Up to Code

The growth in the number of vacant and single-family rental properties adds pressure to municipal staff who inspect properties and enforce codes, particularly in municipalities that have had to reduce staff since the 2008 housing crisis. A further complication is that investors sometimes own properties in multiple municipalities. That’s one reason why the communities that participated in this pilot focused on strategies to gather, share and act on information about problem properties across municipal boundaries, toward a unified effort for maintaining quality rental properties across the region.

The first step they took together was to gain a better understanding of the varying levels of authority across municipalities. In Illinois, municipalities are classified as either home rule or non-home rule, and these designations grant a certain level of authority. Municipalities with a population greater than 25,000 are automatically granted home rule authority. Smaller municipalities must pass a referendum to be granted home rule status. Non-home rule municipalities have powers granted by the Illinois General Assembly, while home rule municipalities have broader authority that does not require state approval for certain local affairs. Non-home rule and home rule designations impact a variety of local codes and ordinances; for example, home rule municipalities have greater authority regarding taxation powers, allowing such municipalities to generate a revenue stream unavailable to non-home rule municipalities.

Non-home rule and home rule designation was especially important to this pilot as it pertained to municipal authority to address property code enforcement and “problem landlords.” Non-home rule municipalities rely on inspections, citations and liens to pressure problem investors and landlords into compliance with their property. A lien constitutes legal claim over a property until a certain outstanding debt, typically accrued through violations, is settled. Liens can be a very effective approach to code enforcement. A variety of liens can be filed against an underperforming property, including demolition, water or sewer service, weed cutting, pest extermination, tree removal, unpaid municipal tax and administrative adjudication judgment liens. However, most non-home rule municipalities in Chicago’s south suburbs do not have the resources to effectively identify problem properties and landlords—let alone generate and foreclose on liens—allowing problem landlords to persist and properties to deteriorate. Leveraging non-home rule municipalities’ authority to file liens is vital to their code compliance efforts.

Unlike non-home rule municipalities, home rule municipalities have the authority to license landlords. Should a landlord violate rental codes, home rule municipalities have the power to then retract the landlord’s license, thereby rendering that individual ineligible to continue renting property in that municipality. This is a more direct, efficient approach to affect landlord behavior, although the authority to license landlords does not eliminate situations that require liens and can be a time consuming venture. As in non-home rule municipalities, it is an equally burdensome task for home rule municipalities to sort through the specifics of each lien filing.

Whether home rule or non-home rule, the common thread is that municipalities need more capacity to efficiently implement these tools. To reinforce these efforts, the pilot partners analyzed strategies to provide the necessary technical and administrative support to bolster code enforcement efforts.

If you are a non-home rule municipality interested in learning more about the legal strategies you can adopt to target blighted property, see this Quick Guide to Non-Home Rule Enforcement by Ancel Glink law firm.

Suburbs across Chicagoland are grappling with enormous shifts in demographics, poverty, unemployment and the aftereffects of the housing crisis. In hard-hit areas, such as Cook County’s southern suburbs, many municipalities already trying to stabilize housing and economic conditions are today contending with a stock of single-family homes that are either vacant or being rented out, often by absentee owners. The inexpensive cost of purchasing and renting out homes has opened up rental property ownership to both large corporate investors and mom-and-pop investors. Consequently, many municipalities are finding themselves faced with an unprecedented stock of rental housing as well as inexperienced landlords. Municipalities need tools and strategies to prevent absentee owners and landlords from allowing properties to deteriorate, as well as incentives to attract responsible investors to their communities.

The responsibility to track, monitor, encourage and regulate landlord behavior and property condition falls to municipalities. Here we recommend that municipalities adopt a regulatory framework that balances punitive strategies with those designed to encourage and reward positive behavior. A strong rental housing framework will consist of municipal ordinances that define the responsibilities, expectations and consequences for landlords. We recommend that communities balance regulations with incentives, engagement and education for landlords.

