandate) and once every four years for SFR's and duplexes (25% per year). In addition, annual inspections would be conducted on properties that had been the subject of previous or frequent complaints/violations. When complaints are received, inspectors would conduct an inspection accordingly, regardless of when the property was last inspected. Routine inspections of SFR's and duplexes would consist of an exterior inspection during which inspectors would check for violations of fire, Uniform Housing Code and zoning regulations. Inspectors would view a property from the public sidewalk or right-of-way in order to determine if there were any obvious violations. Inspectors would attempt to contact the tenants and if they are home, explain the purpose of the inspection and ask if there are any problems inside the rental unit. Inspectors would conduct an interior inspection if requested by the tenants, or if warranted based on observed violations or prior arrangements. If the tenant is not home, they will leave a door hanger with a safety checklist and information about reporting suspected violations. Inspectors would not enter the interior or private yard area of a rental unit without the existence of one of the following conditions: 1. Permission of the tenant. 2. Prior appointment with the property owner who has appropriately notified the tenant and is escorting the inspector. f- q I Rental Property Inspection Fee Program Page 10 3. Obvious presence of a condition that could immediately jeopardize public health (i.e. live sewage, gas leak, etc). 4. The inspectors possess an inspection warrant issued by the court. If violations are suspected and owners/tenants refuse entry, inspectors would seek a court order to enter the premise. Staff considered programs that required the inspection of a higher percentage of rental units each year, or that called for the interior inspection of all rental units. Staff was concerned such programs would be too costly and too invasive. With the addition of over 1,100 SFR's and duplexes to be inspected each year, additional resources will be required for implementation of an enhanced rental inspection program. Two new housing inspectors in the Fire Department would be needed to conduct the inspections of the SFR's and duplexes. Unlike fire inspectors, who are responsible for a wide range of duties, housing inspectors are primarily responsibility for inspecting rental housing. Housing inspectors would need to be well-versed in the laws and regulations pertaining specifically to rental inspections, but not in other areas of the fire code. Due to their limited scope of responsibilities, housing inspectors would be classified at a lower pay scale than Fire Inspectors. Due to the number of units, complexity of scheduling access to units and related data base management issues, the program would also require one additional administrative assistant. Additionally, there will be issues too complex for the housing inspectors to process and these issues will be referred to the Code Enforcement office in the Community Development Department for investigation and follow-up. Examples include unsafe buildings (as defined in the Uniform Code for the Abatement of Dangerous Buildings), illegally added dwelling units, garage conversions and use permit violations. Staff believes that the housing inspectors would likely discover violations during their routine inspections, including unpermitted rentals and illegal conversions, and that up to 300 cases per year could potentially be referred to code enforcement. This increased workload would require the addition of another code enforcement coordinator in the Community Development Department. Fire inspectors would continue to inspect all rental dwellings containing three or more rental units including apartment buildings, motels, hotels, bed & breakfasts, hostels, senior facilities, and sororities and fraternities as they currently do, without any increase in scope beyond fire safety issues. Option 3 Fee Revenue and Program Costs The following table reflects the projected fees, associated revenue and program costs for one year. The fees have been increased to pay for the additional staff added under this enhanced program: HD Rental Property Inspection Fee Program Page 11 OPTION 3-ENHANCED RENTAL PROPERTY INSPECTION PROGRAM REVENUES Apartments Number Fee Total Units—Base Rate Per Unit 6,408 $55.43/Unit $355,200 Facilities—Admin. Rate Per Facility 481 $65/Facility $ 31,300 $386,500 Single Family/Duplex Units—Base Rate Per Unit 5,100 91.05/Unit $464,400 464,400 Hotels,Motels.Bed&Breakfasts.Youth Hostel Units Facilities 1-50 19 $200/Facility $ 3,800 >50 13 $400/Facility $ 5,200 9,000 Senior Facilities Units Facilities 1-25 2 $200/Facility $ 400 26-74 2 $300/Facility $ 600 >74 2 $500/Facility $ 1,000 2,000 Sororities/Fraternities Facilities 11 $475/Facility $ 5,225 $5,200 Total Revenues $867,100 EXPENDITURES 0.5 FTE Fire Marshal $56,300 1.5 FTE Fire Inspector Ill 157,300 2.0 FTE Housing Inspectors @ $81,200 each 162,400 2.0 FTE Administrative Assistant @ $67,600 each 135,200 1.0 FTE Code Enforcement Coordinator 91,400 Ongoing Costs 10,400 Amortized Vehicle and Other Start-Up Costs 19,500 Indirect Costs 234.600 Total $867,100 The impact of these fees would vary according to the type of rental facility and the number of rental units. For example, the fee per apartment would be about $4.50 per month; and about $7.50 per month for a single family residence. Staff has provided their most reasonable estimate regarding the resources needed for this program, along with the estimated fees needed to offset these costs. However, .staff does not have previous experience with an inspection program of this scope. Should Council direct staff to pursue the enhanced program, we would conduct a much more in-depth analysis of the resources needed and the associated costs. This could cause an increase or decrease in needed resources and associated fees. Option 3 Program Management Issues There are several issues that would need to be addressed if Council is interested in implementing an enhanced rental inspection program, including:. 1. Identif yi}_ng.all rental units: Staff would need to design a method to accurately identify the rental units in the City. I Collecting the annual fees: Staff would need to develop processes for billing property owners for the annual rental inspection fees, and for getting people to actually pay their bill. Rental Property Inspection Fee Program Page 12 3. How will we measure success? Staff would need to establish specific benchmarks in order to determine if the program is achieving its goals. Option 3 Pros and Cons Pros 1. Program ensures compliance with State mandate and addresses problems associated with single-family and duplex rental units. 2. Consistent with our user fee cost recovery policies. 3. Utilizes a combination of exterior and interior inspections, along with renter education and self-reporting, in order to minimize intrusion into rental unit. Cons 1. More expensive than previous options, and fees could be objectionable. 2. Challenges in identifying all rental units and ensuring payment of fees. 3. May not achieve all of the four program goals identified above. 4. Could be perceived as overly aggressive. 5. Even though the costs are offset by fees, adding four positions at this time could be viewed as inappropriate. OPTION 4—Something In-between: Should Council have a desire to address problems with all rental units, including single-family and duplex structures, but to a lesser or greater degree than described in the enhanced program above, staff could craft a program that would call for the inspection of single-family and duplex rentals less or more often. For example, a program could be created that calls for the random inspection of only a certain percentage of single-family and duplex rentals each year (i.e. 10%), but yet requires inspection annually for "problem locations" that have been the site of frequent complaints or violations. On the other hand, the enhanced inspections could be conducted more frequently, or the inspection of"three-plus" units could be expanded in scope beyond fire safety issues. Because of the myriad of program options, staff did not prepares detailed cost figures for an "in- between" approach. Should Council direct staff to pursue this approach, staff will return with additional program information and fiscal analysis. OPTION 5—Do Nothing: Council could choose not pursue any type of rental inspection program other than the one currently being conducted by the Fire Department as part of their legal mandate. The City is not currently receiving cost recovery for this service, although it is specifically authorized by law. Consistent with our adopted cost recovery policy, staff recommends at least moving toward greater cost recovery in order to relieve the burden of the mandated program from the General Fund. Rental Property Inspection Fee Program Page 13 Next Steps Depending on the direction provided by Council, staff will complete any research and work needed to return to Council with an appropriate program and necessary ordinance and resolution. Staff will work with stakeholders to seek input and to address any concerns they may have, including property owners, renters and neighborhood associations. CONCURRENCES/PUBLIC NOTIFICATION The City Attorney and Department of Finance & Information Technology concur with the recommended actions. Notifications of this study session were sent to numerous individuals and groups, including all of the neighborhood associations, owners of large rental properties, property management and realtor groups, business organizations, Cal Poly and Cuesta, community and housing organizations, media outlets, and others. In researching the information contained in this report pertaining to the problems associated with rental