Minutes of Headwaters Landlord Association General Meeting
Date: October 25, 2012
Call to order: A general meeting of the Headwaters Landlord Association was held in Beltrami Electric Cooperative conference room, Bemidji, Minnesota on October 25, 2012. The meeting convened at 7:09 pm, President Duane Sea, presiding, and Jessica Sarauer, note taker.
Officers in attendance: Duane Sea, Andrew Erholtz, Kathy Guess
Officers not in attendance: Jeff Janiksela, Jeff Grabowski, Terry Duy, Lorrie Richardson, Harry Aylesworth
Political Forum – Mayoral and City Council Candidates
Duane Sea and Andrew Erholtz moderated the forum. Candidates in attendance were Michael Meehlhause (Ward 1), Derrick Houle (Ward 1), Nancy Erickson (Ward 5), and Rita Albrecht (Mayor). The following is the script (with questions) of the forum.
The Headwaters Landlord Association believes that some members of the current City government strongly oppose additional single family rental housing in the City of Bemidji. A moratorium was proposed that would have halted any single family house from being converted into a rental as the City of Bemidji studied the issues. It was anticipated that this moratorium would last one year or longer. In response to strong public opposition, the moratorium was not passed. Shortly thereafter, it was decided that there were many problems with rentals in Bemidji that could not be adequately addressed with the existing rental ordinance. A new ordinance was proposed that included a $1,000 conversion fee when a single family house was converted to a rental home. Public hearings began and the City again found strong public opposition. The final ordinance, as passed, included a first time rental permit fee of $500 that includes the first year’s license of $100 for a single family unit.
The HLA believes that this extra $400 fee is punitive fee to discourage single family rentals. This punitive fee negatively affects homeowners as well as investors. At a time, when we are in what has been called an unprecedented crisis of foreclosures, the City of Bemidji should seek to prevent foreclosures. Homeowners who must move can seldom afford to support two homes. In today’s market, the house may not sell at the price or in the time the homeowner needs. That homeowner may decide to rent the house rather than go into foreclosure. The extra $400 conversion fee can be a barrier for an already financially stressed owner.
If a foreclosure occurs, the City should seek to have the property sold and occupied as quickly as possible. Some foreclosures will be sold to owners who will live there. Many foreclosures, however, need work and are not in financeable condition. They require a cash buyer who has the resources to buy and invest in the property to bring it up to the standards the City requires for rental properties. If investors are discouraged by the attitude of the City toward single family rentals and the punitive fee, the alternative may be that the property is left vacant for an extended time and continues to deteriorate.
Question 1: As an elected member of City government, would you support changing the $500 first time rental permit fee and what would you support as a replacement?
The rental ordinance was proposed and passed in 2011 to give the City tools to correct issues with rentals. Many landlords felt if the existing ordinance had been uniformly enforced, the ordinance would have required only minor changes. Many issues were discussed by City staff and elected officials (not read to the candidates).
Question 2 to our incumbents: As a member of City Government in 2011 what rental housing issues did you believe needed to be addressed when the rental housing ordinance was drafted; and, 1 year after adoption, is the ordinance working and do you feel it is being enforced? If not, what would you propose as a solution when the ordinance is scheduled to be reviewed in a year?
Question 2 to candidates: what rental issues do you feel exist and what solutions would you propose?
Some of our members have owned rentals in the City of Bemidji for decades. We do not feel the City welcomes or supports our investment in single family rentals. Many people become tenants because either they cannot or do not want to buy a house. Often, they would prefer to rent a single family house in which to raise their family rather than an apartment building. They are not automatically second class citizens of Bemidji. If a rental house sits next to an owner occupied house with the same assessed value, please recognize that we pay more taxes. We also pay 1.5 times more for the storm water fee each month than our neighbors. Why? According the City building department, there are approximately 2700 rental units in Bemidji. Of that 2700, 673 or 25% are single family homes. Yet this 25% pays 67% of the rental permit fees collected. The annual cost of a rental permit doubled with the new ordinance for single family rentals. The rental permit used to be $150 for three years, or $50 per year for one unit. A single family house now pays $100 per year. Currently, a 10-unit building pays only $15 per unit per year. Rental permit fees in Bemidji are so disproportional that we are discouraged.
This month, a board member was personally told by a City Council person that the landlords say they are offering a service, but really they just want to buy as cheap as possible, put as little as possible into the property as they can, get as much money out of the property as they can, and do not care who they rent to or what the tenant does after they are in the property. As with any group, there are a few bad landlords and a few bad tenants. However, to express that attitude toward ALL rental property owners was very biased. Most of us do our best to take care of our rentals and our tenants and maintain a good relationship with City employees and the City Council.
Question 3: Some of us plan to buy other single family homes as rentals. If the City does not welcome or support our investment in single family rentals, should we buy in the City of Bemidji or would you prefer we invested in a surrounding town or a township instead, and why?
Question 4 (submitted by John Peterson): How do you feel about more than 4 non-related tenants in a home, for larger homes with adequate bedrooms and parking? Mike Miller tried presenting to the city council and was shot down. I have a 5 bedroom home with parking for 8, and tenants are paying more in utilities, and is not the greatest use of the property. Not trying to cram more, just using the property as efficiently as possible.
The candidates then visited with members from 8:20 to 8:35.
Business Meeting
Landlord & Property Manager Training: Becky Schuller, who works with Evergreen Youth and Family Services, handed out a flier and invited everyone to a Landlord & Property Manager Training on November 16, 2012 at First Lutheran Church. The training is designed to be informational and to provide resources. The early bird cost was $10 before October 15, 2012, but $50 after. (If the $50 fee was a burden, Becky said to call her and work something out).
Crime Free/Drug Free Multi-Housing: The Bemidji Police Department will host a Crime Free/Drug Free Multi-Housing course Monday December 3, 2012 from 8am to 5pm. The fee is $40. Duane went earlier this year and found it to be worthwhile and informational. The course goes over spotting drug use and drug addicts, how to handle drug use, crime proofing housing, ordinances, how to research applications and do your own background checks, and more.
Leases: All new leases need a crime free/drug free addendum and all existing leases need to have the addendum by the end of the year. Andrew will email this information to all current members and this issue as well and others will be discussed at the next General Meeting.
Secretary report: Andrew read the minutes from the last general meeting.
Motion: Moved by John Peterson to approve the minutes. Seconded by Paul Hofland. Motion carried.
Lawsuit Update: The lawsuit was neither won nor lost (but we did lose the money paid in fees). It was referred to District Court. It may cost $10,000-$15,000, if represented by an attorney, to go to District Court. The Board of Directors did think about having the HLA pay the fees to have Darrell Carter go to District Court (and represent himself), but he was not interested. The letter was put in the Bemidji Pioneer to show that we didn’t lose the case, as the article in the paper implied.
Security Deposits: Duane asked how people paid security deposits and damage deposits. The rule is that you have 21 days to pay back the deposit, otherwise you owe the tenant double. Duane learned this from personal experience and shared that experience. This issue will be discussed further at the next General Meeting.
Announcements
The next Board of Directors meeting will be 3:00 pm on Thursday November 15, 2012.
Adjournment: Meeting adjourned at 8:56.
Minutes submitted by Jessica Sarauer