Listed below are the highlights from our recommendations. For more details, please see Raising the Bar: A short guide to landlord incentives and property regulation, and the case study Understanding Home Rule and Non-Home Rule Municipalities.

• Rental registration and licensing: A landlord licensing system, available in home rule communities, is one tool for ensuring that only quality landlords are allowed to operate rental properties. A licensing system can create the possibility of offering the ultimate consequence to problem landlords—revoking his/her license and therefore his/her ability to run a business and operate rental properties. For non-home rule communities that cannot license, we recommend a robust registration system that requires landlords to register with the city and provide essential information
• Inspections: Regular code and health inspections are essential tools available to both home rule and non-home rule municipalities for overseeing the quality of rental properties. They allow communities to monitor the housing stock, identify deficiencies and order remedies from landlords. Identifying and correcting problems early on ensures both safe living conditions for tenants and stable, appealing neighborhoods for the community at large.
• Property information system: A property information system that keeps track of property code violations and police incidents at the property, as well as the landlord’s history of managing other properties, will help municipalities identify landlords who are reoccurring offenders and target resources to problem properties. Additionally, a property information system can enable the development of a landlord rating classification. This system could identify good landlords and offer them rewards for good behavior, while imposing consequences for code violations or offering incentives for improvement for problem landlords.
• Landlord engagement and training: Landlord engagement, education and incentives should be thought of as integral to—not separate from—a municipality’s rental regulation program. Our research demonstrates that a significant portion of rental property owners with small operations may lack the resources and education necessary to be quality landlords. With additional outreach and resources, many of these landlords will bring their properties up to code. We recommend strategies such as creating a landlord manual that describes municipal policies, best practices around property management and maintenance and resources landlords can access. Another strategy is establishing a landlord academy to provide training and technical assistance on property management and maintenance. An academy can be both a tool that good landlords can access at their own will and a required consequence for problem landlords. We also encourage the formation of a regional landlord association, which can foster better communication between municipal leadership and property owners and provide more opportunities for networking between landlords.
• Landlord incentives: It is important to not just punish bad behavior, but reward good behavior. Incentives for responsible landlords may include licensing fee rebates, reduced frequency of property inspections or expedited permitting.

A multifaceted approach of offering rewards for good behavior and deterrents for bad behavior should work doubly to encourage attentive and responsible landlords, resulting in a sustainable and organized rental market. A poorly maintained rental housing market won’t be easily fixed with a single policy. It is important to first establish housing ordinances and codes that are clearly communicated, then institute the infrastructure to monitor, enforce and create incentives for adherence to the codes. The additional resources for training, networking and support are also essential to supplement and reinforce the rental housing framework established by municipalities.

Enforcing property maintenance standards are critical tasks that municipalities perform to maintain vibrant, safe and healthy communities, yet often these functions can be cost-prohibitive. Code enforcement responsibilities range from inspecting buildings to ensure they comply with local property maintenance standards, to maintaining, repairing or even demolishing blighted, vacant properties. While many owners will respond and remedy the condition of their properties, often municipalities struggle with nonresponsive owners. For vacant and troubled buildings, this means the municipality may be left with the cost of boarding or repairing the house, mowing the lawn, issuing violations and fines and pursuing legal actions, such as recording judgment liens, liening the property for expenses, appointing a receiver and even taking ownership through foreclosure or abandonment.

Since the housing crisis and economic recession, many Chicago-area municipalities are struggling with a declining tax base and a growing number of troubled, vacant and abandoned buildings. The Up to Code Pilot created an “Administrative Hub” to centralize the administrative functions of code enforcement departments, including the legal actions taken on property maintenance violations. This pilot was tested with four south suburban municipalities: Chicago Heights, Park Forest, Richton Park and South Chicago Heights.

The following case studies examine two of the pilot communities’ experiences using the Administrative Hub over the summer and fall of 2015. These two municipalities utilized the Hub for different functions during this period: Chicago Heights used the Hub services to efficiently create high priority property maintenance liens, while South Chicago Heights worked with the Hub to pursue abandonment and fast-track demolition actions.