housing, staff spoke with representatives from RQN, Cal Poly ASI, and Cal Poly and Cuesta. FISCAL IMPACT The costs and estimated fees associated with each option are outlined in the report narrative. If Council directs staff to pursue an option that includes cost recovery, this will shift some of the current program costs from the General Fund to the fee-based revenue. There will be some fiscal impact to property owners, who will likely pass the cost of the annual fees on to renters. In most cases, this fee is about $4.60 per month for the average apartment. The fee-per-renter may be higher for some properties that require more frequent inspection. ALTERNATIVES Staff has presented several different conceptual program options for Council to consider. Council could modify these options, for example, in terms of the frequency of inspection or the fees to be charged. 'In addition, Council could choose to direct staff to take no further action on this subject. ATTACHMENTS 1. Text from California Health & Safety Code Sections 17921, 13146 and 13146.2. 2. Information regarding the Azusa program from the City of Azusa website 3. Annual Fire and Safety Inspection.List for Rental Dwellings with 3 or more units 4. User Fee Cost Recovery Policy 1 - 13 - \ Attachment 1 (pg 1 of 2) California Health 6 Safety Code Sections 17921. (a) Except as provided in subdivision (b) , the department shall propose the adoption, amendment, or repeal of building standards to the California Building Standards Commission pursuant to the provisions of Chapter 4 (commencing with Section 18935) of Part 2.5, and the department shall adopt, amend, and repeal other rules and regulations for the protection of the public health, safety, and general welfare of the occupant and the public governing the erection, construction, enlargement, conversion, alteration, repair, moving, removal, demolition, occupancy, use, height, court, area, sanitation, ventilation and maintenance of all hotels, motels, lodging houses, apartment houses, and dwellings, and buildings and structures accessory thereto. Except as otherwise provided in this part, the department shall enforce those building standards and those other rules and regulations. The other rules and regulations adopted by the department may include a schedule of fees to pay the cost of enforcement by the department under Sections 17952 and 17965. (b) The State Fire Marshal shall adopt, amend, or repeal and submit building standards for approval pursuant to the provisions of Chapter 4 (commencing with Section 18935) of Part 2.5, and the State Fire Marshal shall adopt, amend, and repeal other rules and regulations for fire and panic safety in all hotels, motels, lodging houses, apartment houses and dwellings, buildings, and structures accessory thereto. These building standards and regulations shall be enforced pursuant to Sections 13145 and 13146; however, this section is not intended to require an inspection by a local fire agency of each single-family dwelling prior to its occupancy. 13146. The responsibility for enforcement of building standards adopted by the State Fire Marshal and published in the California Building Standards Code relating to fire and panic safety and other regulations of the State Fire Marshal shall be as follows: (a) The city, county, or city and county with jurisdiction in the area affected by the standard or regulation shall delegate the enforcement of the building standards relating to fire and panic safety and other regulations of the State Fire Marshal as they relate to R-3 dwellings, as described in Section 1201 of Part 2 of the California Building Standards Code, to either of the following: (1) The chief of the fire authority of the city, county, or city and county, or his or her authorized representative. (2) The chief building official of the city, county, or city and county, or his or her authorized representative. (b) The chief of any city or county fire department or of any fire protection district, and their authorized representatives, shall enforce within its jurisdiction the building standards and other regulations of the State Fire Marshal, except those described in subdivision (a) or (d) . (c) The State Fire Marshal shall have authority to enforce the building standards and other regulations of the State Fire Marshal in areas outside of corporate cities and districts providing fire protection services. (d) The State Fire Marshal shall have authority to enforce the building standards and other regulations of the State Fire Marshal in corporate cities and districts providing fire protection services upon request of the chief fire official or the governing body. (e) Any fee charged pursuant to the enforcement authority of this section shall not exceed the estimated reasonable cost of providing 2/16/200510:42 AM ( [� Attachment 1 (pg, 2 of 2) f Rental Property Inspection Fee Program. the service for which the fee is charged, pursuant to Section 