Last month, an association of landlords sued the city of Omaha along with a couple of city code inspectors in federal court.

Landlords file federal complaint against city code inspectors 

The association sued the city with a similar complaint in 2002 and the city agreed to a settlement in 2003.  Now the association asserts that the city breached the settlement.

According to the plaintiff's complaint, one of the inspectors "has openly admitted his prejudice and bias toward Hispanics."

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You think this is happening only in Omaha?!

We have seen some Richardson code inspectors targeting certain landlords.  

Case 1:  Earlier this year, one landlord was cited for having a garage sale more than three times in a year.  She said that she was having her garage painted that morning and had to take stuff out of the garage.  She refused to plead guilty and went to trial. 

We watched the trial and saw the photo the inspector took on that Saturday morning; it didn't look like a garage sale (he claims he just drives around on Saturdays but we think he was targeting her.)  There were a bunch of plastic boxes with lids on on the driveway.  She didn't have a garage sale sign in her yard.  The inspector testified that there was a sign on a street, but he wasn't sure if it was for the landlord's property or the house across the street from her, which WAS having a garage sale.

We were also shocked that the property in question belongs to her ex-husband but the citation was issued to her!  Her name is NOWHERE on the deed.

According to her, this particular inspector often came and monitored her private residence.  Also, he often showed up at her rentals before 8 am.

This landlord is an immigrant with limited English ability.  We suspect that might have been a factor. (i.e. an easy target for issuing citations.)

Case 2:  Also, a few years ago, another landlord was cited by a senior building inspector (who recently left the city).  A few months before that, he had an encounter with this inspector, who told him, "If your tenant refuses a rental inspection, I'm going to bring the police with me and enter your property!"  (Without a search warrant?)

When this landlord had a house for sale (he bought it to rehab and sell.  From the price point, it was obvious that it wasn't a rental.  It wouldn't cash flow), he received a rental registration form THREE DAYS after he closed on it.  He didn't respond since it wasn't a rental.  Then he received a citation to appear in court.  By then, the house was on MLS and there was a sale sign in the yard!  

So the landlord contacted the inspector to ask why he issued a citation, saying, "It's not a rental and it has never been a rental."  That wasn't good enough for the inspector and he wanted to know who lived in the property.  There was (and is) NO ordinance that requires the citizens of Richardson to report to the city about 1) a house that isn't a rental and 2) who lives in a non-rental property. 

If the inspector had driven to the property, it would have been obvious that the house was vacant and it was for sale. Back then, the city claimed that the city was sending rental registration notices to owners every time the name on utility accounts changed.  (We suspect that this building inspector was targeting this landlord.)

The inspector said he would rescind the citation, but the landlord received another notice to appear in court!  So the landlord demanded proof of the citation withdrawal from the inspector -- a copy of the case dismissal the inspector filed in court said "the property is NO LONGER a rental." Yes, he lied to court! (The landlord has a copy of the dismissal.)

The landlord complained to the chief city building official and mayor. (He also contacted the city council, but none of them was interested.) Both the official and mayor apologized for the staff "error," but blamed the landlord for not responding to rental registration notices.  (Again, which ordinance requires citizens to report non-rentals?)

They claimed that rental registration notices went out every time the owner on record and utility account name didn't match (Wow, what a waste of tax money!)  Three days after the closing, the owner on record was still the previous owner.  The inspector sent the notice to the person on the utility account instead (because it was a familiar name to the inspector? ;)  

Anyway, the landlord's persistence led to Mayor Slagel changing the notification procedure.  

Case 3:  A landlord often receives code violation letters for overgrown tree limbs though he has NO TREE in his rental's back yard!!!

There was an interesting article in yesterday's Wall Street Journal (below).

Investors are transforming run-down neighborhoods in Oakland, CA.
(Some Collin people talk about Richardson's "hoods."  They haven't seen real "hoods"!)

The city should embrace investors to be on their side rather than treating them as enemies.
(The city embraces large developers anyway.)

Very often, investors are the only ones with funds and skills to rehab foreclosed or distressed properties.  Most foreclosed properties are in first-time buyer neighborhoods and many first-time buyers don't have resources to buy and fix up foreclosed properties.  (The worst foreclosed properties are HUD properties--after first-time buyers put down 3.5% for FHA loans, they have no money left to repair ACs or roofs. So investors have to replace pretty much everything.)

