Application Fee Cap in Boise City

City of Boise Ordinance

City of Boise Ordinance City Code Amendment Council Office 150 N Capitol Blvd Boise, ID 83702 (208) 972-8531 TO: Mayor and Council FROM: Lisa Sánchez, Council Office NUMBER: ORD-56-19 DATE: November 13, 2019 SUBJECT: Amending Title 5, Adding New Chapter 16, Residential Rental Application Fees BACKGROUND: As you are all aware, the vacancy rate for apartments and rental units in the City is at an all-time low, and our residents, especially our low-income residents, are struggling to find housing. The Grow Our Housing program is working to increase the number of units that are available, but the City is precluded under Idaho Code from placing any kind of caps or limits on rental rates. Despite our limited tools, the City does have the capability to manage residential rental application fees. This would provide relief to residents who are searching for a new rental home who often pay high application fees for each rental-unit application they submit. Currently, there is no limit in Boise on how much a property manager or management firm can charge a potential renter to apply for a unit. There are no criteria on how the applications will be judged, no designation for what the application fee is going toward, and not even an assurance that a unit is actually available. Anecdotally, we are hearing that some property managers are charging up to $100 and are accepting far more applications from prospective tenants than they have units available. Some residents are paying even greater amounts applying for units that, by number of applications alone, they have no chance of getting. I have also been told by the Boise City Ada County Housing Authority that there is a risk to their federal voucher funds if the voucher holders are unable to obtain housing. The application fee costs are very much a barrier for these housing seekers. This makes an already tenuous and stressful financial situation even worse, especially for those among us who can afford it the least. UPDATED PROPOSAL After conversations with impacted parties, the Office of the City Attorney, the Director of CITY OF BOISE Community Partnerships, and the discussion that was had at the City Council Work Session on September 10 and the Public Hearing on October 29th, the ordinance has been updated and now includes: Require that, before an application can be taken or accepted, the criteria on which the application will be judged must be disclosed, along with the amount that will be charged for the application fee. If a property owner or management company is not charging an application fee, they are exempt from the requirements of this section. Require that property owners shall only advertise, take applications and screen applicants for units that will be available within a reasonable time period. If an applicant has been screened, the unit has been offered, and a deposit has been placed, it will no longer be considered available and no other applications will be allowed. If a unit is not available, the applicant will have the option to consent to be screened and placed on a waiting list. Designate that the amount that can be charged by any property management company for a unit in the City of Boise shall not exceed the actual cost of the screening process or $30, whichever is lower. The actual costs that are allowed are only hard costs for items such as background checks, credit report, etc. as written in the ordinance. Soft costs such as labor may not be charged as part of the application fee. The time frame in which application fees can be charged is defined as a reasonable time period before the unit will be available. An explanation and receipt detailing how the fee was used, and any copies of paperwork or correspondence that were generated as a result of the screening must be provided to the applicant. Stipulate that current tenants of a unit shall not be charged an application fee to move to another unit under the control of the same property owner. Further stipulate that violations would be an infraction, punishable by a $100 fine. Second or subsequent violations would be considered a misdemeanor and would also be punishable under those guidelines. Complaints of violation must be filed within six months. I believe that this is a small but meaningful step to assist those in our community, many of whom are low income, who are in search of a place to live. I ask for your support in making this change. FINANCIAL IMPACT: CITY OF BOISE Minimal. Some police enforcement action. CITY OF BOISE Ordinance NO. ORD-56-19 BY THE COUNCIL CLEGG, LUDWIG, MCLEAN, SANCHEZ, THOMSON AND WOODINGS AN ORDINANCE AMENDING TITLE 5, PUBLIC SAFETY, BOISE CITY CODE, BY ADDING A NEW CHAPTER 16, RESIDENTIAL RENTAL APPLICATION FEES – REQUIREMENTS AND PROHIBITIONS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Boise believes that everyone one of its citizens deserves safe, affordable and stable housing; and WHEREAS, the City of Boise is dedicated to ensuring that citizens of all incomes have adequate access to housing and are not having to overcome significant financial and regulatory barriers to achieve that access; and WHEREAS, special considerations must be given to the population pursuing rental housing, due to the barriers to that housing that historically and currently make it more difficult for citizens to secure suitable living arrangements; and WHEREAS, one such barrier is the rental application fee that a renter must submit along with their rental application. BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF BOISE CITY, IDAHO: Section 1. That existing Boise City Code Title 5 shall be, and hereby is, amended to add a new chapter, 16, Residential Rental Application Fees - Requirements and Prohibitions, to read as follows: Chapter 16 RESIDENTIAL RENTAL APPLICATION FEES - REQUIREMENTS AND PROHIBITIONS 5-16-1. Purpose. The City of Boise City, Idaho (“City”) finds that residential rental application fees should be regulated to protect applicants from unnecessary and predatory collection practices. The purpose of this Chapter is to establish rules and regulations for the collection and return of residential rental application fees within the City. Residential rental application fees have recently become unduly expensive and not reflective of the actual costs of performing background and credit checks on potential renters. High application fees act as a barrier to segments of the population seeking to secure suitable housing. CITY OF BOISE All Boise residents should have access to housing without having to overcome excessive financial and regulatory barriers to achieve that access. 