Detroit landlords ignoring rental inspection rules, city says

Christine MacDonald | The Detroit News

Six months after Detroit launched a campaign to inspect all rentals, city officials admit they've struggled to get landlords to follow through with the housing requirement.

Only 11 percent of registered rental properties -- 52 of 468 -- had city clearance to operate in the first targeted ZIP code as of last week's deadline. Mayor Mike Duggan kicked off the crackdown in February starting with the east side's 48215 in hopes of making rentals safe after more than a decade of little city enforcement.

Most landlords have ignored their calls to follow the rules and get their units inspected, officials said. In 48215 on the city's border with Grosse Pointe Park, landlords who haven't complied began receiving $750 tickets last week.

And now that the Aug. 1 deadline passed, tenants in unlicensed properties can put their rent in escrow with the city's help without facing eviction, a controversial part of Detroit's updated housing ordinance enacted early this year.

"We were hoping to get a better percentage than this," said David Bell, director of Buildings, Safety Engineering & Environmental Department. "We've gotten quite a few landlords who've taken a wait and see (approach). They are still in the mindset that they can get away with it ... that they are invisible."

The new enforcement effort came after a year-long investigation by The News found families facing eviction in homes that were never inspected by the city and had dangerous problems, including lack of heat in the winter, hazardous electric systems, missing windows, rodent infestations and a sewage-filled basement.

Bell pledged in February to have all Detroit rentals inspected in two years.

The city campaign, which included mailings and community meetings, hasn't found success in the second ZIP code it targeted, either. In 48224, only 6 percent -- 77 of 1,350 known rentals -- have certificates of compliance, Bell said. Landlords in that area, which includes East English Village and the Morningside neighborhoods, have until Sept. 1 to comply and after that tenants can also escrow their rent with the city.

Some landlords argue the city's regulations are oppressive and costly, resulting in landlords leaving the business. The city faces at least two federal lawsuits from landlords and property managers challenging the ordinance, arguing it violates owners' rights to unreasonable searches and seizures and that there is no way to challenge a city denial to operate.

"I think you will see a wave of properties being sold across the city, east to west," said James Abbott, a landlord attorney. "That's what I am hearing. It's like (landlords) are branded as criminals. I think the landlords are discouraged."

To rent in Detroit, landlords must register properties and get a certificate of compliance, which includes passing an inspection and getting a lead paint clearance. They also can't be delinquent on the property's taxes or have outstanding blight fines on the rental being inspected or others.

Bell said they know they've been able to register the vast majority of rentals in areas they've targeted because they've estimated the rental population using property tax and utility records.

But most of the landlords, mainly of one- and two-family homes, aren't following through by scheduling an inspection using one of several third-party contractors the city has hired to do the work, Bell said.

A common landlord complaint is the cost of the city's annual lead paint inspection, designed to limit exposure to the hazard. An initial inspection ranges between $450 and $700, not including the cost to address hazardous paint. The city requires annual follow-up inspections that average about $250 to make sure lead hazards haven’t returned.

The ordinance passed last year reduced some of the annual lead requirements, but landlords argue it's still one of the most restrictive in the nation.

Lead paint commonly used in homes before 1978, ingested from chips or dust, is considered the top culprit for lead poisoning in young children. High blood lead levels can have severe and lasting effects on children, leading to developmental problems, behavioral disorders and learning difficulties.

Detroit neighborhoods have some of the highest percentages of child lead poisoning in Michigan. And city wide the percentage of children with elevated lead levels is on the rise: 7.5 percent in 2015 to 8.8 percent in 2016, according to the latest data.

The Detroit City Council passed the updated rental regulations last fall, including adding the escrow provision, and the accounts will be administered by PNC Bank. If the landlord doesn't get a certificate within 90 days of the rent going into escrow, the money would go back to the tenant.

Landlords who fought the provision warned it would hurt small property owners and escalate tensions between landlords and renters. Observers expect it to be challenged in court.

No one has applied to put their rent in escrow yet, the city said. Bell said they will refer renters using escrow who face eviction cases to two legal aid groups familiar with the city's regulations.

It's unknown how the courts will treat the city's escrow provision, particularly with renters who come before judges without attorneys who are aware of the city ordinance, said Joon Sung, litigation director of Lakeshore Legal Aid, a nonprofit that represents tenants

But he said it could be an important tool to ensure safe housing in Detroit.

Nancy Blount, the chief judge of Detroit's 36th District Court, wouldn't comment.

“Any ruling regarding the City’s new ordinance will be made based upon the facts and arguments presented in a specific case,” Blount said in a written statement.

Bell said his office will do two rounds of landlord ticketing in 48215 and those landlords who still haven't passed inspections could face 90-day misdemeanors, Bell said.

"Landlords who believe that this is something they can ignore are going to be very, very sorry," Bell said. "We are serious."

The city only has been able to collected 21 percent -- about $530,000 of the $2.5 million -- it has assessed landlords in licensing-related fines since 2016, according to city data.