Companies Spruce Up Neighborhoods, Putting Gentrification in Overdrive

OAKLAND, Calif.—On a recent weekday morning, a crew was busy sprucing up the exterior of Koonal Parmar's one-story house in West Oakland. They trimmed trees, pressure-washed the wood siding and touched up his paint job.

Mr. Parmar didn't pay a dime for all this. The upgrades were compliments of REO Homes LLC, an investment firm that owns several houses on Mr. Parmar's block. In addition to helping homeowners upgrade their homes, REO has mended fences and planted hundreds of trees along city streets.

"The neighborhood was badly in need of capital, to maintain, beautify and restore it," said REO founder Neill Sullivan, while driving his hybrid sedan through the streets of West Oakland.

The company's motives aren't altruistic. They are part of a broader strategy designed to upgrade the neighborhood to attract higher-income residents who, in turn, will help boost properties' values.

In past housing recoveries, investors purchased foreclosed homes and often tried to flip them for a quick profit. But investors with a different approach have plunged into the housing market this time. They have assembled billions of dollars to acquire homes and upgrade them. Their aim is to gentrify communities and profit later when rents and property values rise.

"We're taking mostly vacant, abandoned and beat up housing stock, fixing it up and putting livable, quality housing on the market," Mr. Sullivan said.

The gentrification of low- and middle-income urban neighborhoods is nothing new. But economists and scholars say the current process is moving faster than in the past, which can be unsettling to people who lost their homes or who are being displaced by fast-rising rental rates and home prices.

"It can take generations for neighborhoods to change, but investors have the potential to accelerate the process, especially because they may have the cash on hand to purchase lots of homes at once, even in tight credit markets," said Ingrid Gould Ellen, co-director of New York University's Furman Center for Real Estate and Urban Policy.

These efforts aren't occurring everywhere. In cities far away from vibrant employment centers or where crime and unemployment are high, vast tracts of housing remain abandoned. But in working-class communities in or near Washington, New York, Boston, Los Angeles and San Francisco—where employment is relatively strong and housing costs are high—big investors have become an active part of the housing market.

Virginia Tech professor Derek Hyra, who is writing a book about the gentrification of Washington's historically black, largely low-income Shaw/U Street neighborhood, said while the gentrification process has been moving slowly for decades, it sped up in late 2009 and early 2010, due partially to rising foreclosures. "You see doggy day-cares popping up in the U Street area, which is sort of unbelievable," Mr. Hyra said.

Real-estate firms say they need to spiff up neighborhoods to make their investments pay off. The MACK Cos., is a rental landlord that operates in the Chicago market and owns about 400 homes and manages about 1,400 homes owned by larger investment firms. Six months ago, it paid $165,000 for a house in Midlothian, Ill., near a country club, which sat on a street filled with potholes.

After local officials failed to repair the road, MACK decided to spend $20,000 to repave the block in front of the home, which is expected to rent for about $3,300 to $3,500 per month. Jim McClelland, MACK's chief executive, said the company buys most of its homes, which are all bank-owned foreclosures, for around $50,000. It then spends an average of $43,000 on interior renovations for each house, and an average of $9,700 on exterior improvements, including grooming driveways and planting trees in medians on the street.

"If your play is for long-term appreciation, versus just flipping the houses, wouldn't you want to improve the properties and make the area more desirable?" Mr. McClelland asked. "It creates a look of curb appeal. It's good for business."

Some veteran landlords disagree. "Renters can only afford to pay up to a certain amount. Spending extra money to not only improve the house, but also the neighborhood wouldn't result in enough of a rent increase to be cost-justifiable," said Michael Meyer, chairman of TwinRock Partners, a real-estate firm in Newport Beach, Calif., that owns roughly 250 single-family rental homes in Southern California and Las Vegas.

Because homes prices are rising faster than rents, Mr. Meyer said he is only getting a 5% to 6% annual return on his most recent purchases. Spending more to improve the neighborhood wouldn't be "economically viable," he said.

