Tupelo could shoot past other cities’ landlord costs

TUPELO – As city leaders mull a sharp fee increase for landlords, a review of similar rental-license programs nationwide reveals that Tupelo’s current fees rank among the lowest. But if leaders adopt the new rates proposed in the Tupelo Neighborhood Reinvestment Plan, they will be among the highest.
Tupelo now annually charges $10 to owners of single-family or duplex rental properties, $30 to those with multi-family rentals with three to 10 units, and a maximum $100 to those with more than 11 units. The fees include unlimited inspections by the city to ensure they meet codes.
The proposed increase would help cover the growing costs of the routine inspections required of rental properties, which make up 33 percent of the city’s housing. That compares to 25 percent in Northeast Mississippi.
Among the 22 cities with rental-license programs, including Tupelo, that were randomly selected by the Daily Journal for comparison, none had lower fees for single-family and duplex properties except those that didn’t charge for those categories.
Six cities charged less for multi-family units, but at least one of them – Boulder, Colo. – slapped on a $250 fee per complaint-driven inspection. And in Mississippi, both Madison and Jackson require $5,000-$10,000 surety bonds per property, which adds outside costs for landlords.
Tupelo’s proposed fees, however, soar above those charged by all other cities across all unit categories: $240 annually for a single-family or duplex rental property and $120 per unit annually for all multi-family complexes.
The sole exception is Brooklyn Center, Minn., which charges a higher fee but applies it only once every three years to compliant property owners. Those with numerous code violations are charged annually.
Nine of the cities in the survey either adjusted their rates based on the number of code violations or popped landlords with stiff fees for repeat inspections. These systems penalize landlords who fail to fix inspections the first time around while sparing those who quickly comply.
Others gradually increased fees depending on how many units a property contained. For example, Bloomington, Ind., charges $50 per building but only $12 for each unit within.
Tupelo’s proposed fee structure is neither gradual nor penalizing for repeat offenders. And that’s the rub for landlords like Becky Ewing, who agreed that current fees are too low. But she said the new ones are too high for those who follow the rules.
“A $50 rental application fee to me is a drop in the bucket if that will give them the authority to keep things monitored,” she said. “But it’s the ones who keep disregarding the codes, and they have to be inspected again and again. Fine the crap out of the ones that are not following through.”
Tupelo has more than 5,100 rental units, according to the U.S. Census Bureau. Together, those rental properties rack up an overwhelming majority of the city’s code violations, according to the Department of Development Services. To crack down on blight, the city launched its current rental license program in January 2007. It requires all units pass inspection every two years before a tenant can live there. But the program’s fees fail to cover the hefty work load required of department staff.
Department Director BJ Teal had recommended raising the fees last year to cover the program costs. It didn’t happen, but her proposal offered a more gradual increase that rewarded good landlords.
The city of Ridgeland started its rental program in the early 1990s. It requires an inspection anytime a new tenant enters a units and charges $50 per inspection, including the first and all follow-up visits.
Alan Hart, Ridgeland’s Community Development Department director, said he gets few complaints about the program or its fees.
“We’re not allowed to make money,” he said, “but we can charge for the expenses we incur and ensure that housing is safe and good for public welfare.”
It’s not yet known how much Tupelo spends each time it sends an inspector to check a property and complete the paperwork, but Teal and others are crunching the numbers now, council President Fred Pitts said. The rental fee structure that “has been originally proposed is not what’s going to be adopted,” Pitts said. “There will be an inspection fee that will be one amount the first time, a higher amount the second time, an even higher amount the third time, and even higher the fourth time.”
Other council members haven’t yet heard about the sliding fee scale plan, Pitts said, adding that it’s now under review by Development Services staff. But he said it will be presented during a work session this week. Until then, the only proposal on the table is the one charging $120 or $240.
The City Council ultimately will decide whether or not to adopt the new fees – whatever they are – as part of the overall Tupelo Neighborhood Reinvestment Plan. The group will meet Tuesday to discuss the four-part plan, which also includes a college-tuition guarantee, home loan and home-improvement grant. All together, the plan will cost $15.7 million and aims to stabilize the city’s waning middle class.
“The way the fees are structured will be based on policy decision by the council,” said City Planner Pat Falkner, who works in the Development Services Department. “And they can either look at this as a revenue decision or as a ‘how can we best achieve our goal’ in terms of reducing rental properties and the problems associated with that. How you set the fees really depends on what’s your objective.

Emily Le Coz/NEMS Daily Journal