5-16-2. Legal Authority. Idaho Code sections 50-301 and 50- 302 authorize the City to exercise its police power for the protection of the public welfare, prosperity, health and peace of the City, its residents, and the community. The prohibitions set forth in this Chapter are intended to supplement and enhance, and not supersede, State landlord-tenant law and the Idaho Consumer Protection Act, as set forth in Idaho Code Title 48, Chapter 6. 5-16-3. Scope. This Chapter shall apply to all Residential Rental Units, as defined herein, within the boundaries of the City. 5-16-4. Definitions. A. Applicant: A prospective tenant for a residential rental unit, who signs or intends to sign a lease or other contractual agreement in relation to the unit. B. Rental Application: The written document used by a rental property owner to determine if an applicant is qualified to become a tenant of a residential rental unit. C. Rental Application Fee: Any cost, payment, charge or any other kind of expenditure or renumeration, including administrative costs, that a residential rental applicant is required to pay in order to have his or her rental application considered by the rental property owner. D. Rental Property Owner: The legal owner of a residential rental unit, and his or her agent or representative, including a property management company or its representative. E. Residential Rental Unit (Unit): A building or portion of a building used as a dwelling for one or more persons that is offered for rent or lease for periods of time greater than thirty (30) days. 5-16-5. Disclosure of Application Criteria. Before accepting a rental application, a rental property owner must disclose to the applicant, in writing, the criteria on which the application will be judged. 5-16-6. Disclosure of Application Fee. Before accepting a rental application fee, a rental property owner shall disclose in writing to the applicant the rental application fee amount. The applicant shall not be charged more than the disclosed rental application fee for that application. 5-16-7. Availability of Units. Rental property owners shall only advertise rental units, receive applications, screen applicants, and accept application fees for rental properties when such rental properties are actually available and ready for occupancy or are expected to be available for occupancy within a reasonable time period; provided, however, that an applicant may consent to be screened and placed on a waiting list. For purposes of this Chapter, a rental unit is no longer considered available if a different applicant has been screened by the rental property owner, has been offered the rental unit and accepted it, and has placed a deposit on the rental unit. A rental unit may be considered available if a tenant of a unit has declared they will not be renewing a lease or have otherwise vacated the CITY OF BOISE property. Rental property owners shall document the date and time that deposits are placed on rental units. 5-16-8. Application Fees. Application fees for rental properties shall not exceed the actual cost of the screening process or thirty dollars ($30.00), whichever is lower. The actual cost of the screening process includes only the hard costs associated with a background check. Labor costs and other soft costs associated with application process must be excluded. Hard costs may include, but not be limited to, the following: national, state and local criminal background checks, credit reports, rental history records and/or reference checks, eviction records and/or employment verification. Each adult who intends to reside in a residential rental unit may be charged an application fee. 5-16-9. Disposition and Use of Application Fee. Within ten (10) days of receipt of an application fee, a rental property owner must provide an explanation for the disposition and use of the application fee and provide a receipt to the applicant detailing how the application fee was used. An application fee shall be refunded in its entirety if a rental property owner does not incur hard screening costs. A rental property owner shall also provide the applicant with any paperwork or copies of electronic correspondence generated as result of the screening process, to the extent permitted by State and Federal law. 5-16-10. Current Tenants. A current tenant of a residential property unit shall not be charged an application fee to move to another rental unit owned by the same rental property owner. 5-16-11. Penalty. A violation of this chapter is an infraction, punishable as provided in section 1-4-2 of this Code. A second or subsequent violation within one year of a prior conviction shall be a misdemeanor, punishable as provided in section 1-4-1 of this Code. A complaint filed under the provisions of this Chapter must be filed within ninety (90) days of the alleged violative conduct. 5-16-12. Exemption. The provisions of this Chapter shall not apply to any Rental Property Owner who does not charge a Rental Application Fee. 5-16-13. Private Right of Action. There is no private right of action that is created by this section or money damages available to any person based on this chapter. Section 2. That this Ordinance shall be in effect immediately upon its passage, approval, and publication. CITY OF BOISE ADOPTED by the Council of Boise City, Idaho, on December 17, 2019. APPROVED by the Mayor of the Boise City, Idaho, on December 17, 2019. APPROVED: David H. Bieter, Mayor ATTEST: Lynda Lowry, Ex-Officio City Clerk