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Erik Burgess, Published November 09 2013

Some Fargo property managers dislike housing registry

FARGO – For Kathie Kvalvog, the decision to start managing rental property in Moorhead years ago was daunting.

Kvalvog, president of ABC Property Management, now manages about 160 properties split evenly between the two cities. At first, she was “scared to move to Moorhead” because of the city’s more-stringent rental housing inspections.

In Moorhead, rental property owners must pay an annual fee to be on the city’s rental building registry. They are examined by the city every year, and those not on the registry are fined and could be ultimately shut down.

Fargo inspections are less frequent and new apartments might go un-examined by city code inspectors for up to 17 years, the city’s inspections administrator said.

That could change in the near future. Fargo city commissioners are considering establishing their own building registry as part of a plan by Commissioner Melissa Sobolik to curb housing discrimination against gay, lesbian and transgender tenants.

A building registry is being used in Grand Forks to ban housing discrimination against LGBT tenants.

Sobolik said she could begin pushing harder for a registry at the commission level in about two months.

The less-stringent inspection system in Fargo is concerning, Kvalvog said, and despite some initial reluctance, she now appreciates the annual checkups in Moorhead.

“I do feel safer in Moorhead with my rentals because I know they’ve been thoroughly inspected,” she said. “You really are on your toes to make sure that everything is to code.”

Some of the bigger rental property managers in the area say the registry is unnecessary and would cause needless rent hikes.

“I just believe that they’re adding a level of bureaucracy and a level of cost that ultimately isn’t going to cure any perceived issues,” said Kurt Bollman, executive vice president of Goldmark Property Management.

Helps enforce the code

The decades-old registry in Moorhead helps the city keep track of every building that is renting.

Landlords who don’t register in Moorhead can be fined $100 a day up to $2,000, and can eventually be taken to court and shut down, said Lynn Brown, a code compliance technician for Moorhead.

The same is not true in Fargo, where the city doesn’t keep a strict tally of who rents and who doesn’t, Kvalvog said.

“Anyone could buy a house and rent it out in Fargo, and the city might not ever know about,” she said. “Keep in mind that house might not be up to code. It’s kind of a dangerous thing for anyone who’s renting it.”

The Fargo inspections department does not keep a regularly scheduled rental property inspection routine like in Moorhead, said Ron Strand, Fargo inspections administrator.

Strand said the frequency of inspections in Fargo depends on a number of factors: the building’s age and general upkeep, the city’s history with management, and the frequency of tenant or landlord complaints.

“The more dubious any of those factors become, the more frequent the inspection,” Strand said.

Buildings that are in the worst shape might get inspected every other year, he said. On the other hand, Fargo inspectors won’t examine a brand new apartment building for 17 years, unless there are complaints, Strand said.

“A brand new apartment is going to be brand new for a long time, and it’s going to be in good shape and require minimal maintenance,” he said.

Part of the reason for the less-frequent inspections is because of staffing, Strand said.

“Frankly, how many staff would you need to do 24,000 units in a year? A lot,” he said.

The Fargo Fire Department does its own fire code inspections of rental properties every other year, but they only inspect public areas like laundry rooms and hallways, not individual units, said Capt. Rob Severson.

‘Fee’d to death’

The building registry in Moorhead has been in place since the late 1980s, but the city didn’t start charging fees until 2000. Landlords were skeptical at first, Brown said.

“They were worried about being fee’d to death,” she said.

The rental inspection program in Moorhead is now 100 percent supported by fees, said Lisa Vatnsdal, Moorhead’s community development manager.

A building with one to four units pays a yearly base fee of $125, plus $10 per unit. A five-to-12 unit-building pays $150 a year plus $10 per unit, and any building with more than 12 units pays $175 a year plus $5 per unit.

Brown said many property managers now embrace the system and realize regular inspections provide landlords with updated documentation if they need help evicting a difficult tenant.

“It has also made them more responsible for their properties, and the properties are in better condition,” Brown said.

But Bollman said the fees charged to landlords in a registry system are an unnecessary burden. The Greater Red River Apartment Association, made up of about 80 property managers and owners, agreed.

In a joint statement, the association’s president, Lisa Gefroh, and lawyer and board member Greg Thompson said the association believes the rental system in Fargo is “working just fine” as is.

“We don’t mind some government oversight, and we have that now with the city of Fargo’s periodic property inspection program, but requiring a rental registry will only amount to a tax on the property owners that invariably will just get passed on as additional rent,” the statement said.

In Moorhead, there are discounts and incentives for managers who do a good job taking care of their property, Brown said. A building that has no violations gets a $50 discount and the opportunity to self-evaluate the next year.

Kvalvog said she probably pays a couple of thousand dollars a year per property in Moorhead, but she says it’s worth it.

“I don’t want to be cheap,” she said. “I’d rather be safe.”

Brown said there are similar rental registries in Minneapolis, St. Paul, St. Cloud and Fergus Falls in Minnesota.

Discrimination an issue

With Sobolik leading the way, the Fargo City Commission passed a resolution Oct. 28 that states the city doesn’t condone discrimination against LGBT residents, but the resolution is a toothless statement of principle, not an enforceable law.

Now Sobolik said she wants some time to study the building registries in Grand Forks and Moorhead before moving ahead with Fargo’s. She also wants to get property managers involved.

“I don’t just want it to be government regulating them,” Sobolik said.

All five Fargo city commissioners have told The Forum they are interested in further studying a building registry.

“I think we have a lot of renters, and I think it gives renters more protection,” said City Commissioner Mike Williams.

While Sobolik and other human rights leaders in the Fargo area have said they think housing discrimination against LGBT tenants is a big issue, opponents of the building registry aren’t so sure.

“A registry, although I’m sure well-intended, isn’t going to solve any problems that might be out there,” Bollman said. “I rather think that the problems they’re talking about are so minimal, I really question whether (they exist).”

The Moorhead registry does not enforce fair housing rules, which are handled by the state, Vatnsdal said. In Minnesota, sexual orientation is a protected class for fair housing disputes, she said.

North Dakota doesn’t recognize sexual orientation as a protected class, so Gefroh and Thompson argued that a registry in Fargo wouldn’t curb discrimination.

“The city has no mechanism in place to investigate those claims,” their joint statement said. “If this is to be enacted, it should be enacted on the state level where the Department of Labor already has the investigation mechanism in place.”

At the Oct. 28 City Commission meeting, area human rights activists said they hope Grand Forks and Fargo can lead the way for statewide change.

Kvalvog said it’s no surprise the bigger companies are balking.

“They’re happy (in Fargo) because it’s easy,” she said.

But Kvalvog said a registry, which could include landlord training sessions, would be a good thing in the long run for tenants and landlords.

“I do think it would benefit everyone,” she said.


Readers can reach Forum reporter Erik Burgess at (701) 241-5518