Improvements to the code enforcement process: Chicago Heights

Before the Administrative Hub was created, Chicago Heights, like many municipalities, was alerted to troubled properties in one of two ways: an inspector identified a troubled property when they were out on their normal inspection rounds or a concerned resident called the municipality to report an issue they identified in their neighborhood. Once the property was flagged as troubled, the following steps occurred:

1. The inspector visited the property to examine its condition and take a photo for future documentation.
2. Back at the office, the inspector researched the property’s past history with violations and wrote up a violation notice. Given staff capacity, the violation notice was sent to the property’s address, although the owner might have been absent.
3. The owner was given 24–48 hours to bring the property into compliance.
4. If the property was not brought into compliance, the inspector notified others at the building department to begin the process of filing and recording a lien against the property. About once or twice a month, the building department went to court to record the liens for the previous time period, although recording liens is often neglected when the building departments are behind on their daily inspections and tasks.

All in all, the building department estimated that, on average, each lien also required two or more hours of administrative work associated with the code enforcement process, a significant amount of time given the nearly 500 troubled properties that were flagged for 2015 in Chicago Heights. This time was spent inspecting, researching and filing liens.

Under the Administrative Hub model, the inspector was still charged with examining the property’s condition and recording any relevant details. But rather than the inspector researching the property’s history and sending a violation notice, they were able to send the property address to the Hub, which took over the legal, title and property information research. The Hub staff researched the property’s owners to identify where the owners were living—especially useful given the rise in absentee owners—and sent the violation notice to the owner’s address. This additional step resulted in a higher response rate from the owners of these troubled buildings. For owners that were nonresponsive, the Administrative Hub helped to record the liens in one large batch for all nonresponsive owners.

It important to note that the Administrative Hub took the additional step of recording a high-priority lien, which differs from a normal lien in that if a bank pursues foreclosure on a property, then the mortgage company must settle the high-priority lien payment thus generating additional revenue for the municipality.

Overall, the Hub worked with the pilot municipal building departments to prepare all necessary supporting documents for a wide range of liens and other enforcement actions. The Administrative Hub streamlined the process by preparing form documents, structuring and negotiating title services, and focusing the efforts of the building departments. With the paperwork being compiled by the Hub, municipal staff could focus on additional property inspections.

Impact in Chicago Heights

In the spring and summer of 2015, the Administrative Hub sent code violation notices to 330 properties. Of the 330 properties, seven properties immediately paid the dues for the city’s boarding and/or grass cutting services. From these seven properties alone, nearly $13,000 was recovered. It is noteworthy that after receiving these violation notices two of the owners began rehab work on their properties. For the remaining properties, the notice paved the way for filing a high-priority lien. Chicago Heights staff believed that having contact with these owners signaled the city’s commitment to revitalizing the area and served to encourage investment in the community. In collaboration with the Administrative Hub staff, the City has recorded high-priority liens for the 322 properties with the County Recorder’s Office.

The housing challenges in the south suburbs are still troubling and during the course of working on the 330 properties during the summer and fall of 2015, an additional 300 properties were identified as troubled and having code violations. The Administrative Hub provided a mechanism to pursue code enforcement on these properties more quickly and strategically and will ideally generate a larger flow of high-priority lien payments to the city to cover their numerous code enforcement expenses. These high-priority liens are paid by banks during the foreclosure process, thus increasing the likelihood of collection. Given that the City of Chicago Heights paid more than $500,000 to cut grass in 2015—between $800–$850 per property—the high-priority lien is vital to sustain building department efforts.

Experience and impact in South Chicago Heights

In the Village of South Chicago Heights, the Administrative Hub staff worked to utilize economies of scale when pursuing title to vacant property via a judicial deed. Specifically, Illinois law allows municipalities to seek an order of “abandonment” by filing a petition in state court that alleges certain statutory elements: 1) proof of two or more years of delinquent taxes or water bills, 2) evidence of no legal occupant and 3) a structure that is in an unsafe condition. Municipalities must serve all parties with interests in the property. If successful, the court will issue a judicial deed to the municipality free and clear of all back taxes and liens.

