Indy officials work to strengthen rental-property inspection bill

City officials from across Indiana are decrying a bill that curbs rental-property inspection programs, but Indianapolis is taking a different tack.

After more restrictive legislation was enacted on a temporary basis last year, a group of city-county councilors, city officials and Rep. Justin Moed, D-Indianapolis, worked with bill author Rep. Jud McMillin, R-Brookville, to ensure that cities could set up landlord registries. That's a priority for the city's Department of Code Enforcement and neighborhoods.

"Right now, it’s the wild west in Indianapolis,” Moed said. “We don’t know who these folks are. We don’t have a registry. We don’t have any guidelines for landlords. We certainly don’t have any inspection programs.”

House Bill 1403 stipulates that professionally managed rental properties can’t be subject to inspection programs. It would allow landlords to conduct their own inspections, as long as they use “qualified” personnel. It would also allow landlords to pass inspection fees to their tenants.

Cities with inspection programs admit that inspectors don't hit every unit every year, McMillin said. The bill allows the owners of large apartment complexes to show they are meeting standards and avoid fees, and for city inspectors to focus on problem properties. Nothing in the bill precludes inspectors from responding to complaints or acting on reasonable cause, McMillin said.

"If I was a large apartment complex and I was able to self-inspect, I wouldn't want the government coming in and doing it if I can show I'm doing a good job of it," he said.

At the same time, the bill states that cities can establish rental-property registries, and that the registration fees can be no more than $5.

City-County Councilor Jeff Miller said the language is the result of local officials' discussions with Moed, who met with McMillin early in the session.

Miller, a Republican representing a near south-side district, said he'll work with Democrats Zach Adamson and John Barth on an ordinance creating the city's first rental-property registry, if HB 1403 passes.

Miller said he expects opposition from those members of his caucus who oppose growing the reach of government. “That’s OK,” he said. “I think we’ll have pretty strong Democratic support for it."

HB 1403 is the continuation of a legislative effort to rein in what apartment owners say are onerous inspection fees in some communities. The northwest Indiana town of Merrillville became notorious last year for charging annual fees of $100 per unit and using the revenue to fund its police department.

In 2013, Rep. Mike Speedy, R-Indianapolis, authored a bill that would have banned cities from charging inspection fees, essentially undercutting their ability to start new programs. The bill passed as a one-year moratorium, and the issue of rental-property regulation went before a summer study committee.

Indianapolis neighborhood leaders packed the study committee's meeting, Miller said. The committee didn't issue a recommendation on future legislation, but it soon became clear that the issue wasn't dead.

The fact that McMillin, a proven vote-getter, is carrying the bill suggests that it was a priority for House leadership, Moed said.

"My preference would’ve been to restore full local control over landlord transactions in a community," Moed said. "We tried to do the best we could to restore what power folks here locally wanted."

Hammond Mayor Tom McDermott said he’s been fighting the Legislature for several years to keep his inspection program, which charges landlords $80 per unit. The fee went up after property-tax caps were enacted, he said, but it still doesn’t cover the entire cost of the rental-inspection program, which is $1.2 million a year.

McDermott said the routine inspections are needed to ensure the safety of single-family homes divided into three or four apartments. “It’s dangerous,” he said.

Just this winter, McDermott said, three children were killed after a propane heater caught their clothes on fire. They were part of a family of seven living on the first floor of a three-unit building with no electricity or central heat, he said.

The building used to be a single-family home, McDermott said. “The predator landlord cuts it up into pieces and rents it out for as much as possible,” he said. “It took us a week to find out who owns it, even in a tragedy like this.”

The bill exempts cities that had rental inspections prior to 1984, which means that programs in Bloomington and West Lafayette won't be affected. Officials from those cities have testified against the bill anyway.

McDermott is incensed by exemptions for Indiana's big college towns. “If you live in West Lafayette or Bloomington, your life is more important than if you live in Hammond,” he said.

HB 1403 is assigned to the Senate Local Government Committee but hasn't been scheduled for a hearing.