Advocates urge inspections of single-family rental homes

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by Cynthia Price
Legal News

Cascading effects of the foreclosure crisis currently seem endless. A group that includes local stakeholders and Grand Rapids city representatives has worked on how to address some of the worst consequences.

And although the working group’s recommendations will cost the city some money, the  group was empowered to develop suggested ways to fund them.

The first of the working group’s recommendations is to include single-family rental homes in the city’s inspection and certification program.

Increased foreclosures are a double-edged sword for single-family rentals: first, some of those who purchase foreclosed properties do so with a view to rent them out; second, people losing their homes mean there are many more in the market for rental housing.

The City of Grand Rapids currently has a policy that excludes those rental units from the inspection and certification program of double- and multiple-occupant rentals.

Since 2004, one in seven residential properties in Grand Rapids has undergone foreclosure. The number of families living in single-family rentals increased 70% from 2006 to 2009 (from 4,568 to 7,771).

Advocates concerned about the consequences of those numbers had approached the city commission since the end of 2009, according to Tyler Nickerson, Affordable Housing Advocate with the Grand Rapids Area Coalition to End Homelessness. There has also been increasing concern about the effect this all might have on stable and prosperous Grand Rapids neighborhoods. In July 2010, the city set up a working group to analyze the worst of the problems and recommend solutions.

The group’s report, “Supporting the Long-Term Sustainability of Housing and Neighborhoods in Grand Rapids,” came out last December, and the stakeholder advocates have since been working to have the recommendations incorporated in policy.

City Commissioner Ruth Kelly, a member of the working group, comments, “We’re reviewing our housing policies as a commission. The goal is to modernize our code... so that we can certify single family rental units, which several neighboring cities do.” These cities include Wyoming and Kentwood.

Part of what advocates fear is that there will be an increasing number of “bad-actor” landlords who will be attracted to an under-regulated situation. According to working group member Kym Spring of Foreclosure Response, “We have a lot of very good landlords, but some of our families are really getting a bad deal when they rent a single-family home.”
Nickerson considers there are at least four strong reasons to change the policy. First, based on the U.S. Housing and Urban Development-mandated data kept by the Coalition to End Homelessness, he says we may just be beginning to see the negative repercussions of increased foreclosures. This makes action essential, so that the City of Grand Rapids can continue its reputation as proactive.

Second, it is only fair to landlords themselves that single-family units not be exempted. Paul Haan, Executive Director of the Healthy Homes Coalition, sees a lot of poorly-maintained properties which are severely detrimental to the people, often children, living in them. “With this leftover policy of no single-family rentals, we’ve created a special class for one group of landlords.”

Third, substandard rental properties neighboring other houses causes an overall decline in housing values. Haan has seen sewage in the basements of some properties, and a tremendous increase in rodent infestations. Such problems are challenging for neighborhoods as a whole.

Finally, related to the first, if city officials want to attract people to locate in Grand Rapids, as Mayor George Heartwell indicated in his State of the City address they do, statistics show that people who have relocated to other cities are looking for quality housing uniformly, an equity of access for all, and vibrant, safe neighborhoods.

The working group’s proposal is opposed by the Rental Property Owners Association (RPOA). As Executive Director Clay Powell says, “We’re not in favor of any inspection process that doesn’t include owner-occupied homes in the inspection process.” Powell’s group also thinks that the advocates’ goals may be met some other way than undertaking “a very costly and difficult program.”

Another bone of contention is the fees which the working group recommended as a budget-neutral means to fund the program. Approximately $85 per year would be required of the single-family landlords. This is just a suggestion, and as Kelly says, “The details have not yet been worked out.”

The good news is that RPOA, the city, and the working group will be meeting in the near future in an attempt to iron out their differences. “It’s important that all ideas and thoughts get out on the table before something gets finalized,” Powell comments.

The second set of recommendations from the working group center around vacant properties. Similar to poorly-maintained parcels, vacancies have a negative effect on property
values.

Spring referred to a study done by Dr. Paul Isely of Grand Valley State University, referenced in the report, which indicated that for each unoccupied, bank-owned property within 500 yards of a home, that home’s value was reduced by $1000. “We already having housing property values declining,” Spring said, “and they’re degraded further by vacant properties.”

The working group’s recommendations include making sure that the vacant property registration already on the books is enforced, and includes a local contact for the property. “We want to know who is responsible for shoveling the sidewalks, weatherizing, and how to get in touch with that person,” Nickerson commented.

The report recommends that a “No Trespassing” order be instituted at the property as soon as it is registered.

The working group would also like to see the city (and advocates) play a larger role in development of Kent County Land Bank policy,
particularly on reuse of such vacant properties.

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