Few places highlight how investors are hastening gentrification as well as Oakland, a port city on the San Francisco Bay with a long history of labor and political activism. The city's working-class black population swelled after World War II as families relocated from the South to seek work in Oakland's shipbuilding and food-processing industries.

Over the years, Oakland has been the scene of numerous dockworker strikes and in 1966 became home to the Black Panther Party, a black militant organization. Crime skyrocketed during the crack-cocaine epidemic of the 1980s, and the city's reputation suffered despite its proximity to some of the wealthiest neighborhoods in the country.

As crime has fallen in recent years a technology industry boom has lifted the Bay Area economy, and real-estate brokers have positioned Oakland as a more affordable option to San Francisco, a few miles away. The average asking rent for a one-bedroom apartment in San Francisco rose 39.4% to $2,797 between the second quarter of 2009 and the second quarter of 2013, according to RealFacts LLC, a real-estate data provider. Oakland's rental market is rising, but it remains comparatively cheap. Over the same period, one-bedroom asking rents rose 31.2%, to $1,839 from $1,402.

Home prices also are significantly cheaper in Oakland, although they are rising faster than in San Francisco. The estimated median sales price in the Oakland area was $450,180 in June, according to CoreLogic, a real-estate data provider, up 25.7% from a year ago. In the San Francisco area the estimated median price was $773,473, up 21% from a year earlier.

After the housing crash, investors pounced on Oakland. In 2006, absentee buyers and buyers making cash purchases—another sign they are investors—made up 10.6% and 5.7% of the market respectively, according to DataQuick, a housing analytics company. By 2012, the absentee buyer share had risen to 30.5%, and the cash-buyer share had risen to 33.6%.

A study conducted last year by the Urban Strategies Council, an advocacy organization based in Oakland, found that between 2007 and 2011, 10,508 homes in the city went through foreclosure, and 42% were acquired by investors.

One of the biggest investors to seize on the opportunity was Mr. Sullivan's REO Homes. With the help of an early investment from Thomas Steyer, the founder of San Francisco-based hedge-fund firm Farallon Capital Management LLC, REO has acquired more than 200 homes in Oakland since REO was founded in 2008. Most are in West Oakland, known for its stately Victorian homes and located just one stop from San Francisco on the local commuter rail line.

In the five-block radius around Mr. Parmar's house, REO owns around 20 homes, Mr. Sullivan said. Most houses cost around $200,000 and Mr. Sullivan said he invests as much $100,000 to fix each one up.

Mr. Parmar welcomes the investor-driven gentrification. The 39-year-old musician and youth soccer coach purchased his home in West Oakland for $302,000 in 2004, when the neighborhood was, as he said, "very marginal."

The housing crash made things worse. By 2007, Mr. Parmar's home was worth $125,000. Similar-sized houses in the neighborhood have sold in recent months for more than $370,000, Mr. Parmar said.

Mr. Parmar said that since investors started buying up blighted properties in the neighborhood, drug dealers have stopped selling on a corner near his house, neighbors have started taking better care of their houses' appearances, local residents have set up a neighborhood watch group on Facebook and a once-dangerous park nearby has reopened for weekly youth soccer practices and softball games.

He also points to new, trendy restaurants and a brewery that have opened recently nearby, and said that the neighborhood is getting younger and more ethnically diverse as more-affluent white and Asian renters move in. "This neighborhood has turned around 180 degrees," said Mr. Parmar. "The people who were living here for 30 years were just letting the neighborhood rot."

That isn't the way many longtime residents see it. A few blocks away, Jo Anne Stamps, 61, a retired administrative assistant, lives with her 96-year-old mother in a home that has been in her family for more than 40 years. She said the new renters who have come in over the past few years keep to themselves and don't participate in neighborhood traditions like the annual block party. "When mom moved in, people were more friendly," Ms. Stamps said. "Everybody knew everybody. It made me feel safer."

The changes in the community also worry Oakland city officials. They are advancing various initiatives designed to slow down investor purchases and give owner-occupiers a chance to buy foreclosed properties before investors see them as part of a federally funded "First Look" program.