66014 of the Government Code. 13146.2. (a) Every city or county fire department or district providing fire protection .services required by Sections 13145 and 13146 to enforce building standards adopted by the State Fire Marshal and other regulations of the State .Fire Marshal shall, annually, inspect all structures subject to subdivision (b) of Section 17921, except dwellings, .for compliance with building_ standards and other regulations of the State Fire Marshal. (b) A city, county, o= district which inspects a structure pursuant to subdivision (a) may chaisge aiid oollect a fee .for -the inspection from the owner of the structure in an amount, as determined by the city, county, or district, sufficient to pay -its costs of that inspection. 2/16/2005 10:42 AM City Of Azusa Building Divisior Attachment 2 (pg 1 of 2) I yc�.. Wt I Building Rental Property Ordinances and Inspections Homepage Building Plan What is the Rental Housing Inspection Program? Requirements The program is based on an ordinance which requires the Building Permits annual inspection of all rental housing within the City of Forms Azusa.The properties are inspected for compliance with Rental Property state and local laws involving property maintenance. Interior Ordinances and inspections are conducted only with the consent of tenants. Inspections Once an inspection is completed,the owner is notified of Contact Us any deficiencies found and asked to correct them in a timely manner. GENERAL Why does the City have a Rental Inspection Program? Azusa Home For years the City responded to complaints from tenants, Page other nearby rental property owners, and residents about Calendar the lack of property maintenance on many rental properties. Nearby property owners complained that as a result of poor DEPARTMENTS property maintenance on rental properties, their property Building values were being adversely affected.This same complaint Business was echoed by other rental property owners who believed Licensing that their ability to rent, and even their ability to increase City Clerk rents, was being adversely affected by other errant rental City Manager property owners in their neighborhoods. This all culminated Community in 1989 when the City began the Rental Housing Inspection Development program following public meetings with the rental property Community owners and the local apartment owner's association. Improvement What is the Real Property Records Report Ordinance? Engineering This is an ordinance that requires all properties being sold Finance in the City of Azusa to be reviewed for compliance with local Human land use regulations, and building regulations. This report is Resources required to be provided to a prospective buyer which will Library disclose to the buyer any unpermitted construction, Police unpermitted land uses, any legally existing nonconforming Planning uses, or other information which may affect the buyer. Public Works Recreation What Is the Rental Housing Inspection Ordinance? Economic The ordinance simply requires that all rental housing in the Development/Redevelopment City of Azusa be registered with the City and that it be Senior Center inspected annually to insure that the property is being Transportation maintained. Utilities Will Each Apartment or House on the Property Be Inspected? Upon making an inspection the inspector will contact tenants and ask if there are problems. In larger complexes this will be done on a random basis. If there is an apparent need each unit may be inspected.All exterior areas will be inspected. What Happens If There Are Violations? 1 http://www.ci.azusa.ca.usiuilding/rental_ordinances.asp 2/16/2005 City Of Azusa Building Division Atr�chment 2 (pg 2 of 2) Where violations are found you will receive an inspection report showing the problems and location. The notice will also include a date for compliance. Upon reinspection if the correction is not made you will be charged for any additional City time and expense in handling the violation. What Will the Inspector Be Looking For? The inspector will be looking for a number of things including;junk cars, dead vegetation, accumulations of junk and debris, landscape maintenance, building maintenance, graffiti, adequate refuse facilities, illegal/unpermitted construction, dilapidated structures and substandard housing conditions. What Happens If I Do Not Register My Rental Property? If you do not have a unit registered, the utilities (gas,water, electricity)will not be turned on when a vacancy exists until it is registered.The City will also be reviewing assessor records for unregistered units. If you do not register a rental you will be charged for all enforcement costs. Why Is The City Interested in Rental Properties? The City of Azusa has 6,500 rental units which accounts for approximately 50% of existing housing.Approximately ninety percent(90%)of the complaints received by the City involve rental housing and the failure