City may hike fees on problem landlords

Above: Landlord Mahmood Khan, who owns several dozen troublesome North Side rental properties.

Landlords of Minneapolis' worst rental properties may soon pay more every year for their licenses under a proposal aimed at incentivizing better management.

City Council President Barb Johnson announced her intent to change the city's license fee structure at a Friday council meeting. If approved in the coming months, the proposal could force landlords at the city's more problematic apartments to pay nearly five times more per license than they do now.

Those so-called "tier three" properties only comprise about 4 or 5 percent of the city's 23,000 rental licenses, while another 30 percent are "tier two," said regulatory services chief Nuria Rivera-Vandermyde. But they require more frequent inspections and therefore a lot of staff time.

The current rental license fee is a flat $69 for all landlords, plus $19 for each additional unit. The proposal would raised that fee based on three tiers, while lowering the per-unit price since large apartment buildings are typically better managed.

"The bulk of the issues are usually in our one to 4 [or] 6 units," said Rivera-Vandermyde. "And those really just pay the lower fee but are taking up and consuming the majority of our time. So this really shifts that burden to the people that are using our services more."

But Mahmood Khan, who holds 43 licenses largely for North Side properties, said the city is putting too much blame on the landlords when tenants are causing many of the problems.

The city has an existing tier system for rental properties, which determines how frequently they are inspected. Rivera-Vandermyde said the tiered fees will be based on factors like the number of violations, the rate of compliance and the number of police calls for disturbances.

"Whatever we have to go out there and manage, that's going to bump you up on the list," Rivera-Vandermyde said.

The precise fee structure will be determined by the council, but Rivera-Vandermyde said for a one-unit property the $69 cost may rise to $112 for tier two and $373 for tier three.

The change coincides with another new method of prodding problem landlords: A list that prohibits them from obtaining new licenses if their properties are having frequent problems. Most of those properties are clustered in four North Side neighborhoods and alongside central Lake Street (click here for a map).

Johnson said she suggested the fee change, which must still go through the city's committee process. "I want to take credit for every single increment of…trying to get the money out of the people that are causing the problems," said Johnson, who represents one portion of the North Side.