"I'm not interested in finding housing for San Franciscans who can no longer afford San Francisco. I'm interested in helping people here in Oakland," said Desley Brooks, the council member who sponsored city legislation requiring investors to record their property holdings in a city registry to slow down purchases. "There are people here who have lived here their whole lives who can no longer afford Oakland."

Write to Robbie Whelan at robbie.whelan@wsj.com

By JULIETA CHIQUILLO 

Staff Writer
jchiquillo@dallasnews.com

Published: 04 August 2013 11:40 PM
Updated: 04 August 2013 11:41 PM

Richardson officials are considering changing the city’s rental registration program to throw out a requirement for inspections inside properties.

The current ordinance requires landlords to schedule an interior and exterior inspection with city staff within 30 days of a new tenant moving in. Amendments to the ordinance proposed last week call instead for annual inspections of the exterior only.

Since inspections began in 2012, most landlords and tenants have complied, though city inspectors have met some resistance.

The city has sought two warrants after being denied admission to rental houses. It also cited two landlords for failure to make a property available for inspection. One pleaded no contest, and the other was convicted in municipal court. That landlord appealed to a Dallas County court. On Thursday, the conviction was overturned.

If the ordinance is amended, owners and tenants will be encouraged to allow an interior inspection, but it won’t be mandatory.

“For some people, they will see that as perhaps less taxing on them,” said Don Magner, assistant city manager of community services. “The other thing is that they don’t have to be there, so coordinating schedules wouldn’t be as big of a hassle.”

City officials maintain that the current ordinance is reasonable. They said they revisited it as part of a regular review.

But some critics of the program who welcome the proposed changes and said their objections probably played a role.

For landlord David Farnham, who was cited by the city, the main concern is tenants’ right to privacy.

“Whatever the reason is, I think it’s a good move for the city not to be forcing themselves on people,” said Farnham, who owns two rental properties in Richardson.

Richardson’s rental registration program is a decade old, but inspections were introduced only in January 2012. The city has conducted 1,022 inspections through July, and only one property has failed.

Of the 10,231 code violations that have been identified, 88 percent are exterior.

City Council members indicated at a July 29 work session that they would support amending the ordinance.

“That’s what brings property values down — when you have homes that at least on the exterior do no meet the standards that we feel they need to meet for health and safety reasons,” council member Steve Mitchell said.

According to the ordinance, city inspectors need the occupant’s permission to enter a home. If permission is denied, the city can seek a warrant.

The proposed amendment would keep the option of a warrant when a tenant refuses an exterior inspection.

Peter Balbus, who has rented a home on Windsor Drive for six years, also favors the planned revisions. He said interior inspections are a legitimate service when tenants want them.

“This is the way the program should have been from the beginning,” he said.

Last fall, Balbus refused to let city employees into his home after his landlord scheduled an inspection. He said the city later obtained a warrant but didn’t execute it.

“I didn’t want the inspection; I don’t need the inspection,” he said. “I have absolutely no issue with my landlord, who’s wonderful.”

The city then cited Balbus’ landlord, Wendy Moore, who lives across the street. A municipal court jury found her guilty of failing to make the property available for inspection. She was fined $1,500.

The conviction was overturned after Moore and her husband, Luke Lukas, filed an appeal in April.

Magner said the city won’t prosecute outstanding citations or court cases that would be rendered moot by the proposed changes once adopted.

Other North Texas cities that have rental registration programs include Garland, Little Elm, Coppell and Carrollton. Garland was forced to adjust some of its provisions after being sued.

The revisions to Richardson’s ordinance will go to the council this month for a vote.

Though Farnham embraces the planned revisions, he said his tenants might find even exterior inspections intrusive.

“Some people feel very strongly about their privacy and being treated as equal to anybody else,” he said. “That’s really the issue.”

The rental inspection program since January 2012 has recorded:

1,022 — Rental house inspections

1 — Property that has failed inspection

10,231 — Code violations identified

177 — Citations for failure to register property, renew registration or pay $75 renewal fee

2 — Citations for failure to make a property available for inspection

1 — Conviction for failure to make property available for inspection, which has been overturned

2 — Number of warrants sought for inspections

http://www.dallasnews.com/news/community-news/richardson-lake-highlands/headlines/20130804-richardson-looks-at-revising-rental-registration-rules.ece