of many owners to maintain their property. What Happens If The City Received a Complaint About My Property Between Inspections? If the complaint is valid you will be charged for our time and expense. However, if you are registered we will call you about the complaint if you provide a telephone number you can be reached at during business hours.This will save you some direct cost charges. More Questions? If you have any other questions regarding rental property ordinances or inspections, please contact Dave_ Rudisel in the Community Improvement division Drudisel@ci.azusa.ca.us or(626)812-5285. The Division fax number is (626)334-5464. home I administration i building I business licensing i city clerk'I community development I community improvement I economic development I engineering i finance I human resources i library i police I planning I public works i recreation I senior center I transportation I utilities designed by ernes[&alien,maintained by Ury staff i a c.yw r- copyright 2000 emest&alien i contact webmaster ., i � I http://www.ci.azusa.ca.us/building/rental_ofdinances.asp 2/16/2005 -'] P achment 3 (pg 1 of 1) Rental Property Inspection Fee Program ANNUAL FIRE AND LIFE SAFETY INSPECTION LIST This list applies to: 1. Rental dwelling properties with three or more units 2. Hotels, motels, bed&breakfasts, and youth hostels 3. Senior facilities 4. Sororities and Fraternities 1. Conduct file review prior to inspection. 2. Check address numbering on building exterior. 3. Check clearance around all fire hydrants. 4. Check fire extinguishers including placement, minimum rating and service records. 5. Check fire sprinkler system (if applicable) for routine maintenance and clearance around fire risers. 6. Check standpipe hose cabinets and standpipe outlets for obstructions and covers. 7. Check fire alarm system (if applicable) for maintenance records, battery dates and fire alarm control panel status.. 8. Check common areas; i.e. hallways,for penetrations in walls; floors or ceilings. 9. Check exit doors, exit signs, and exit pathways for code compliance. 10. Check utilities/laundry rooms and mechanical rooms for general housekeeping issues. 11. Check main electrical panels for clearance and access. 12. Check smoke detectors in any vacant rental units for placement and operation. 13. Check smoke detector and battery testing records for all apartment units. 14. Check Fire Department's knox box(if applicable) for current keys. 15. Check perimeter for weeds or any other combustibles. 16. Check fire lanes for signage and red curbs.. 17. Update records; i.e. emergency contacts. 18. Input data into computerized inspection tracking program and file paper copies. 19. Telephone owner's representative after completion of inspection to "verify records and emergency contacts. 20. Re-inspect, if applicable, to verify that deficiencies have been corrected. 2/16/2005 10:42 AM I ' b At hment 4 (pg 1 of 4) City Of it San Luis OalsPO User Fee Cost Recovery Policy USER FEE COST RECOVERY GOALS such, cost recovery from the applicant is appropriate. A. Ongoing Review 3. Effect of Pricing on the Demand for Services. The level of cost recovery and Fees will be reviewed and updated on an related pricing of services can significantly ongoing basis to ensure that they keep pace with affect the demand and subsequent level of changes in the cost-of-living as well as changes services provided. At full cost recovery,this in methods or levels of service delivery. has the specific advantage of ensuring that the City is providing services for which In implementing this goal, a comprehensive there is genuinely a market that is not analysis of City costs and fees should be made at overly-stimulated by artificially low prices. least every five years. In the interim, fees will Conversely,high levels of cost recovery will be adjusted by annual changes in the Consumer negatively impact the delivery of services to Price Index. Fees may be adjusted during this lower income groups. This negative feature interim period based on supplemental analysis is especially pronounced, and works against whenever there have been significant changes in public policy, if the services are specifically the method,level or cost of service delivery. targeted to low income groups. B. User Fee Cost Recovery Levels 4. Feasibility of Collection and Recovery. Although it may be determined that a high In setting user fees and cost recovery levels, the level of cost recovery may be appropriate following factors will be considered: for specific services, it may be impractical or too costly to establish a system to identify 1. Community-Wide Versus Special Benefit. and charge the user. Accordingly, the The level of user fee cost recovery should feasibility of assessing and collecting consider the community-wide versus special charges should also be considered in service nature of the program or activity. developing user fees, especially if The use