March 29, 2024

Rental property, business owners ask city to suspend inspection programs

Landlords fill council chambers asking for ‘common sense’ improvements that don’t discourage property owners

Landlords gather inside the council chambers on Oct. 3 to discuss their issues with the City of Newton's rental housing inspection program. Many of them say they are losing money and irreplaceable housing stock because of the program.

Newton landlords gathered in droves Oct. 3 to tell city council they are losing irreplaceable housing stock in town, and they request the city immediately suspend its rental housing and commercial business/property inspection programs until a more “common sense solution” can be found and implemented.

Fred Rhodes, a Newton landlord, has addressed his issues with the rental inspection program to council members in the past, but this time he was accompanied by dozens of other landlords who felt the same way. While he spoke favorably of the council, he stressed the program is causing problems.

“I would like to address you this evening on some struggles that we see brewing in our community, struggles that have a long-lasting affect on our town,” Rhodes told city council members. “A lot of times challenges and decisions we make we don’t necessarily see down the road.”

Several years ago the city saw a weakness in the rental inspection program, Rhodes added, and there were a fair amount of properties considered unsafe. Under the rental inspection program at the time, there were no substantial moves to close those homes down or enforce compliance with certain guidelines.

If enforcement had been made back then, he argued the problem would have been solved “and we would not be where we are at today.”

In an effort to correct the problem, Rhodes said a decision was made to throw out the old rental inspection program and for a new program that has since been carried over to commercial businesses. But problems have come up as a result of the new program and is creating “a lot of unrest” in the community.

This unrest is felt by people that the city counts on “to provide extremely valuable housing and much needed businesses,” Rhodes said.

“Both of which are crucial to the development and prosperity of our community. Our inspector has been given free reign to interpret the guidelines and make terribly unnecessary rule changes that affect some of our good quality houses that we have. This, in turn, decreases the value of the property in our town.”

Inspection services in Newton are provided by a third-party company, Iowa Inspections, on behalf of the city. But many of the landlords that spoke during the council meeting felt the company is incentivized to fail properties, even though the city says a vast majority of properties pass the initial inspection.

Barney Bushore, a landlord, mentioned specific issues with the guidelines, including not being able to use a garage for storage and not being able to store an unassembled bed in the basement room with no egress window. He also criticized the process of paying the same fee after failing the first inspection.

“I just think there has to be a little more common sense,” Bushore said.

Still, Rhodes and others said the rules put in place now are becoming quite costly for landlords. Julia Prendergast, a business owner and rental property owner, said the additional costs to meet compliance are discouraging landlords, saying she has sold three rental properties this past year to owner-occupants.

“I did this in a market where it is almost impossible to find a house to rent,” she said. “I sold because the rental inspection program made it prohibitive to maintain and made it hard to make a profit on these properties. Incidentally, these were nice homes for people to live and they were safe and affordable.”

Prendergast and others claimed the inspection program works against the city’s aging housing stock. Several houses and businesses were built more than 100 years ago. She called them quality structures that make the community unique and even draw people to town, but they were built under different guidelines.

“To bring this community up to a Waukee-standard will devastate our housing market and business environment,” she said. “It will take away the advantage of attracting people to move to our community. This is a great cost-advantage to have people move to Newton, which is going to change under this program.”

As a result, the landlords say people will not move to Newton. If new rental housing is built, Prendergast claimed it would raise the cost of rent.

Taking older houses off the market would also hurt Newton’s growth for years to come, she said. Landlords pleaded with the city to help them make the program easier. Laura Yochem, owner of Crazy Red Head Quilting and multiple rental properties, said the inspection programs are making landowners want to leave.

“I’m a lifer here in Newton, born and raised. My husband as well. But something’s gotta change because I’m ready to sell them all,” Yochem said.

CITY ADMINISTRATOR SAYS STAFF WILL MEET WITH LANDLORDS

Newton City Administrator Matt Muckler provided more information to Newton News after the meeting, noting staff will be working to reach out to landlords in the coming weeks to speak with them about specific details they would like to see changed about the program.

Staff is always willing to talk with individual landlords about they issues they have, Muckler said, and the city has consistently done so in a professional manner and made necessary adjustments to these programs in consultation with elected officials as needed.

For instance, the city no longer requires tree trimming in the inspection and have reduced expectations when it comes to paint.

“Several city staff meet monthly with Fred Rhodes as part of the (Newton Housing Development Corporation) Board meetings,” Muckler said in an email a day after the city council meeting. “I maintain regular contact with Julia Prendergast, Dave McNeer and others in the council chambers last night.”