Abandonment proceedings are a powerful tool for municipalities to use when fighting blight. Unfortunately, municipalities rarely use the authority because of the time and effort needed to identify interested parties, serve them and prosecute the abandonment petition. This project tested the hypothesis that a team of Administrative Hub staff could develop a system for processing abandonment claims that would reduce cost and time for the municipal partner. Instead of having each municipality develop their own expertise, the municipalities could send these petitions to a centralized hub of abandonment specialists that can develop and use models, consolidate hearing dates and leverage experience with the same judges. The incremental cost of adding another petition to the caseload is far less than the initial cost of pursuing the first few petitions.

To test the hypothesis, the Administrative Hub filed six petitions for abandonment and two petitions for demolition, all of which were brought at the same time. The Hub staff developed model complaints, reviewed title searches for each property, and developed a system for incorporating necessary information in to standardized pleadings and service documents. The Hub attorneys scheduled the hearings for the same day to minimize the time in court. In the end, the cost per petition was consistently less than past abandonment and demolition petitions that were prepared and filed in isolation. While unbiased, empirical data is difficult to generate when each case is different, the trend was clear: Municipalities would reduce costs if they jointly used regional specialists to prepare and file standardized abandonment and demolition petitions.

Next steps

One of the major findings of this project is that many municipalities do not utilize their full legal authority to tackle certain vacant property challenges, simply because they do not have the time or staff capacity to go through the procedural steps required to utilize these tools. Centralizing the administrative aspects of this work can not only increase efficiency but also the likelihood that a community will take advantage of the best code enforcement and legal tools available to remedy vacant property challenges and blight.

Furthermore, as the Administrative Hub pilot progressed, it became clear that many of the efficiencies gained through using centralized staff to perform the administrative functions of code enforcement on vacant property could be replicated and automated in a software program. As a result of the pilot, the project team developed a tool in collaboration with the software company STR that replicates these efficiencies and allows municipalities to better combat nuisance vacant properties. This software is being tested for the period of one year by a select number of municipalities to determine its effectiveness of replicating the Administrative Hub functionality and efficiency. For further information on this project, please see this memo from Ancel Glink or contact Allison Milld Clements at the Metropolitan Mayors Caucus.

While the previous case study: “Implement an effective rental housing framework,” provides an overview of the ordinances, administrative systems and operating practices the municipality uses to foster responsible landlord behavior, here we want to focus solely on rental licensing ordinances and systems.

Regulating the condition and operation of rental housing is a major challenge facing local governments across the United States, particularly those experiencing social and economic distress, yet the Illinois Constitution clearly states that home rule communities have “the power to regulate for the protection of the public health, safety, morals and welfare; to license…”. The basic approach used by local home rule governments to raise the quality bar for rental housing in the community is that of rental licensing (info for non-home rule municipalities can be found below). Please note this case study is a summary of the document Drafting Rental Regulation Ordinances in Illinois Municipalities, which contains more information about the strategies described below.

Applicable to home rule municipalities

A licensing system is fundamentally different from a registration system, which is purely informational. It requires landlords to provide basic information to the municipality. It carries with it no inherent ability to enforce codes or set standards. A licensing system is a fundamentally different matter. By establishing minimum standards that a landlord must comply with in order to operate a rental housing unit in the municipality, it makes it clear that the community’s landlords have a responsibility to live up to certain standards, but also that the municipality has accepted its responsibility to act proactively to enforce its standards. It enables the municipality to move from a reactive and complaint-driven code enforcement system to one that aims at improving the quality of the entire rental stock, not just individual properties that trigger complaints.

