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City revokes 160 landlord licenses

The city’s Department of Codes and Inspections is in the process of revoking rental licenses of about 160 landlords for failure to comply with a requirement to obtain fire and liability insurance for their properties.

Those requirements were added in February in an ordinance amending rental inspection rules, based on a suggestion from the city’s Blight Task Force, in the belief that insurance companies would insist on improvements to reduce their risk, thus upgrading the city’s housing stock.

The city notified landlords in mid-June that they would need the coverage by the time their annual rental license payments came due at the end of July. Then, because the requirement is new, the city gave the landlords twice the usual 30-day grace period — a double extension that recently ended, according to Codes Director Rebecca Brown.

Landlords whose licenses are revoked may not bring in new tenants — though their current ones can remain, according to Brown.

To reinstate their licenses, landlords will need to obtain proof of insurance and pay a penalty, Brown said.

They’ll also need to pay their regular rental fees and provide their tenant lists, as usual, because the city didn’t accept those from the landlords who were out of compliance at the end of July, Brown said.

“There’s been ample time” since then, Brown said. “But we’re to the point now where we’re done with extensions.”

The 160 landlords have failed to obtain insurance policies for a total of about 200 properties — which comprise about 350 living units, Brown said.

There are about 5,000 licensed rental properties comprising 8,800 units overall in the city, she said.

A landlord with five properties who didn’t want to be named and who hasn’t obtained insurance for those properties doesn’t believe the city should have the right to add the insurance requirement.

It’s the business of the property owner whether to carry such insurance, according to the landlord.

The landlord is thinking about hiring a lawyer and about putting those properties on the market.

It’s especially irksome that the city would “spring it on us in June,” said the landlord — who wasn’t aware of the ordinance passage in February.

The landlord doesn’t oppose all city rental rules and doesn’t object to the inspection program itself.

That program charges $50 per unit per year for the first four units of a building and $15 per unit for additional units in those buildings, according to the city website.

“I want to follow the rules I agree with,” the landlord stated.

All the insurance companies that the Warren A. Gingrich Insurance Agency deals with require inspections before writing fire and liability policies, according to agent Clay Gingrich.

Generally agents themselves inspect properties and evaluate risks initially, and if they see a major problem, don’t write a policy, Gingrich said.

Otherwise, they take photos and measurements, write policies, send them to the insurance company best suited to the situation and await recommendations, Gingrich said.

There may be recommendations for handrails on stairs, railings on porches, repairs to cracked sidewalks, installation of fences and locking ladders to protect against improper entry into pools and electrical upgrades to eliminate knob-and-tube wiring and fuse boxes — “any hazard you could think of that could cause … injury to a visitor or someone walking by,” Gingrich said.

The new policyholder generally gets 30, 45 or 60 days to make corrections based on those recommendations and to send proof based on photos, he said.

Failure to comply results in policy cancellations, he said.

Generally, insurance underwriters like to see “pride of ownership” in properties, he said.

Then, “it’s apparent usually to the insurance company that ‘this guy cares,'” he said.

Conversely, “if it’s decrepit and decaying, (the underwriter) looks at that like it’s an accident waiting to happen,” he said.

For a modest apartment building in the city, he guessed that most policies would likely cost between $100 and $1,000 a year.

An employee of another agency who didn’t want to be named guessed such premiums would average about $500.

The cost of a policy would depend on the condition of the property, its value and the type of insurance, Gingrich said.

The depreciated cash value of a property may be far less than replacement costs, Gingrich said.

The depreciated cash value is the replacement cost minus the depreciation caused by use, while replacement value is the cost replace the lost property today, with similar construction methods, craftsmanship and materials.

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