of general-purpose revenues is significant program costs are intended to be appropriate for community-wide services, financed from that source. while user fees are appropriate for services that are of special benefit to easily identified C. Factors Favoring Low Cost Recovery Levels individuals or groups. Very low cost recovery levels are appropriate 2. Service Recipient Versus Service Driver. under the following circumstances: After considering community-wide versus special benefit of the service, the concept of 1. There is no intended relationship between service recipient versus service driver the amount paid and the benefit received. should also be considered. For example, it Almost all "social service" programs fall could be argued that the applicant is not the into this category as it is expected that one beneficiary of the City's development review group will subsidize another. efforts: the community is the primary beneficiary. However, the applicant is the 2. Collecting fees is not cost-effective or will driver of development review costs, and as significantly impact the efficient delivery of the service. l - L9 i AM--hmnent 4 (pg 2 of 4) User Fee Cost Recovery Policy 3. There is no intent to limit the use of (or meet regulatory requirements. Building entitlement to) the service. Again, most permit, plan checks, and subdivision review "social service" programs fit into this fees for large projects would fall into this category as well as many public safety category. (police and fire) emergency response services. Historically, access to E. General Concepts Regarding the Use of neighborhood and community parks would Service Charges also fit into this category. The following general concepts will be used in 4. The service is non-recurring, generally developing and implementing service charges: delivered on.a "peak demand" or emergency basis, cannot reasonably be planned for on 1. Revenues should not exceed the reasonable an individual basis, and is not readily cost of providing the service. available from a private sector source. Many public safety services also fall into 2. Cost recovery goals should be based on the this category. total cost of delivering the service,including direct-' costs, departmental administration 5. Collecting fees would discourage costs, and organization-wide support costs compliance with regulatory requirements such as accounting, personnel, data and adherence is primarily self-identified, processing, vehicle maintenance and and as such, failure to comply would not be insurance. readily detected by the City. Many.small- scale licenses and permits might fall into 3. The method of assessing and collecting fees this category. should be as simple as possible in order to reduce the administrative cost of collection. D. Factors Favoring.High Cost Recovery Levels 4. Rate structures should be sensitive to the The use of service charges as a major source of "market" for similar services as well as to funding service levels is especially appropriate smaller, infrequent users of the service. under the following circumstances: 5. A unified approach should be used in I. The service is similar to services provided determining cost recovery levels for various through the private sector. programs based on the factors discussed above. 2. Other private or public sector alternatives could or do exist for the delivery of the F. Low Cost-Recovery Services service. Based on the criteria discussed above, the 3. For equity or demand management following types of services should have very purposes, it is intended that there be a direct low cost recovery goals. In selected relationship between the amount paid and circumstances, there may be .specific activities the level and cost of the service received. within the broad scope of services provided that should have user charges associated with them. 4. The use of the service is specifically However, the primary source of funding for the discouraged. Police responses to operation as a whole should be general-purpose disturbances or false alarms might fall into revenues,not user fees. this category. 1. Delivering public safety emergency 5. The service is regulatory in nature and response services such as police patrol voluntary compliance is not expected to be services and fire suppression. the primary method of detecting failure to -2 At hment 4 (pg 3 of 4) User Fee Cost Recovery Policy 2. Maintaining and developing public facilities Mid-Range Cost Recovery Activities that are provided on a uniform, community (30%to 60%) wide basis such as streets, parks and e. City/County Library room rentals general-purpose buildings. f. Special events (triathlon, other City- 3. Providing social service programs and sponsored special events) economic development activities. g. Youth track h. Minor league baseball G. Recreation Programs i. Youth basketball j. Swim lessons The following cost recovery policies apply to k. Outdoor facility and equipment rentals the City's recreation programs: Low-Range Cost Recovery Activities 1. Cost recovery for activities directed to adults (0 to 30%) should be relatively high. 1. Public swim in. Special swim classes 2. Cost recovery for activities directed to youth n. Community garden and seniors should be relatively low. In o. Youth STAR those circumstances where services are p. Teen services similar to those provided in the private q. Senior services sector, cost recovery levels should be higher. 