Code Enforcement Reform

lewiston_kirlin2We can make sure all residents and property owners working with each other in good faith can have both high-quality, affordable housing—and sustainable business models that foster investments in rebuilding our city. It starts by ensuring all buildings are free of major health and safety violations with a rental licensing program, financed by a modest registration fee. Those who sign up immediately and have buildings in good shape will then be eligible for free trash pick up by the city—as well as a host of other investments. That project can only reach scale with the infusion of more state and federal dollars. But we can lay the foundation for all of this with existing resources, without raising property taxes.

Introduction

For too long, Lewiston has been in a circular argument around housing: good landlords versus bad landlords, good tenants versus bad tenants. What has been missing is a policy framework that people of good will on all sides can get behind. At the end of the day, everyone can agree that local property owners who play by the rules deserve investment and a sustainable business model. Everyone also agrees that high, quality, affordable housing is essential for a decent society. This enormous common ground gives us plenty of room to work together to make some transformative progress for our city.

Below I outline a policy framework that people of goodwill on all sides can get behind. It comes from years of talking with landlords, tenants, and other property owners about their needs—plus discussions with national experts on what has worked well in other cities similar to Lewiston.

Like other proposals in this campaign, there’s a lot that we can do with existing resources, and none of this is financed through increases in property taxes. At the same time, to truly shift the underlying dynamics of Lewiston’s housing market, we are going to need more than existing resources. That’s where aggressive pursuit of revenue sharing and other state and federal funds come in, as well as utilizing the tax reduction resources outlined in the already-released tax fairness proposal.

Importantly, however, we recognize that these resources should go to high-road, local owners. That’s why we start with determining who those are, and then build towards a suite of incentives and investment programs to truly impact the market.

Registration Program and Code Enforcement

The goals of licensing multi-unit property are: 1) fostering better communication and 2) ensuring basic housing quality standards. The city of Portland has already implemented a rental registration program after six people died in a fire that did not meet fire safety codes.  Sanford is currently discussing a similar proposal, and several other Maine towns have one.

Many landlords struggle to even find the contact information for their neighbors to discuss issues that come up in the natural course of owning property. The city often struggles—particularly when ownership defaults to a lending institution—to communicate with owners when their property begins to cause neighborhood blight. Establishing a basic registry lays the foundation to address these basic communication issues.

Importantly, those who immediately register and do not have any major health or safety violations in their buildings should be enrolled in the city’s trash removal program—for free. Property owners across downtown lament that they have to pay for trash pick up, while people outside of downtown do not. Over the years, taskforces, like the Downtown Neighborhood Action Committee, have considered free trash pick up a helpful policy. We should offer that as a major “carrot” to enroll in the registration process. This is paid for through the tax fairness policy outlined elsewhere. My proposal is that landlords who participate in the registration process and have their buildings up to code should be eligible for the free trash removal on a first-come, first serve basis, until the resources are exhausted. (There should be about $500-$800k available for the program.) For landlords that use dumpsters, or would prefer an equivalent amount of resources used to defray the cost of disposing larger waste at the dump, we should do our best to build in flexibility to the program to accommodate these preferences. For example, a three-unit, owner-occupied building should be eligible for equivalent discounts on the city’s e-pass program at the solid waste facility.

If additional resources become available, the trash removal program should be made available to everyone complying with code. Until then, however, it likely will need to operate on a first-come, first-serve basis.

If resources are still available at the end of the year, then landlords with up-to-code buildings should be eligible for additional support to defray the costs of taking, for example, demolition trash to the solid waste facility.

Following the registration process, the city should conduct comprehensive inspections. Because inspection capacity is always limited at a local level, Lewiston should consider using a firm like Nan McKay that specializes in designing mass, comprehensive inspection strategies to ensure on basic issues like: leaking roofs, working heat and hot water, pest infestation, etc… After ensuring every unit of housing is inspected, the city now has a database of housing quality. Typically, about fifty percent of landlords comply with the first notice to schedule inspections, and immediately remedy any issues discovered. With a few more rounds of follow up, the next 40% usually come on board, with the final ten percent or so requiring legal action. That’s where we should direct our existing code enforcement energy. Importantly, people’s compliance in subsequent years depends on seeing the rules getting enforced evenly and fairly. That’s why follow up will be so important to the ongoing maintenance of the program. The waste removal incentives are therefore targeted to those first 50% of people who sign up to register and quickly address any issues discovered in inspection.

From this point forward, “good landlord” versus “bad landlord” will no longer be a matter of anecdote. We can do real analysis on who is obeying the law, how many properties they own, and what it will take to increase their share of the market. Conversely, we can do the opposite for those not obeying the law. Borrowing approaches from other cities across the country, property owners can be rated on a five-point scale. At one end, are the highest road owners, whose property only needs inspection every five years to ensure they are maintaining high standards. They receive discounts, incentives, and rewards, as outlined below. On the other end of the scale are the “bad apples,” who receive follow up inspections more than once a year, penalties for non-compliance, and are not eligible for city programs. This approach is borrowed from places like Brooklyn Center, Minnesota, an inner-ring suburb of Minneapolis, that has used this approach with success.

