Rental Licensing Ordinance

Introduction

Within the City of Frederick, it is estimated that there are more than 10,500 dwelling units currently being rented. Many of these units were built before 1980. Conservation of existing rental housing stock is of tremendous importance, as it provides necessary naturally occurring affordable housing. However, there may be units that violate the City’s Property Maintenance Code or other technical codes. Moreover, the City does not have comprehensive information about the location, ownership, or condition of many units. The lack of information about these units, and the health and safety of the tenants residing in them, is of concern to housing advocates and officials.

Relying on a complaint-based enforcement program may not be adequate to ensure that residential rental units are safely maintained. Tenants may not report complaints due to fears of landlord retaliation and/or fear of government authorities. They may also face language, culture, or education barriers that deter them from using complaint-based programs. Substandard housing conditions are linked to a wide array of significant health problems - especially in children, the disabled, and the elderly. They also threaten the physical, social, and economic stability of surrounding structures, neighborhoods, and the City as a whole.

It is in the public interest that all residential rental units comply with certain minimum maintenance standards. The most effective way to obtain compliance with such standards is through licensing with periodic inspections of residential rental units.

Applicability

The Rental Licensing Ordinance Applies to:

All long-term residential leases (greater than 6 months)

AND

Short-term residential (STR) leases

Exceptions

Dormitories, bed and breakfasts, motels, hotels, medical care facilities, religious facilities, a portion of a dwelling unit (Example: a bedroom for rent), an informal arrangement without an agreement

Registration and Licensing

Concept

Annual on-line registration system for residential
License valid for 1 year

Inspection

Audit inspections will be completed on a random selection of 15 percent of residential rental units annually.

Criteria

DPW to develop an inspection checklist based on the Property Maintenance Code (PMC).

Failures

If the property fails to meet the required criteria after the second re-inspection, the rental license will be revoked for one year.

Non-Compliance

Non-compliance will be monitored through a complaint-driven system run through Code Enforcement.

Purpose

Investigating properties that rented without a valid license

Fees and Fines

$120/year Licensing fee (will cover cost of 15% audit inspection)
Free 1^st re-inspection, $300 for 2^nd re-inspection
$1,000/day Fine for operating without a license

Note

If a unit fails inspection and is owned by a landlord with multiple properties, inspectors may inspect other units of the same owner

Tenant Protection Programs

If a unit fails after the second re-inspection (third visit), the rental license is revoked, and the tenant must vacate, the City will assist with tenant relocation if there is a demonstrated financial need. (Note: Two percent of annual program revenue generated after operations expenses will be used to fund the tenant protection program).

Phasing

The rental licensing program will be implemented in phases to allow landlords time to comply with requirements and to build revenue ahead of the auditing process to allow the program to be cost neutral.

Phasing timeline

Now thru 2023 – Messaging and Education
January 2024 – Commence Mandatory Rental Licensing
June 2025 – Affordable Housing Conservation Program

Costs and Revenues

Revenues

Fees and fines will be used to pay for the program. Remaining funds will be used to create an Affordable Housing Conservation Program through the Department of Housing and Human Services. Projected annual revenue between $0 to $900,000.

Estimated Program Expenses

Est. startup expenses (one-time) $400,000
Est. annual operations (recurring) $750,000