While even the most rudimentary licensing system is likely to be better than no licensing system, the framework that we propose for the licensing ordinance is what we call a performance-based licensing system. A performance-based licensing system tracks the performance of rental properties and landlords, in terms of such matters as code violations, nuisance complaints and police calls, and adjusts the licensing requirements based on the property’s performance. The majority of responsible landlords who maintain their properties well and carefully screen their tenants benefit with fewer inspections and lower fees, while the municipality can target its limited resources to the smaller number of problem landlords who are creating a disproportionate share of the problems.

The Center for Community Progress’ guide will walk through the elements that may be appropriate for a performance-based rental licensing ordinance in a home rule municipality in greater detail. In summary, the ordinance is designed to lay out:

• The rationale for the licensing program;
• The ground rules the municipality will follow in administering the licensing program;
• The criteria used to evaluate performance and the consequences of different performance levels; and
• Fines, penalties and other sanctions for violation of the ordinance.

While each ordinance should be tailored to the particular conditions and priorities of the municipality, it is critical that the ordinance not only address all of these areas, but that it do so in a way that is rational and consistent; in other words, the findings should clearly establish a basis for enacting the ordinance, the ground rules should flow logically from the findings, the performance-based system should be a rational system for addressing the conditions identified in the rationale for the ordinance and the sanctions should be reasonable in light of the nature of the violation.

We recommend that performance-based rental licensing ordinances include the following nine elements:

1. The findings section should establish not only why a rental licensing ordinance is needed to serve the public interest generally, and the health and safety in particular, of the municipality and its residents, but why the key features of this ordinance are needed.
2. The definitions should include any basic matters that may be subject to interpretation, including the terms: dwelling unit, owner, agent or representative of owner, and tenant.
3. License and application procedure. This is the heart of the ordinance, where the municipality makes it clear that all owners of rental property must obtain a license to offer rental accommodations to the public. The bulk of this section should deal with the procedure for applying for and obtaining a license.
4. Inspection requirements and exceptions. The conditions that are considered the basic requirements of licensing are typically centered around how each rental unit preserves the health and safety of the residents and neighbors. The guide further details the 12 fundamental health and safety concerns that are a risk for tenants and neighbors and pose significant costs to municipal fire, police, public health and sanitation services. This section should also note the percentage of units in each multifamily building that will be inspected, exemptions from the inspection and whether or not the inspectors will be municipal staff or third-party contractors.
5. Issuance of licenses. This section sets forth the obligation of the municipality to immediately issue a license for properties that pass the health and safety inspection, and the obligations of the owner with respect to the license.
6. Annual performance evaluation and property classification.The best way to motivate property owners to become more responsible landlords, fixing the problems with their properties and making sure to the extent possible that they do not recur is to conduct an annual review of the ‘track record’ of each licensed rental property. The municipality should adjust its status going forward on the basis of that review, distinguishing between those properties that are well maintained and well managed, those that need help and those that are chronic offenders. Through the annual review, the owner of a property that causes the municipality few if any problems is rewarded for responsible behavior, while those that continue to cause problems face varying degrees of additional scrutiny or requirements.In order to conduct an annual performance review, a municipality must have a property database that tracks the license information and contains a record of complaints, calls, violations and other property concerns, such as the health safety conditions, criminal offences, timelines of correction of violations, etc. These elements serve as the basis for the performance criteria and scoring for each property. The evaluation of each property and its appropriate score should be rational given that it impacts the fees that landlord will be responsible for.
7. Performance-based inspection requirements and landlord obligations. We recommend a performance-based schedule that puts each landlord into one of four categories with varying levels of fees, re-inspection requirements and requirements to participate in landlord training and improvement requirements. We suggest examples of how to tackle this with the main goal being that there can and should be incentives built into the model to encourage positive landlord behavior.
8. Any fees imposed under a rental licensing program should be designed to cover the cost of the licensing program and no more. While home rule municipalities in Illinois have broad powers, Article VII, §6(e) of the state constitution specifically bars “licens[ing] for revenue.” Over and above the legal constraints affecting fees, it is important to remember that in setting licensing fees that the goal of the licensing system is to motivate compliance and responsible landlord behavior.
9. Violation, suspension, revocation of license; penalties. Although most performance-based systems significantly increase compliance and reduce the incidence of problem properties, even under the best system not all landlords will always comply with the municipality’s codes and standards. The rental licensing ordinance must recognize this, and provide clear language setting forth the penalties, beginning with increased fees and ending with fines and revocation of the license, that are associated with various levels of non-compliance. There is no hard and fast line between fees and penalties. Some of the matters that one municipality treats as fees might be handled as penalties in another municipality. We recommend that this section contain a schedule or chart of violations and penalties, so that an interested party can easily and quickly learn the effects, financial or otherwise, of each possible violation or infraction of the rental licensing ordinance or a related ordinance.

