Critics say Truth in Housing mandates not worth city's cost
For retired lawyer Jim Lund and his wife Ingrid Lund, an attempt this past summer to sell their home in the 4800 block of Sheridan Avenue S. opened Pandora's Box.
As required by city ordinance, the Lunds hired a private evaluator and got a Truth in Sale of Housing report. It detailed several required repairs ranging from installing a smoke detector in the basement and capping an old unused gas line, to moving sink spigots from below the "spill line" and retrofitting a proper water trap on a basement floor drain.
When the home didn't sell for what they wanted, the Lunds pulled it off the market.
But the Truth in Housing repairs remained a requirement. "They insist it has to be fixed, even though it wasn't sold and we don't have the money to do it all," Lund said.
Since 1999, the Truth in Housing program has mandated certain repairs be completed by the seller or assigned to the buyer.
Its future, however, stands in doubt as the Minneapolis City Council plans to review whether to continue mandating repairs.
Lund said he recognized the value of making some of the repairs, but for others -- like the sink spigots below the "spill line" -- he didn't see the need. (The evaluator said that an inverse draft could suck water in the washbowl back into the city water system, according to Lund.)
"We live here and have lived here for 40 years and everything works - it works as well as we want it," Lund said. "If somebody wants to come in and buy it, let them put the new stuff in."
Lund twice applied for and received extensions for the repairs from the city's inspections department. Now, he plans to put the home back on the market, hoping to sell and leave any repairs to the buyer.
Proposed modifications Mayor R.T. Rybak and several councilmembers proposed eliminating the mandatory repairs during budget cutting in February. The finance department showed the Truth in Sale of Housing program was revenue-neutral, but Councilmember Barb Johnson questioned whether the fees really covered all of the program's costs.
On a 9-to-4 vote, the council removed the item from budget deliberations and sent it to the Public Safety and Regulatory Services Committee. A public hearing on the program was set for March 19.
Philosophical lines were already being drawn during budget deliberations.
"This is Minneapolis over-regulation at its finest -- a nanny state that we don't need," Councilmember Barret Lane (13th Ward) said.
"I don't believe we have any business interfering with a private-sector sale," said City Councilmember Lisa Goodman
But not everyone saw the mandatory repairs as interference.
"What we're really talking about here is the preservation of our housing stock for our great grandchildren," said Councilmember Dean Zimmermann (6th Ward). "It is done at a point which is essentially painless."
Councilmember Joe Biernat (3rd Ward), who chairs the Public Safety and Regulatory Services Committee, co-authored the current version of the Truth in Housing ordinance. "What the mayor wants to do is put money in the pockets of people that are leaving the city," Biernat said during one heated exchange.
Biernat said the program was particularly important to the more distressed areas of the city.
How the program works In 1974, the Minneapolis City Council approved an ordinance creating the Truth in Sale of Housing Program. It mandated an inspection and disclosure of certain conditions before the home is sold. In 1998, the council approved a beefed-up Truth in Sale of Housing ordinance, making certain repairs mandatory. The mandatory nature of the program started in 1999.
A seller must get a Truth in Housing evaluation done by one of roughly 90 private, licensed evaluators. The evaluation costs about $125 to $180.
Sellers can get a pre-inspection, which doesn't trigger required repairs, according to Connie Fournier, deputy director of construction inspection services for the city. A pre-inspection costs about $120, with most evaluators giving a discount on a later full Truth in Housing inspection.
If any required repairs are identified, the seller must address them or they can be assigned to a buyer. (See sidebar for areas of required repairs.) The buyer then has 90 days from the closing to make the repairs.
The MCDA offers programs for people needing financial assistance to make repairs.
About one-third of the homes evaluated have no required repairs, according to Inspections Department figures. Of those that have repairs, the burden of doing the fixes has been pretty evenly split between the seller and buyer.
Since 1999, there have been 19,441 evaluations, which uncovered 74,632 housing violations. Smoke detectors are one of the top items cited in Truth in Housing reports.
But for… Proponents of the program contend many of the code issues identified in the Truth in Housing report would not get fixed unless mandated. "The [real estate] industry keeps saying it will take care of itself," Fournier said. "Our research showed that wasn't the case."
"Before the program, you would go back to a place and find the same electrical issues or the same plumbing issues, or say for instance, rust holes in the vent pipe on the furnace," said Don Doty, a housing evaluator with Homeplace Inspections Inc. of Minnetonka. "You would go back three years later and they were still there."
"They won't fix it if they don't have to," he said.
Doty said a majority of the repairs are minor items that can be fixed by the homeowner for a few dollars, such as adding smoke alarms or cover plates on electrical junction boxes. "It's a lot of simple items that once the homeowner reads the item, they can go to the hardware store and make most of the repairs themselves," Doty said.
For some work, permits are required. Fournier said state law requires homeowners and licensed contractors to pull permits. "The whole goal here is to make sure what is done here is safe," Fournier said.
Realtors Several councilmembers said realtors have been vocal opponents of the mandatory Truth in Housing program, complaining about how it slows the selling process.
Sandy Loescher, owner of Sandy Green Realty, said she didn't support the mandatory nature of the program.
"If we had houses burning down and exploding all over town, then I'd say we need to get into those houses and tell people how to live," Loescher said.
Loescher cautioned that while most people are making gains when they sell their homes in Minneapolis, that has not always been the case. "To assume everybody is making money on their houses, I think is a poor argument," she said. She asked what happens if there's a downturn.
Loescher also cautioned against people relying too heavily on the Truth in Housing reports since they only look at specific areas. She advises her buyers to hire their own inspector.
Deb Wagner is a somewhat of a rarity -- she is a realtor who supports the Truth in Housing program. "Two hundred dollars is money well spent when you're putting something as complicated and expensive
as a home on the market," said Wagner, who works at Camden Homes. The more disclosure the better, she said.
"If there is a safety issue with regards to the property and the city is requiring them to make the repairs, I think it's to the seller's advantage to make the repairs, especially if they want to get a premium price for the property," Wagner said.