Investments in high road owners

But we aren’t going to be able to rebuild our city with only “sticks”; we need “carrots” as well, to make sure that we push the economics of rebuilding housing in the right direction. All of this is made possible by having a registry that allows a comprehensive, data-driven approach to investment. The following are ideas borrowed from conversations with local landlords, and best practices from other cities in the US and abroad. All of these investments—particularly the largest ones—should prioritize going to local people with a solid track record of success.

  • Regular meetings: It sounds simple, but many landlords understandably get frustrated when the only conversation with the city is around complaints. Owning property is not an easy job, requiring one to deal with people on an intimate level, as well as technical projects related to maintenance, not to mention the economics of ending the year in the black. By shifting from a reactionary to a systemic approach to housing, the city should be able to proactively reach out and meet with most owners every 1-3 years. These conversations allow potential conflicts to get solved before they spiral, as well as help officials and property owners identify mutually beneficial opportunities.
  • Accelerated grant/ loan approval. Another simple step we can take to make life a little easier is streamlining the process for application for city funds. Because we do not have a systematic list of the top-tier property owners in Lewiston, when people apply to the city for resources for building rehabilitation, the process starts from scratch. A property owner recently told me that, although they were grateful for the city’s support, it was the smallest part of their project, and took the longest to procure. Once we have a list of top-tier owners, we should streamline the process to ensure the resources can move in a few weeks (or less) from the time in which the owner applied.
  • Negotiated discounts at hardware stores. In the U.K., several municipalities work with hardware stores like Home Depot and Lowe’s to negotiate discounted rates for top-tier property owners. Once Lewiston has a clear list of those, there’s no reason why we can’t do the same.
  • Litter removal and trash discount. In the Rebuild Lewiston Job Corps proposal, we discuss the idea of using our welfare system to create public jobs, like clean up of blighted properties, financed by a fee assessed to the offender. Similarly, we can think about similar help for top-tier landlords. From basic litter pick up, to discounted rates for trash removal, there are many small things that the city can do to send a signal to property owners we are a good place to invest.
  • Security deposit assistance. Another best practice from other communities is providing security deposit assistance for people who are likely to be good residents of buildings, but simply cannot come up with the money for it. This helps property owners by reducing vacancy rates, and helps residents get into housing more quickly. In particular, asylum seekers often cannot obtain security deposits, although many landlords are happy to have them.
  • $4 million in additional grants to high road, resident-owned housing. In 2015, we rolled out a plan to invest in resident-owned housing, particularly limited equity housing cooperatives, like the RAISE OP. This is still a good idea. At this level of investment we could put another 100 units of housing to resident ownership. While it will take many different kinds of ownership models to truly get our city back on track, limited equity housing cooperatives offer a unique pathway out of poverty for residents, combined with a bulwark against gentrification, and have already demonstrated great capacity at rehabilitating buildings. Increasing their market share will raise all boats, by stabilizing property values and ensuring investment stays local. The city already does have some modest programs to help with building rehab. We need to scale them up, however, to truly impact the market.
  • Secure a $30 million, low-interest redevelopment loan for property rehabilitation for 100 units. Perhaps the most ambitious of this plan—but also made doable by have a systematic registry—the city should approach multiple lending institutions to craft a large participation, economic development loan that can be used to finance low-interest projects for Lewiston’s best property owners. Institutions from Androscoggin Bank to the Finance Authority of Maine to Coastal Enterprises could be engaged to land these resources. The key role for the city is to act as a catalyst, using the data from the registry to demonstrate that a key cohort of, say, a dozen landlords have the track record of doing right by Lewiston and are worthy of interest rates and terms better than they probably could get as individuals. By ensuring a broad range of lending institutions participate in the financing, it helps to minimize the risk of any one institution, while also achieving the scale necessary to really transform the city.

Voucher Program

Finally, once we have established the top property owners in Lewiston, we want to help ensure that housing both remains affordable. To that end, we should work to draw down state and federal resources to create a local voucher program (similar to what was intended in LD 1475 this year).

We should advocate for state and federal dollars for housing vouchers that will ensure that low income people can stay in Lewiston and continue to afford housing—at a rate that allows high road property owners the resources to continue to reinvest in their buildings. It’s widely understood that one should not pay more than one-third of their income for housing, yet state and federal programs currently fall far short of guaranteeing that standard. We must work in coalition with others to change that.

Financing

A modest, per-unit registration fee covers the cost of implementing the licensing program, and owners may obtain discounts on that fee for demonstrations of quality, such as completion of HUD Quality Standard Inspections.

There are more details in the tax plan, but we expect to be able to finance much of the downtown trash removal for high road landlords through the state’s property tax reduction funding (passed in last year’s state budget).

Registration fees and penalties for non-compliance for “bad apple” landlords must more than cover the cost of administering the regulations, and must be more expensive than the violation. For example, the fine paid for failure to heat one’s building should be more expensive than what the landlord would save by not filling the oil tank.

For programs like the security deposit assistance, the grants for resident-owned housing, and the voucher program, we may be able to get some of these started with existing resources, but we won’t be able to scale these programs until the state restores revenue sharing funding. Further state and federal opportunities may also be available to draw down resources. We won’t be able to do any of that, however, if we lack a compelling vision for how those resources can be used. That’s why this plan—particularly the registry that can lay the foundation for making a data-driven case for investment—is so important. Plenty of other cities have turned their declining, post-industrial core into thriving, exciting places to live and work. We can too.