Setting the Record Straight on Rental Licensure

A recent Frederick News-Post editorial that called for the City's Rental Licensing Ordinance to be given a chance to work mischaracterized its potential impact on Frederick’s rental housing market. For example, the write-up missed that the ordinance was amended to include short-term rentals despite the city’s statement in the executive summary that it doesn’t have the capacity to enforce the law for those properties.

The editorial implied that fees for the program would only raise rents by $10 but didn’t mention last week’s hearing where the ordinance’s sponsor noted that fees could raise rents by $20 per month. Unfortunately, the editorial also failed to note that in addition to licensing and inspection fees, the ordinance permits the establishment of administrative or regulatory fees that would also impact affordable housing.

In addition to missing the fee provision, the editorial erroneously claimed that the ordinance goes out of its way to minimize the impact on housing providers, which is completely refuted by the ordinance’s text. Consider a small property owner who offers a nice property for rent but forgets to renew their license for a week. Under the ordinance, that small property owner would be exposed to $7,000 in potential fines, and the city would have the authority to revoke their license without a hearing. Revocation without a hearing would require a six-month removal of the property from the rental market and a requirement to allow residents to live at the property for up to 60 days, rent-free. On appeal, the ordinance requires the property owner to prove their innocence by showing that the city revoked the license in error. As an aside, the ordinance also directs property owners to an appellate board that doesn’t exist in current law or the ordinance.

"Consider a small property owner who offers a nice property for rent but forgets to renew their license for a week. Under the ordinance, that small property owner would be exposed to $7,000 in potential fines, and the city would have the authority to revoke their license without a hearing."

Finally, the editorial wants the ordinance to be given a chance to work, but Frederick’s property owners cannot afford that risk. The Court of Appeals recently held that property owners effectively forfeit rent if they lack a license in jurisdictions with rental license laws, even if the property is in perfect condition. In turn, implementation of the ordinance would be inextricably linked to the ability of Frederick property owners to collect rent. This fact is extremely alarming since the executive summary calls for implementation of the program after the required date of licensure, and since the ordinance was expanded to include properties that the city has noted it does not have the capacity to manage.

The amended ordinance places undue pressure on the city’s implementation, includes provisions that make it an outlier in the state, and includes fees and unreasonable exposure to high penalties that will reduce affordable housing. While the editorial chose to ignore these issues, the city’s residents and property owners simply cannot.