4. For cost recovery activities of less than 100%, there should be a differential in rates Although ability to pay may not be a between residents and non-residents. concern for all youth and senior participants, However, the Director of Parks and these are desired program activities, and the Recreation is authorized to reduce or cost of determining need may be greater eliminate non-resident fee differentials when than the cost of providing a uniform service it can be demonstrated that: fee structure to all participants. Further, there is a community-wide benefit in a. The fee is reducing attendance. encouraging high-levels of participation in b. And there are no appreciable youth and senior recreation activities expenditure savings from the reduced regardless of financial status. attendance. 3. Cost recovery goals for recreation activities 5. Charges will be assessed for use of rooms, are set as follows: pools, gymnasiums, ball fields, special-use High Range Cost Recovery Activities areas,and recreation equipment for activities (60%to 100916) not sponsored or co-sponsored by the City. Such charges will generally conform to the a. Classes(Adult and Youth) fee guidelines described above. However, b. Day care services the Director of Parks and Recreation is c. Adult athletics (volleyball, basketball, authorized to charge fees that are closer to softball,.lap swim) full cost recovery for facilities that are d. Facility rentals (Jack House, other in- heavily used at peak times and include a door facilities except the City/County majority of non-resident users. Library) 6. A vendor charge of at least 10 percent of gross income will be assessed from individuals or organizations using City facilities for moneymaking activities.. -3- A `chment 4 (pg 4 of 4) User Fee Cost Recovery Policy 7. Director of Parks and Recreation is 1. Surveying the comparability of the City's authorized to offer reduced fees such as fees to other communities provides useful introductory rates, family discounts and background information in setting fees for coupon discounts on a pilot basis (not to several reasons: exceed 18 months) to promote new recreation programs or resurrect existing a. They reflect the "market" for these fees ones. and can assist in assessing the reasonableness of San Luis Obispo's 8. The Parks and Recreation Department will fees. consider waiving fees only when the City Administrative Officer determines in writing_ b. If prudently analyzed, they can serve as that an undue hardship exists. a benchmark for how cost-effectively San Luis Obispo provides its services.. H. Development Review Programs 2. However, fee surveys should never be the The following cost recovery policies apply to sole or primary criteria in setting City fees the development review programs: as there are many factors that affect how and why other communities have set their fees at I. Services provided under this category their levels. For example: include: a. What level of cost recovery is their fee a Planning (planned development permits, intended to achieve compared with our tentative tract and parcel maps, cost recovery objectives? rezonings, general plan amendments, b. What costs have been considered in variances,use permits). computing the fees? b. Building and safety (building permits, c. When was the last time that their fees structural plan checks,inspections). were comprehensively evaluated? c. Engineering (public improvement plan d. What level of seryice do they provide checks, inspections, subdivision requirements,encroachments). compared with our service or performance standards? d. Fire plan check. e. Is their rate structure significantly 2. Cost recovery for these services should different than ours and what is it intended to achieve? generally be very high. In most instances, the oCity's cost recovery goal should be 3. These can be very difficult questions to 100%. address in fairly evaluating fees among 3. However, in charging high cost recovery different communities. As such, the comparability of our fees to other levels, the City needs to clearly establish communities should be one factor among and articulate standards for its performance in reviewing developer applications to many that is considered insetting City fees. ensure that there is`value for cost." 1. Comparability With Other Communities In setting user fees, the City will consider fees charged by other agencies in accordance with the following criteria: