City ordinance could increase fees for owners of third-tier properties

The Minneapolis City Council is considering an ordinance this spring that could charge landlords with high-maintenance properties more to keep their licenses.

Property owners say if the measure passes, they may have to increase tenants’ rent.

The goal of the proposed ordinance is to charge rental property owners for the amount of time and resources they use from the city.

The city’s Director of Regulatory Services Nuria Rivera-Vandermyde said the proposal would give property owners an economic incentive to take better care of their properties.

City Council President Barb Johnson announced the proposal last month, and the council will hold a public hearing on the ordinance in April.

Minneapolis rental properties are categorized into three tiers. The first tier comprises the city’s least complained about and inspected properties –the third tier are the most.

Third-tier properties account for about 5 percent of Minneapolis properties, but Johnson said they require more of the department’s resources than those in the first or second tier.

Properties across Minneapolis pay a $69 fee each year for their first unit and $19 for each additional unit on the property.

The city may increase that fee to $70, $112 and $373, depending on the property’s place within the tier system by the end of August, when annual property licenses fees are due.

“It should not be that all properties are created equal if some are requiring us and the police to go out so many times to address an issue that other property managers are taking care of on their own,” Rivera-Vandermyde said.

Paul St. Andrew, a property owner with a third-tier property, said his tenants will see a rent increase if the proposal goes through so he can pay the fees.

Previous tenants at his only property that qualifies as substandard received a lot of complaints, he said, but they don’t live there anymore.

St. Andrew said he’s renovating the property and hopes to change rank before the potential increase takes effect.

“This is a ploy by the city to tax poor people,” he said

Rivera-Vandermyde said the proposed increase has nothing to do with revenue and is designed to encourage compliance.

“The choice to be a tier-three property is not mine,” she said. “So if everybody shifted and [became] a tier-one property and we had less revenue as a result of that, then so be it.”

Co-owner of Dinkytown Rentals Tim Harmsen oversees more than 700 bedrooms in the Dinkytown area.

Though the new policy would require property owners to be more mindful of their management style, he said, tenants are typically responsible for complaints.

Large apartment complex owners pay the bulk of rental license fees, but Rivera-Vandermyde said those properties generally require the least amount of work because their management is more involved.

“It’s really the small one- to four-units that cause the bulk of the issues,” Rivera-Vandermyde said. “And they certainly don’t pay their fair share of rental license fees.”

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