Residential inspections are handled by the community development department, and commercial inspections are handled by the fire department. Property owners have been encouraged to contact city planner Brian Dunkelberger and Newton Fire Chief Jarrod Wellik on those respective inspection issues.

If property owners have an issue they would like addressed and they disagree with city staff on that particular problem, Muckler said they can present them to the building trades board. That committee is made up of fellow citizens. Muckler said the rules exist to ensure every resident has a safe and healthy place to live.

Housing codes for cities of more than 15,000 people are required by Iowa Code 346.17, which is something that is not optional or something the city can waive. Inspection programs, Muckler added, will reduce future demolitions under the D&D Program as these properties are not allowed to fall in disrepair.

According to the city, 91.25 percent of all inspected residential properties passed the initial or second inspection, and 88.24 of commercial properties passed their initial inspection. City residents have consistently identified improved curb appeal in survey results, and Muckler said these programs are part of that solution.

RENTAL INSPECTION PROGRAM DATA

In a memo sent to the city administrator, the mayor and city council members by Newton Community Development Director Erin Chambers, it was noted that the council adopted a goal in 2018 to update the city’s rental inspection program in order to improve quality of housing options in town.

“This goal is a direct response to citizen feedback regarding curb appeal, housing quality within neighborhoods, and desire to take measures to reduce the City’s need for continued significant investment into the D&D program,” Chambers said. “In September 2019, the current program was adopted.”

There are 723 rental properties registered in the city’s rental inspection program, which consist of 2,296 total units. The city noted these numbers can fluctuate.

Out of those 723 registered properties, 640 have been inspected and are now placed on a specific inspection schedule: four years if the property passed initial inspection, three years if passed on second or third inspection and annually if more than three inspections failed.

City staff began tracking rental property sales in 2021. During that same year, 51 properties were sold and were “taken out of service” from the rental program. As of 2022, the city says 48 properties have been sold and taken out of service. The city said 14 of the 48 properties were sold by a single landowner.

The city estimates 2.19 percent of rental properties in the program have been placed on the annual inspection schedule for failing more than three inspections.

Inspection fees were frequently brought up as a problem by the landlords, whoalso have permit registration fees of $15 per unit per year. Depending on a property’s performance, an inspection fee is also charged by the inspection company at $75 per unit and $25 for each additional unit in the same building.

Re-inspection fees are the same as initial inspection fees.

Properties that pass their inspections will be put on an inspection schedule. Depending on their performance, they may not get inspected again for another four years. But landlords will must pay the permit registration fee every year even without an inspection.

Keeping good relationships with landlords is key for the city. Chambers stated in her memo that effort has been taken to maintain an open dialogue. Staff and landlords attend monthly NHDC meetings, as well. An appeals process was created with the building trades board to resolve more difficult issues.

Earlier this year a meeting was held with the city, the landlord association and the inspection company to identify ways to continue to improve the program.The city made amendments to the rental inspection program, like the tree removal and painting requirements mentioned before.

COMMERCIAL BUSINESS PROPERTY INSPECTION PROGRAM DATA

The fire chief also sent a memo to city officials about the commercial inspection program, which does not have a statutory requirement from the state. Wellik said the program is rooted in fire prevention and public safety. In 2019, he city council made it a goal to update and enhance Newton’s commercial inspection program.

Like the rental inspection program, the program was adopted the following year. The program is still in the first cycle of inspection, Wellik said. The city was split into two halves: with the north half being inspected in 2021 and the south half to be inspected in 2022.

Currently, there are 488 commercial businesses properties in the program, which has increased from 375 in 2020.

Out of the 488 properties, 425 of them have been inspected and are now placed on an inspection schedule: three years if the property passed the initial inspection, two years if passed on the re-inspection and annually if two or more inspections failed. Out of the 425 properties, 375 passed their initial inspection.

Which leaves 26 of the 50 properties that failed their first inspection passed their re-inspection and will not have to the inspected again for two years. But 24 of the 50 properties that failed their initial inspection and re-inspection will need to be inspected annually until they comply with regulations.

Commercial property owners must pay permit and inspection fees, too. The permit fee costs $25 per unit per year, but the inspection fees are varied. But like the residential rental inspection program, the re-inspection fees are the same as initial inspection fees.

Depending on the square footage of the business properties, owners will pay $100 to $400 for an inspection fee. The frequency of an inspection fee may vary depending on the inspection performance of the commercial property.

Contact Christopher Braunschweig at 641-792-3121 ext 560 or at cbraunschweig@newtondailynews.com

Christopher Braunschweig

Christopher Braunschweig

Christopher Braunschweig has a strong passion for community journalism and covers city council, school board, politics and general news in Newton, Iowa and Jasper County.