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Citrus Heights council votes 4-1 to move forward with mandatory rental inspections

Citrus Heights City Council
Citrus Heights City Council members discuss a proposed Rental Housing Inspection Unit on Aug. 9, 2018. // CH Sentinel

Sentinel staff report–
The Citrus Heights City Council voted 4-1 on Thursday in favor of moving forward with plans for a new $500,000 mandatory inspection program for the city’s 15,000 rental homes and apartments, despite the lone objection of Councilman Bret Daniels who said the program was unnecessary and too expensive. A new ordinance must still be drafted and voted on by the council before inspections can begin.

“The whole premise is to make sure that we have housing units that are safe for occupancy and that they are safe for the families and the occupants who live there,” said Councilman Al Fox, in a comment just prior to casting his vote in favor of the inspection program. “That then protects the property owners to make sure that the values of those properties stay up.”

Fox also noted several properties he’d seen in Citrus Heights with siding “falling off the wall” and said he supported the idea of proactive rental inspections as a way to prevent situations like the 2016 “Ghost Ship” fire in Oakland that killed 36 people, and another incident where a balcony collapsed in Berkeley and killed six people in 2015.

Citrus Heights currently has a state-mandated program in place to respond to complaints from tenants about the condition of rental properties, but the new program seeks to be proactive rather than reactive — resulting in regular interior and exterior inspections of rental properties in an inspection cycle of three years.

Councilmembers in favor of the inspection program noted a desire to clean up neighborhoods with deteriorating appearances outside and ensure tenants live with safe conditions inside.

“Clearly, if we had this in place, we probably wouldn’t have had to go in and purchase some of those properties on Sayonara Drive,” said Councilman Jeff Slowey, referencing a problem street in Citrus Heights off Sunrise Boulevard that the city has spent millions of dollars trying to remedy. “They would’ve been in better shape. Would’ve been a different story.”

Guest Opinion: Citrus Heights shouldn’t punish reputable rental owners with more fees

Although the council’s vote was a necessary procedural step to implementing the inspection program, an ordinance for the new Rental Housing Inspection Unit must still be drafted and brought to the city council for another vote later this year, before inspections are proposed to begin next July. If implemented, the new inspection unit would have an annual operation budget of $505,450, largely to fund the addition of three full-time Code Enforcement officers and two full-time program assistants to ensure regular interior and exterior inspections of all rental properties.

An aspect of the program highlighted by supportive councilmembers is that it would be funded entirely by fees assessed on rental property owners, rather than being funded by the city’s general fund.

The majority of costs would be paid by charging rental property owners an annual $95 fee per property, with the fee applied to any single-family or multi-family residence that is intended for use as a rental property. The remaining costs would be paid for through an increase to an existing “Rental Stock Fee” of $12 per unit, which currently funds 75% of Code Enforcement staffing. That fee would be raised to $17-27 per unit, depending on the number of rental units owned.

Councilman Daniels, often the lone no vote on the council, differed with his colleagues and didn’t see a need for the program.

“What I don’t see is any evidence, for me, that indicates there’s a problem on any scale where the government needs to be showing up, knocking on your door and saying, we’re going to come in and inspect your living quarters, your home,” said Daniels, citing police statistics indicating about 350 calls for service are received each year dealing with code enforcement issues out of the city’s nearly 15,000 rental units. “What I see is, at a maximum, about 2% of the rental units, are at this time, causing enough problem that is resulting in us having to take action.”

Daniels also said the cost “seems to be way above and beyond” what other cities charge for similar programs, and said the existing Code Enforcement unit could work to educate tenants on the process for contacting the city about rental issues on a case-by-case complaint basis, rather than by implementing a new “aggressive program.”

Representatives from the California Apartment Association and the Sacramento Association of Realtors addressed the council prior to the vote on Thursday night, both stating they were largely in favor of the idea of rental inspection programs, but expressing some concern about cost and other details that will be hammered out in the final ordinance wording.

