Brooklyn Park had one of the strictest home-sale inspection programs in the Twin Cities until this month, when a new majority on the City Council voted to eliminate the requirement.
The ordinance — called point of sale — required a city inspection before a home could be sold, providing a disclosure report of findings to prospective buyers and correction of any building code violations. The seller usually made the repairs, although it was negotiable.
Home-sale inspection programs of various kinds are used in about a dozen area cities, including Minneapolis, St. Louis Park, Bloomington and St. Paul, says the Minneapolis Area Association of Realtors.
Brooklyn Park is the only metro city that adopted a point-of-sale (POS) program and later dumped it, said Cathy Bennett, a consultant for the Urban Land Institute of Minnesota. She said point-of-sale, also called time of sale, is one of a number of best practices that cities should consider to maintain a healthy housing stock.
But free-market advocates, including the Minneapolis Realtors association, argue that required inspections, often followed by mandated repairs, hinder home sales and are unnecessary because many buyers pay for their own inspections before purchasing a home.
The Brooklyn Park City Council voted 5-2 to repeal its ordinance early this month. Mayor Jeff Lunde said he had opposed the ordinance since it was adopted in 2007 with the intent of improving the city’s aging housing stock. He noted that two new council members elected in the past year created a conservative majority that eliminated the ordinance.
“Our main goal was to keep housing values up and there’s no proof it did that, ” Lunde said. He acknowledged that the recession depressed home values, making it difficult to gauge the effect of the ordinance. He said another issue was requiring minor, noncritical repairs to meet standards of the state building code and of the International Property Maintenance Code. He noted that the international code involved “way more than health and safety.”
“I think it is overregulation,” he said. For example, he cited a city-required upgrade of an outside faucet that lacked a backflow preventer.
Community Development Director Jason Aarsvold said it’s hard to quantify the ordinance’s effect. However, he added, “I would say we have seen a significant improvement in overall housing stock based on our inspectors being in the homes on a day-to-day basis.”
Aarsvold said the council has asked staff to look for simpler alternatives to the ordinance that would focus on exterior maintenance items such as broken windows or garage doors. He said there are few tools besides point of sale that can improve housing stock on a significant scale. The city has retained its rental housing inspection program.
Among the metro-area cities with POS ordinances, Brooklyn Park stood out as one of the strictest, said Julia Parenteau, public affairs director for the Realtors association. She spoke against the idea several times at Brooklyn Park council meetings.
“We try to protect the rights of the seller and the incoming buyer,” she said. “We have found the inspections are more effective when they are privately hired by the parties.”
She noted that St. Paul and Maplewood require inspection disclosure reports but don’t mandate correction of deficiencies that are found. Minneapolis has Truth in Sale of Housing inspections and requires home buyers to correct unsafe items if sellers don’t.
Joe Schilling, director of the Metropolitan Institute at Virginia Tech, in Alexandria, Va., has worked with Midwest and Northeast cities that have tried to maintain and improve their housing stock. He said point-of-sale is a sound public policy adopted in recent decades by many Midwest cities.
He cited Shaker Heights, Ohio, an inner-ring Cleveland suburb that adopted POS about 20 years ago. There, he said, point-of-sale was a good tool during the recession to deter land speculators who invest little and try to “flip” or resell a home quickly at maximum profit.
Since “the foreclosure crisis hit, Shaker [Heights] has been more resilient. It had its share of foreclosures, but … it had significantly less negative impact from the crisis than cities without POS,” Schilling said.
Building officials in New Hope and St. Louis Park say point of sale has helped keep blight out of their cities. Both have among the oldest ordinances in the Twin Cities: St. Louis Park adopted POS in 1972 and New Hope in 1978.
Brian Hoffman, St. Louis Park’s director of inspections, said the policy also helped maintain home values during the recession. “I think most agree the housing stock is very good. We work with people to make sure buildings are maintained, ” Hoffman said. He said buyers are attracted because they know the homes they purchase meet basic housing and safety standards.
Voices pro and con
Bob Mata joined the Brooklyn Park City Council last September after winning a special election by five votes. He said the city’s $150 inspection charge was an additional that burden home sellers didn’t need, especially those short of funds who faced foreclosure. Mata, a real estate agent, said that he had two clients who had inspections to sell their homes but that the sales fell through and they were still stuck paying for repairs required by city inspectors.
“I always felt it was an additional tax and a harassment on homeowners trying to sell homes,” Mata said. He said if most other cities get by without POS so can Brooklyn Park.
Council Members Rich Gates and Mike Trepanier cast the two votes against repealing the ordinance. The two said the ordinance insured that homes sold are safe, which improved housing values. “I’ve seen what POS has done for the housing stock in my own neighborhood, ” Gates said.“I feel we have maintained at least some level of preservation of the housing stock we have in this city.”