Applicable to non-home rule municipalities

The rental regulation ordinance for non-home rule municipalities varies from home rule municipalities because non-home rule municipalities cannot license under the Illinois Constitution. Instead, non-home rule municipalities have the authority to define, prevent and abate nuisances. The municipality must determine what a public nuisance is and when a public nuisance becomes a chronic nuisance. When a nuisance becomes chronic, the non-home rule municipality has the power to abate the nuisance and impose sanctions on the owner.

A nuisance becomes public when others are impacted beyond the owner or tenant of the property; public nuisances can take many forms. In some cases, as with dumping of garbage in the street, it can directly affect their health and safety; in others, such as perpetuating conditions that require the municipal government to intervene, or that create costs to local government for actions to protect the public health or public safety, the public is affected because these costs increase the taxes everyone must pay to the municipality. Thus, an ordinance violation does not have to be visible to the public to become a public nuisance, as long as the municipality can show the clear nexus or relationship between the violation and an effect on the public well-being. For the municipality to be able to act, the nuisance must also be chronic, meaning that the owner should be given an opportunity to correct any nuisance condition before it can be considered chronic. At the same time, the municipality is under no obligation to allow a problem to fester once there is evidence that the owner has not addressed it.

Many municipalities use their legal authority to identify and abate nuisances, but many do so on a one-off, case-by-case basis, rather than by developing an ongoing strategy designed systematically to reduce the incidence of nuisances. The approach we describe here is designed to accomplish that goal by identifying when a particular condition or series of events involving a property constitutes a chronic public nuisance, and addressing that nuisance by creating a regulatory framework for nuisance properties and their owners, under which they become subject to a regulatory regime; that is, a combination of inspections and obligations imposed on the owners of nuisance properties designed to prevent the nuisance from recurring, as well as incentives to encourage responsible landlord behavior.

We suggest that non-home rule municipalities adopt an ordinance that contains the following: the rationale for the ordinance; the ground rules the municipality will follow in identifying nuisances; and the procedures that are followed when a nuisance is identified. The ordinance should contain the following:

1. The findings section should establish not only why a rental regulation ordinance is needed to serve the public’s health and well-being but why the key features of this ordinance are needed. Documentation that nuisance conditions exist and that rental properties account for a disproportionate share of those conditions should also be included.
2. The definitions should include any basic matters that may be subject to interpretation, including the terms: dwelling unit, owner, agent or representative of owner, and tenant.
3. Landlord obligation to register. While the regulatory regime that is the heart of the ordinance is triggered by a nuisance condition or event, it is important (and within the legal authority of non-home rule municipalities) to require that all rental properties be registered for informational purposes with the municipality. The registration should cover the following information: 1) location of the rental property; 2) number of separate dwelling units in the property; 3) name and contact information for the owner of the property; and 4) where the owner is not local, the name and contact information for an agent or representative who can act on behalf of the owner. The fee for registration should be nominal, and designed to do no more than cover the municipality’s clerical expenses in entering the information into the municipal property database and, where appropriate, sending annual mail registration notices.
4. Nuisance physical conditions. The basis for being able to inspect and impose fees and sanctions is based on the conditions that the municipality outlines as a nuisance. This should include a full definition of the physical conditions on property, both inside or outside the structure or dwelling unit. The guide outlines the conditions we would recommend that municipalities include in this section. The second part should set forth the definition of what recurrence or failure to correct renders a condition a chronic nuisance, and thus triggers the property being placed on a nuisance property registry. As noted above, the recommended standard is that the owner has been cited for a violation based on the condition, and that the owner has failed to correct the condition within the time period provided for compliance.
5. Nuisance property registry. This section sets forth the outcome of a determination by the municipal official that the property harbors a chronic nuisance as determined by the municipality. Such a determination triggers a series of outcomes with respect to the property and the landlord, including:
   • Creates a nuisance property registry, and specifies that any property meeting the above standard is to be placed on the registry;
   • Requires inspection of any property placed on the registry, and provides for re-inspection as set forth;
   • Requires good landlord training for owners of properties placed on registry, as established by the municipality;
   • Authorizes levying of fines for chronic nuisances, for certain types of nuisance determination, reduce the fine if the owner participates in the voluntary crime-free rental housing program; and
   • Sets an administrative fee for placing property on the nuisance property registry.

