Minneapolis landlords speak out against city license fee increase

Minneapolis wants to raise the annual rental license fees for the first time since 2012, but some landlords are pushing back.

City officials said they have been undercharging for rental housing licensing and inspections fees.

"Today, license fee revenue only covers 30 percent of expense, with property taxes covering the other 70 percent," said Micah Intermill, the city's budget director. "Under the revised recommendation, the city will now collect 60 percent of the expense from fees, with the remaining 40 percent covered by property taxes."

Under the city's proposal, which received tentative approval from a City Council committee Tuesday, landlords will continue to pay more or less depending on their record of inspections and code violations. The fees are also going up for larger buildings, which will be receiving more comprehensive inspections, said Mark Ruff, the city's chief financial officer.

Rental properties of four units or larger that are "tier one," which the city classifies as properties that use few city services and are the best maintained, will pay a $135 base fee plus $10 for each additional unit. Before, that was a base fee of $82, plus an extra $5 for each additional unit.

"Tier three" rental properties that are "poorly maintained" will see the largest increase. Those with more than four units will pay a $190 annual base fee plus $80 for each additional unit. The proposed rental license fee includes a new $400 supplement charge that Intermill said will "help recover the additional costs associated with inspecting noncompliant buildings."

In a contentious public hearing at the council's Economic Development & Regulatory Services Committee, landlords complained that the proposed increases will make housing more expensive in Minneapolis.

"When I saw the licensing going up, I honestly don't know what the licensing bureau does for me. They come out. They say 'Great — you meet our standards,' " Jonah Bridger, who owns two tier one properties in north Minneapolis, told the committee. "I'm watching my license fees darn double."

Landlord Cecil Smith said the city says it wants affordable housing, but then increases property taxes and rental license fees.

"This is a confusing message," he said. "In principle, the city leadership desires affordability, but in practice you increase cost. Why so much?"

Property owner Dennis Meyer said he cannot avoid raising rents while the city increases the rental license fee.

"We are facing 13 to 15 percent property-tax increases in our rental properties each in the last two years," he said. "You take that and you add an additional rental fee increase, and it's almost absurd."

Council Member Lisa Goodman, chair of the Economic Development & Regulatory Service Committee, said the property owners' comments have resonated with her. She wondered if a better way to handle inspection could be charging property owners per visit.

"I have a concern that we are charging for rental licenses and we don't even do the inspections," she said.

Still, Goodman joined the other committee members to approve the new fee schedule and refer it to the Ways and Means Committee.

Mukhtar M. Ibrahim • 612-673-4689 • Twitter: @mukhtaryare