A bill that would increase the fee landlords pay to register their rental properties on one hand but cap the penalties incurred by not registering on the other was tabled because its language caused more questions than it answered during a Tuesday morning hearing of the the House Local Government Committee.
Authored and presented by Rep. Julie Olthoff, R-Crown Point, the bill would allow a municipality to charge a $10 fee — up from $5 currently — for property owners and-or landlords to register their single-family rental unit while requiring the municipality to provide a reminder notice to the owners and landlords who registered their properties the year prior. If the landlord doesn’t pay the $10 registration when it’s due, the municipality would be allowed to charge an additional fee of no more than $50 per single-family unit between 30 and 90 days after being given notice; and no more than $100 after 90 days.
The bill would further cap the penalty amount a municipality can impose for not registering properties at $7,500, the bill reads, and doesn’t include multifamily units.
Olthoff said she authored the bill because she owns a rental unit in Merrillville. She paid the $5 registration fee last year, she said, but because of a clerical error was notified that it wasn’t paid and was charged $100. She went to Merrillville and cleared up the error, she said, but the situation caused her to think about how municipalities can charge enormous amounts at their discretion, and she “started getting mad.”
“It’s a fee for doing business and a cap of $7,500 for missing a $5 deadline,” Olthoff said.
After calling out Olthoff for proposing a bill that affects her directly, several representatives questioned whether she understands the original bill’s purpose. That bill, House Bill 1403 of 2014, was written to give municipalities a registry of landlords and in-state contacts in case a rental unit is involved in a catastrophic event or falls in such disrepair that it needs immediate action, said its author, Rep. Justin Moed, D-Indianapolis.
“It’s a little disheartening that we’re back here discussing this,” Moed said. “Do you understand the registry and what it does?”
“So you can find landlords,” Olthoff said.
“So when someone doesn’t register, what happens?” Moed said.
Rep. Vernon Smith, D-Gary, pointed out that the registry is a byproduct of capping the property taxes at 1%, 2% and 3%, because now, municipalities impose all sorts of fees to make up for lost revenue. Also, if the municipality is having to send the landlords a notice to pay, they already know where they are, he said.
Moed said the fees aren’t the point of the bill.
“The fee is $5, and that was the compromise we made (in 2014) to Rep. Smith’s point that we’re not going to allow registration programs to be a revenue generator,” Moed said. “The penalty is levied for violating the city code, for not following the rules. If you’re a business owner, it is incumbent upon you to know the rules to practice your business; if you don’t, there is a penalty.”
Rep. Karen Engleman, R-Georgetown, then asked what happens to the landlords who don’t pay the $5 fee, to which someone said “Nothing.”
“So why would anybody pay the $5?” she asked, to which someone responded, “I guess the good people do.”
Rep. Vanessa Summers, D-Indianapolis, said that while she appreciates Olthoff’s issue, it’s her issue.
“What you’re doing is wreaking havoc on everybody because you have a small problem,” Summers said.”We worked out our issue, so that’s not fair.
“I believe that, with all due respect, this bill needs to be held, and there needs to be some conversations because from what I’m understanding on both sides, you don’t know what you’re messing with.”
Rep. Blake Johnson, D-Indianapolis, said that if the bill were standardizing notices and a reasonable set of penalties, it wouldn’t be an issue, and asked Olthoff how she responds to the critique that they would be creating a law that protects only those who would violate it. Further, he said, what would she say to the smaller communities who would see their coffers drained because of the capped fee.
“What I do have to say to the communities not being able to get all this income, it’s like, so this is an income generator and maybe it shouldn’t be,” Olthoff said. “On penalties on negligent landlords, I agree with you: We should be able to penalize negligent landlords. That’s it.”