   These elements, in conjunction with the annual review and performance-based adjustments described below, make up the regulatory regime.

6. Inspection and re-inspection. Once a property is placed on the nuisance property registry as set forth above, it is the subject of a health and safety or nuisance inspection. This component of the ordinance should provide for regular re-inspection in the event that the initial inspection, or the first re-inspection, identifies violations of any health and safety feature. The time between initial inspection and re-inspection depends on the nature of the violation. Owners should be given a realistic, but not overly generous, period in which to correct violations.
7. Annual performance evaluation and property classification. The circumstances that lead a chronic nuisance to be found, and a property placed on the registry, vary widely. The condition may be fairly quickly repaired, and not arise again; in other cases, it may simply be one of many recurrent problems associated with the property. It is very strongly in the interest of the municipality to motivate property owners to become more responsible landlords, by fixing the problems and making sure that they do not recur. The best way to do that is to conduct an annual review of the ‘track record’ of each property on the nuisance property registry, and adjust its status going forward on the basis of that review. Please see bullet point six under the home rule municipality section for further detail on categorizing and scoring property violations to encourage landlords to invest in and maintain their properties.
8. Effect of the Annual Review. We recommend a performance-based schedule that puts each landlord into one of four categories with varying levels of fees, re-inspection requirements and requirements to participate in landlord training and improvement requirements. We suggest examples of how to tackle this with the main goal being that there can and should be incentives built into the model to encourage positive landlord behavior.
9. Any fees imposed under a rental licensing program should be designed to cover the cost to the municipality and no more. Article VII, §6(e) of the state constitution specifically bars municipalities from “licens[ing] for revenue.” Over and above the legal constraints affecting fees, it is important to remember that in setting fees that the goal of the rental regulation ordinance is to motivate compliance and responsible landlord behavior.
10. Although most performance-based systems significantly increase compliance and reduce the incidence of problem properties, even under the best system not all landlords will always comply with the municipality’s codes and standards. While most infractions and violations can reasonably be addressed through imposition of additional fees or penalties, a recurrent issue is how to address conditions where the level of chronic nuisance becomes such that is necessary to take more drastic action. The Drafting Rental Regulation Ordinances in Illinois Municipalities guide outlines varying conditions and steps to take depending on the nature of the violation. If the health and safety of the tenants are in jeopardy, immediate action may be the most fitting, whereas other situations may require additional penalties and fines.

The above is a summary of how both non-home rule and home rule municipalities can implement sound policies that are proven to raise the bar for rental housing. Municipalities should be thoughtful when crafting rental regulation ordinances to ensure consistency, non-discrimination and coherence between the various elements. Performance-based systems that encourage and reward positive landlord behavior are a great place for municipalities to start improving the quality of their housing stock. Full access to the guide, Drafting Rental Regulation Ordinances in Illinois Municipalities, is available for download.