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AATC agrees to settlement with Bedford over inspection fees

Synopsis

The Bedford City Council has approved a settlement to an ongoing lawsuit filed by the Apartment Association of Tarrant County over the city’s inspection fees and schedule. The settlement cuts the fees in half and gives property owners an opportunity to correct problems.


Key takeaways

  • This month, the Bedford City Council will consider a new ordinance as part of a settlement to a lawsuit brought by the Apartment Association of Tarrant County in 2016 challenging the city’s adoption of a new rental housing inspection program and fee schedule.
  • The proposed settlement cuts current inspection fees in half and provides property owners an opportunity to correct problems and avoid falling into a more expensive inspection classification.
  • The proposed settlement also eliminates surprise inspections and ties fee increases for two years to no more than the CPI.

The Apartment Association of Tarrant County’s Board of Directors has approved a settlement agreement with the City of Bedford that ends more than three years of litigation over the city’s adoption of a new rental housing inspection program and fee schedule.

The proposed settlement, which the city council approved this month, cuts the current inspection fees in half and provides property owners a 30-day opportunity to cure problems and achieve a higher tier rating if they address all inspection deficiencies.

The new ordinance will be presented to city council in late July. If approved, the city would adopt a new inspection ordinance, incorporating terms of the settlement. AATC would have an opportunity to review the new ordinance prior to the city’s approval.

Settlement terms

Terms outlined in the settlement, and to be incorporated into a new ordinance, include:

  • Removing the $13.20 per unit per year license fee
  • Increasing the inspection fee from $10 to $15 per unit per year
  • Reducing required annual inspections to only one, rather than a minimum of two
  • Scheduling required subsequent inspections as follows:
    • For tier-1 properties, no subsequent mandatory inspection rather than two
    • For tier-2 properties, only one additional subsequent mandatory inspection rather than three
    • For tier-3 properties, only two additional subsequent mandatory inspections rather than four
    • Tier designations will be established with the first annual inspection, so the first inspection under the new ordinance will be very important.

In addition to the 3 tier designations above, the new ordinance will include the following:

  • Opportunity to cure: The city will establish a 30-day opportunity to cure, exclusive of serious life, health and safety issues which must be addressed promptly. This 30-day period can be used to allow properties to address any and/or all inspection violations, thereby achieving a higher (or lower) tier rating. Follow-up inspections will focus on deficiencies identified during the initial inspection.
  • Advance notice of inspections: The city will provide five business days advance notice of inspections, as well as accommodate one reset to help avoid weather-related score deductions. Surprise inspections will not be allowed.
  • Fees tied to CPI for two years: The city agrees inspection fees will not be increased above the CPI (Consumer Price Index, All Urban Inflation Rate) for two years.
  • Appeals: Designates the existing Building & Standards Commission to hear inspection appeals.

Example of savings under the proposed settlement

Bedford Current vs Agreement Fee Assessment for 300-Unit Property

Tier Current

per

Unit Fee

Current Total

for

300 Units

Agreement

per

Unit Fee

Agreement Total

for

300 Units

Delta/Savings

for

300 Units

1 $33.20 $9,960 $15 $4,500 $5,460
2 $43.20 $12,960 $30 $9,000 $3,960
3 $53.20 $15,960 $45 $13,500 $2,460


AATC concessions

In order to reach this settlement, AATC:

  • Released the City of Bedford from all claims in its lawsuit
  • Agreed to pay its own attorney fees (more than $225,000)
  • Accepted the tier-system for classifying properties based on past inspections
  • Dropped its lawsuit and the opportunity to establish a state-wide legal precedent that constrains municipal fees

Critical supporters

This outcome would not have been possible without the persistent support of the AATC leadership team, stakeholders and most importantly, Bedford owner/management members. Special thanks to our association partners the Apartment Association of Greater Dallas, the Texas Apartment Association and the National Apartment Association for their encouragement and support.

In particular, AATC would like to thank:

  • Jim Canon (Highmark Residential) and Michael Payne (Allmark Properties), whose industry knowledge, operational insights and negotiation skills made the agreement possible
  • Tony Comparin (Alliance Tax Advisors), who hosted both mediation conferences and worked behind the scenes for more than two years to ensure a successful resolution
  • Israel Suster, Will Sweet, John Cayce, & Byron Henry (AATC’s legal team), for forcefully advocating on AATC’s behalf and providing the legal wisdom necessary to guide AATC through a complex process

Nicolle Block is Area Vice President for AMLI Residential and President of the Apartment Association of Tarrant County. For more information, contact AATC Director of Government Affairs Perry Pillow at ppillow@aatcnet.org or 817/616-0354.

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