“This will be the most expensive rental inspection program by far in the region because of base fee,” said Jim Lofgren, senior vice president of the California Apartment Association, telling the council he was “really concerned about the program having too much of a cost on good owners.”

To cut costs, Lofgren suggested fines be incorporated into the annual budget and proposed that the city consider spreading out the inspection cycle to five years rather than an “aggressive” three-year cycle. He also said increased costs to property owners would ultimately be passed on to renters and called it “a bit unreasonable” for the city to require every unit to be inspected on smaller complexes of under 16 units in size.

Councilman Slowey questioned Lofgren’s assertion about costs, but said he wasn’t going to “dicker back and forth about $10 here or $15 there,” arguing that he viewed the costs as reasonable.

Vice Mayor Jeannie Bruins also said the inspection cost, even if passed along to renters, would be insignificant.

“I can tell you that even if they pass it along, a $10 a month increase, to someone who’s paying $14-1500 dollars or more for rental housing, it’s not going to be a deal breaker for them to stay in that home,” said Bruins in remarks before the vote. However, several comments about the program on social media noted that costs would also include fixing any violations stemming from an inspection, which they said would result in landlords raising rent prices on tenants to cover the increased costs.

Police Lt. David Gutierrez, who presented a staff report to the council about the inspection program, cited common violations being missing or broken smoke alarms, lack of GFCI outlets, faulty plumbing, hazardous wiring, mold, and accumulation of debris on the property.

Gutierrez also cited statistics from the City of Sacramento, which implemented a rental inspection program in 2008, showing the first year of inspections found violations in 69% of the units. By the third year, he said more than double the number of inspections were conducted, but only 30% of the units had violations — indicating the program was successful in gaining compliance.

As previously reported on The Sentinel, a police staff report to the city council reported there are about 14,800 rental units in Citrus Heights, which makes up about 55% of all housing in the city. Due to 88% of the rentals being built prior to 1990, and 44% in the 1970s, the report cited concern regarding a “lack of quality control” during the 70s and 80s, and also noted that critical components of rental units, like HVAC systems and roofing, are nearing the end of their life.

The report also cited research finding that approximately 40% of rental property owners live more than 10 miles outside the city. Of those, the report said a large portion live in the Bay Area, causing concern that such rental units are less maintained as a result of owners’ distance from the property.

Document: Read the staff report

Currently, police report receiving about 1,300 code enforcement-related calls a year, with roughly one-quarter of those calls being related to rental properties. With a current staff of three code enforcement officers to respond to calls, the police department says its officers are only able to be 5% proactive with their time.

According to the staff report, the new ordinance would authorize the police chief to determine the most problematic areas to be inspected first. Notification would be sent to both owners and tenants 30 days prior to inspections. Tenants would be able to reject an inspection, which several councilmembers highlighted as an important aspect of the program, but rental owners would not be able to refuse inspection if the tenant would like the property inspected.

A rental property with 15 units or less would have a minimum of one interior inspection for all units on the property within the three-year cycle. For properties with 16 or more units, at least 5% of units would be inspected once within the three-year cycle. All rental property exteriors would also be inspected at least once within the three-year cycle.

The program would exempt rental properties built within five years from inspection, and rental units subject to other governmental inspection agencies are also exempt from the proposed inspection program.

Rental properties with over 16 units would be able to attain “self-certification.” If the property passes initial inspections and has no prior code violations, the owner can apply for self-certification in the program’s second cycle. However, these properties could still be subject to random inspections.

Following Thursday’s vote, Lt. Gutierrez told The Sentinel the city manager is now authorized to direct staff to craft an ordinance for the Rental Housing Inspection Unit and set proposed fees. He said the next step will be to bring the ordinance back to the council for a first and second reading, which, if approved, would then put the ordinance in place after 30 days.

The lieutenant said plans are to have the ordinance drafted and approved before Jan. 1, 2019, with inspections beginning after July 1, 2019.

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