Committee votes to send rental inspection pilot to council

Brent Brown: City should target repeat offenders instead of entire industry.

Monica Horton: Not all council members see rental problems in their neighborhoods.

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Springfield City Council’s Community Involvement Committee gave the nod to a rental inspection program at its meeting Aug. 27.

The proposed program is an 18-month pilot that would inspect all of the estimated 1,541 single-family and duplex rental properties in the West Central Neighborhood Service District, according to Martin Gugel, director of Building Development Services, whose department would oversee the program. That figure removes properties that are not subject to inspection, such as those funded by the U.S. Department of Housing and Urban Development, which does its own inspections.

The program next heads to council for discussion and a vote, though a date has not yet been set. Gugel said the earliest council could consider the measure is late September.

Gone from the proposal following committee review are two ideas that raised concern among landlords. One is a requirement that either the owner or a representative of the owner reside in the Springfield Urban Service Area. The other is a tool that would allow the city to request utilities to be turned off at the home or business of an owner or property manager with properties whose violations have not been resolved.

In an Aug. 12 presentation to council, Gugel said if approved, the pilot program would target the West Central neighborhood, where structures have an average age of 102 and many nuisance complaints are made, making it ideal for the pilot.

Landlords would be charged a $35 license fee per unit annually – an amount that would cover an initial inspection – plus $50 for reinspections. The pilot is projected to generate some $69,000 annually in revenue to go toward its cost, and that is roughly the proceeds anticipated from license and reinspection fees, according to Gugel. Startup costs have been calculated at $80,000 with an annual cost of $238,000, including the salary and benefits of a dedicated inspector and office administrator for the pilot, Gugel reported to council.

The city is subsidizing the shortfall for the pilot, Gugel said. This prompted Councilmember Brandon Jenson to suggest at the council luncheon that there not be a license fee during the pilot year. That suggestion is not incorporated into the bill as currently written.

On Aug. 21, Gugel presented the pilot to the Springfield Apartment & Housing Association.

“The overall goal of this program is to improve the safety and livability and the quality of rental housing in the city,” he said to the packed banquet room at Highland Springs Country Club.

Gugel said the evolving plan incorporates concerns brought forth by tenant representatives and SAHA members.

“We’re trying to find that balance, again, so that we can achieve that overall goal,” he said.

After the pilot, the city will determine whether to expand the program, Gugel said.

After the presentation, Brent Brown, founder and CEO of Entrust Property Solutions LLC and president of SAHA, said the organization’s members have some concerns about the program.

One of these, according to Brown, is the broad-brush approach taken by the program, when his organization’s members are not among those on recent lists of nuisance properties.

“They’re trying to do the right thing, because there are people that make all the rest of us look bad – that don’t take care of their property, that don’t take care of their residents,” he said.

SAHA members hold themselves to a higher standard, according to Brown.

“We have to figure out the sweet spot where we’re punishing those that are not doing their job and yet we’re not lumping every other owner, operator, into that category,” he said.

For about a year overlapping 2022-2023, the city released quarterly lists of repeat offenders in nuisance property reports. Brown said that list represented about 300 units, which he estimated to be a half-percent of the total units in the city.

“This group, I know we’re doing our job, because we have other obligations – investor obligations, lender obligations,” he said of SAHA members. “You can’t fly under the radar if you’re in this circle and have dilapidated property.”

A housing study commissioned by the city and released in December 2023 showed 97% of all housing structures in the city are occupied. The study showed a majority of housing in the city is rented – only 42% of Springfield residents occupy owned homes – and that there was a shortage of 14,000 housing units in the city.

The need for housing is well documented, according to Brown, and he doesn’t see the inspection program as helping the situation.

“Rents will go up – this is inevitable,” he said. “For someone like me, if I’ve got $35 a door and I own 1,000 properties, that’s $35,000. The reality is, rents are going to have to adjust. Do we need more units, or do we need affordable units? Layering regulation is going to make both difficult.”

Asked how he would solve the problem, Brown said he would target repeat offenders instead of the whole rental housing industry.

“That’s where I’d start,” he said. “If they can’t fix it, some of us will go in and buy it and we’ll fix it, whatever. But I would go after those guys.”

Committee discussion
The input from council’s Community Involvement Committee may signal some of the debate to be brought up by the full council when the legislation hits its agenda. Its appearance is not yet scheduled, according to a city spokesperson.

Gugel outlined the teeth in the program for property owners who either fail to register or fail to take care of violations in a specified period of time.

In either instance, property owners can be brought before a municipal court judge and face a fine of $500-$2,500 per violation, Gugel said.

They could additionally face administrative adjudication, he said, and an administrative fine of the same amount, plus costs of a lien. Ultimately, they may find that their property has to be surrendered for a sheriff’s sale.

Councilmember Monica Horton, who represents Zone 1, said she prefers the requirement for a company representative to live locally.

“When it comes to those critical areas, I know that not everyone sees that in their neighborhood, but I do, every single day,” she said.

Horton said property management can be built into the business model and it works.

“If you’re out of state, you don’t even know what’s going on with your property, and nine times out of 10, according to the housing study, your property is probably in our zone, boarded up, floors just looking any old kind of way,” she said. “It’s unacceptable to people who live in that area.”

Councilmember Callie Carroll, chair of the committee, said having an emergency contact is a fair requirement, but noted she can’t agree with requiring an owner or contact to live within the city.

Councilmember Heather Hardinger said if contacts are not reachable within the pilot program, at that point city officials can talk about what additional teeth might be needed to reach their goals.

Tenant perspective
At the Aug. 25 council meeting, representatives of the local tenant community spoke up in favor of a rental inspection program. Many were repeat visitors to the council podium. Springfield Tenants Unite was founded in June 2020 as a city-wide tenant union, according to its website, and members have been advocating for a rental inspection program nearly from the start.

Alice Barber, a leader of STUN, urged council to pass the rental licensing and inspection program but to do so with the requirement intact for landlords or their representatives to reside in the city.

“It’s not fair for tenants, neighborhoods, city employees or good landlords to let bad landlords fail at their jobs and get away with it,” she said.

In an interview after the meeting, Barber explained why it’s important that a landlord or representative be local.

“We know that both local and nonlocal landlords can run properties well or poorly. The problem is, they all have to be accountable, no matter where they are,” she said, adding that her own landlord is not based in Springfield and could adequately respond to any violation.

She said inspectors have experienced difficulty reaching out-of-town landlords.

“They’ve said it’s a problem; they put it into the ordinance completely of their own accord because it’s a problem,” she said. “If the people who are already trying to inspect just based on complaints are clearly having difficulty getting a hold of someone just to be a point of contact, we need something to change so that there can be a local point of contact.”

If council approves the pilot, Gugel said, it will take about four months to get staff, equipment and software in place. The 18-month period includes that preparation period at the front end, plus two months of analysis of data at the back end, with about a year of inspection activity.

Gugel said it is helpful to begin with a small-scale pilot to work out the kinks that may be found along the way.

“Any problems we encounter with our procedural processes, we can address those – that’s easier to do on a much smaller scale,” he said. “We want to put a good foundation in that we can build on.”