This month, a proposal dubbed the “Residents First Legislative Package” (the “Proposal”) was introduced to Cleveland City Council. The Proposal is aimed at combatting vacant and dilapidated buildings in the City of Cleveland as well as enforcing stricter upkeep of residential and commercial properties within the City.
Introduction of the “Residents First” Proposal
The Proposal follows on the tail of a similar push by Cuyahoga County and the Cleveland Housing Court to combat deteriorating housing stock and negligent owners. The County now requires additional questionnaires aimed at determining if properties are intended to be rented at the time they are transferred, while the Housing Court had previously attempted to enforce the City’s lead-safe requirements (although this attempt was halted in Shaker House LLC v. Christopher Daniel by Ohio’s 8th District Court of Appeals).
The Proposal and the measures by the County are aimed at combatting issues that have long been apparent throughout the City – the rate of vacant properties is increasing while the quality of the City’s housing stock continues to fall in many areas.
Regulatory Schemes for Residential and Commercial Properties
The Proposal introduces two regulatory schemes, one for residential properties and one for commercial, both aimed at halting the deterioration of properties and holding owners more accountable.
For owners wishing to rent residential real estate, the property must be registered with the City as a non-owner-occupied unit, and the owner must provide the owner’s identity, address, and the local agent in charge of managing the property. Once registered, the owner must apply for a certificate approving rental occupancy. To obtain this certificate, the property must be lead-safe certified, be in compliance with any notices of violation, have the HVAC units inspected by a certified technician (for properties containing 4 or more rental units), have utilities confirmed to be up to date by a certified technician (for properties containing 4 or more rental units), and be up to date on property taxes. If the property complies with all of these requirements, a certification for rental occupancy will be issued.
For owners of vacant commercial properties, under the Proposal, such properties would need to be registered until no longer vacant. As with the rental registration, the owner would need to provide their identity, address, and the local agent in charge of managing the property. The owner would further be required to perform basic upkeep of the vacant structure, including maintaining the roof, keeping the property in watertight condition, and removing unsightly conditions such as graffiti. Further, upon registration, a cash bond would need to be posted with the City to ensure continued maintenance and upkeep of the property. The proposed bond structure would be $5,000.00 for structures of less than 10,000 square feet, and $15,000.00 for structures of more than 10,000 square feet. Upon a proposed sale of the property, a City inspection would need to be passed (similar to residential point-of-sale inspections common in many areas around Cleveland).
Provisions and Implications of the Proposal
One of the most contentious provisions of the Proposal, lauded by tenant’s rights groups and decried by property owners, is the new ability for City inspectors to issue civil infraction tickets with potentially serious penalties for non-compliance. Inspectors would be able to issue a civil citation to property owners for nuisance conditions such as garbage, vermin, and unsightly conditions such as graffiti. Unlike existing criminal citations for similar conditions which often require lengthy prosecution by the City in Housing Court, the citations issued under the Proposal would automatically mature into an assessment on the property tax bill if left unpaid.
The Proposal is sure to become a serious point of contention as it is debated, with the City’s property owners already pushing back. For responsible property owners and landlords in good standing throughout the City, the Proposal represents a potentially difficult framework to come into compliance with. While to many renting residents in the City, the Proposal may represent a tool to bring accountability long lacking.
As the Proposal and similar initiatives are introduced and debated, the Real Estate Practice Group at KJK can help anticipate change and comply with new regulations. Contact Matt Viola at email@example.com or James Scherer at firstname.lastname@example.org to learn more.