Fee frustrations

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The apartment industry in Charlotte is doing well.

Rents have been soaring, and occupancies are up – all thanks to the downturn in the single-family housing market.

But just because apartment owners are seeing a rise in business it doesn’t mean they want to fork over money to register their properties with the city.

Talk from the Charlotte-Mecklenburg Police Department about possibly requiring all of Charlotte’s rental properties to pay a registration fee has real estate industry officials on edge. According to the CMPD, an across-the-board fee might just be the thing to help offset costs of an already-in-place program to monitor crime-ridden rental properties.

That idea bothers Ken Szymanski, executive director of the Greater Charlotte Apartment Association.

“A uniform registration requirement cannot be tied into a fee,” he Szymanski.

Also inserted into the debate: a new state law.

Police have been mulling Senate Bill 683 and what it means when it comes to charging registration fees to rental property owners. Last year, the North Carolina General Assembly gave its blessing to the bill, which deals with crime-ridden and unsafe rental properties. Gov. Bev Perdue signed it in June.

According to the bill, a county can charge a registration fee if a rental property has enough violations of housing ordinances or codes.

Tyler Mulligan, assistant professor of public law and government for the University of North Carolina School of Government, says that while a registration fee for all rental properties would be illegal, requiring the units to register would not.

Mulligan wrote a 19-page paper on SB 683.

“Although a local government is permitted to establish a residential rental property registration program and require universal participation, it may impose an associated fee with the registration program only under certain circumstances,” he wrote.

According to Mulligan, the new state laws says those circumstances include if a rental property has had more than two violations of housing ordinances or codes within the most recent 12-month period.

SB 683 also says a registration fee can be charged to residential rental properties that are within the top 10 percent of properties that are plagued with crime and other “disorder problems.”

SB 683 does not seem to require that all rental properties – problematic or not – register with local government.

But CMPD Capt. Stephen Willis said the law would allow it.

“Our attorney believes that there is language in there that offers us the opportunity to have a full registration process … that all residential rental properties would have to register,” Willis said.

It’s been almost two years since the city put into effect a rule that requires rental properties that are too problematic and, therefore, cross a “disorder risk threshold” to register with the city.

Police, though, have complained that the ordinance is hard to enforce. Willis said it’s been tough to track down the owners of troublesome residential rentals. Property owners also complain about the current registration fees being too high, he said.

According to Willis, requiring all residential rental properties to register, even the ones that aren’t crime problems, would mean the registration fees would fall.

“A couple things that would occur with that is, one, it would reduce the fees,” Willis said. “You are not going to have to pay $335 to register. We want to get the fees down to a much lower rate.”

Currently, only rentals in the top 4 percentile of troublesome properties are considered to have passed the “disorder risk threshold” and are required to register with the city. The fee to register starts at $335 but increases with the number of rental units per property. A property with 300 or more units must pay a $1,300 registration fee. Once registered, the property owner must meet with police three times during an 18-month period and comply with a plan to reduce crime at the property.

Willis said the program costs about $200,000 a year to operate and is not revenue-neutral.

City Councilman Michael Barnes says that with roughly 50,000 rental properties in the city, it would costs about $4 per property if all properties had to register.

According to Barnes, a free registration program would reduce “all barriers” to registration.

Still, three industry groups are fighting CMPD’s proposal that all rental properties that fall into its jurisdiction be registered: Szymanski’s organization, the Charlotte Regional Realtor Association and the Real Estate and Building Industry Coalition.

Szymanski says requiring all rentals to register is unnecessary. The current system is good enough, he said.

“We contended, and still contend – but apparently the police don’t agree and the records are spotty – that the existing sources through the tax collector and register of deeds should be an outstanding database for property records,” he said.

Elizabeth Barnhardt, government affairs director for the CRRA, said her group is also opposed to the proposed changes.

“This is not us against them,” she said. “We all recognize that we want crime to go down in every neighborhood. Our property owners and managers would rather get a call from the police. They want to be a part of this. We just want to make sure we are targeting crimes and not making criminals out of every property owner out there.”

CMPD attorney Mark Newbold said it seems that the new state law would not allow Charlotte to charge every rental unit owner a registration fee.

“But it would not prohibit us to try to recoup some of that cost from those properties that fall into that (disorder risk) threshold,” he said.

Even though real estate industry officials are upset over the proposal, it’s not a done deal. A city committee still has to vote on it, and, if it wins the committee’s approval, the City Council would have to consider it.

RAMSEY can be reached at [email protected].