Inver Grove Heights considers rental license program

Inver Grove Heights officials are weighing an ordinance requiring landlords to obtain a license for their rental units, a move that's generating concern from some property owners and renters despite the ubiquity of rental licensing programs in metro suburbs.

"All the surrounding communities of Inver Grove Heights have them," said Marty McDonough, municipal affairs director for the Minnesota Multi Housing Association. "They're kind of playing catch-up."

Under the program, rental property owners submit a $25-per-unit licensing fee every two years and a background check. Owners would have to adhere to an industry standard for a dwelling's lighting, plumbing and fire safety, but city staff plan to inspect only properties that draw grievances.

The ordinance stems from concerns about certain properties becoming rundown or triggering repeat complaint calls, said Tom Link, Inver Grove Heights' community development director.

Inver Grove Heights has 3,700 rental units, about 25 percent of its total housing stock, Link said.

Having to deal with problem properties or aging rental housing are common reasons to enact a licensing ordinance. Without one, there's little cities can do about complaints, McDonough said.

"They look at their ordinances and don't have any means, any tools, to deal with a certain property," McDonough said. "There's no way … to go after the property owner."

Many cities implemented licensing programs during the mid-to-late 2000s — Eden Prairie began its program in 2007 and Brooklyn Center in 2010. A few, such as Edina, North Oaks and Minnetrista, don't have them.

In 2015, a task force discussed licensing in Carver, but decided against it when the group "couldn't reach consensus on the need," said Brent Mareck, Carver's city administrator. It seemed duplicative when some properties, like the soon-to-open affordable housing project Carver Crossing, already require inspections, he said.

During a comment period this spring in Inver Grove Heights, two-thirds of the about 25 comments favored the program, Link said.

One renter feared rent increases, while another considered licensing to be government overreach.

But some landlords said they'd welcome the ordinance.

Jon Riley, co-owner of the 320-unit Salem Green Apartments, said he supports the concept, "but it's got to be the right program."

"The background checks [part] is just unworkable," he said, explaining that many big apartment complexes have multiple owners and conducting background checks on all of them would be cumbersome.

McDonough questioned the necessity of background checks, calling them "a head-scratcher," but Link explained the city doesn't want criminals owning rental housing.

The cost is also unfair, Riley said, citing the $8,000 fee for Salem Green's two-year license compared with $25 for the owner of one unit. "I'd absolutely have to raise rents," he said.

McDonough wrote a letter detailing his organization's concerns, including a proposed fee structure with a per-building fee plus a smaller fee per unit, lowering the price tag for multiunit properties.

That setup would be more labor-intensive, Link said, and the city planned on using existing staff.

City staff will work with McDonough and property owners on their concerns, Link said. The ordinance's second reading isn't scheduled yet.

Erin Adler • 612-673-1781