06-275..
Substifute 4/19/2006
ORDINANCE
CITY OF SAINT PAUL, MINNESOTA
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THE COUNCIL OF THE CITY OF SAINT PAUL DOES ORDAIN:
Section i
54.01 Purpose
Council File # 06-275
Green Sheet # 3030001
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l0 It is the considered judgment of the city council that rental application fees should be regulated to protect
1 t applicants from unnecessary and predatory collection of fees and discrimination. The purpose and intent of
12 this chapter is to establish rules and regulations for the collection and return of rental application fees in the
13 City of Saint Paul.
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54.02 Definitions.
Kental Application Fee: A fee paid by the potential tenant to a rental property'owner, in order that the owner
can screen the background of the potential tenant before signing the lease.
54.03 Rental Application Fee Requirements.
(a) Before taking a rental application fee, a rental property owner must disclose to the applicant, in
writing, the criteria on which the application will be judged.
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{e� � Application fees for rental properties shall not exceed :����a��5."-�= °�'n'-�Y ic� ::
the cost of the screeningprocess, which mav include, but is not limited to, criminal backeround
M ord�nance amending Chap[er 54 to Regula[e Rental Application Fees, Page 1 of 3
An ordinance amending Chapter 54 to Regulate Rental Application Fees
06-275
i checks in Mianesota, and other states if necessarv, credit historv and rental history of the prospective
2 tenant(sl. Written information on the actual cost of the screenin� nrocess shall be made available to
3 the prospective tenant or actual tenant on reguest. This written information shall include the
4 followin� statement: complaint that the rental apnlication fee exceeded the actual cost of screening
5 should be directed to the Citv of Saint Paul Citizen Service O�ce at (6 5 11266-89 89.
7 (-d-} � If the applicant was chazged an application fee and the rental property owner rejects the applicant,
8 then the owner must, within fourteen (14) days of the issuance of the rejection, notify the tenant in
9 writing of the reasons for rejection, including any criteria that the applicant failed to meet, and the
10 name, address, and phone number of any tenant screening agency or other credit reporting agency
11 used in considering the application.
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(�} � The landlord must refund the application fee if a tenant is rejected for any reason not listed in the
written criteria.
16 � Application forms must allow the applicant to choose which of the following methods will be used
17 for return of the application fee.
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19 (11 mailin¢ it to the applicanYs chosen address as stated on the application form;
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(2) destro� i�t; or
(3) holdine the fee for retrieval by the tenant uoon one business-day's notice.
( fl Nothing in this section shall prohibit a rental property owner from collecting and holding an
application fee so long as the rental property owner provides a written receipt for the fee and the fee
is not cashed, deposited, or negotiated in any way until all prior rental applicants either have been
screened and rejected for the unit, or have been offered the unit and have declined to take it. If a
prior rental applicant is offered the unit and accepts it, the rental property owner shall return all
application fees in the manner selected by the applicant, pursuant to section (b).
54.04. Violation; penalty.
34 . Alleged violations of this
35 ordinance shall be investigated by the Fire Department for those nroperties which are required to have a
36 certificate of occupancy, and by the Department of Nei�hborhood Housing and Proper[v Tmprovement for
37 those oroperties required to have a rental re¢istration certificate.
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34 Notwithstanding the lack of a specific reference thereto, a violation of, or failure to complv with, any section,
4o provision or requirement in this chapter shall be a misdemeanor and shall be subject to sections 1.05 and 1.06
41 of the Le�islative Code, and to the provisions of applicable state statutes. If a landlord or property manager
42 is convicted of chareinga prospective tenant in excess of the allowable fee, or not returned a fee in violation
a3 of this ch�ter, the court sball require restitution, in addition to other oenalties that mav be sought under this
44 chapter. This chavter is a part of the city health, safetv, housin�, buildine, fir�revention and housing
45 maintenance codes.
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An ordinance amending Chaprer 54 to Regulate Ren[al Apphcation Fees, Page 2 of 3
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06-275
Section 2
This ordinance shall take effect and be in force thirty (30) days following its passage, approval and
publication.
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Yeas Nays Absent Requested by Department of:
Benanav
Bostrom
Harris
Helgen
Lantry
Montgomery
Thune
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AdoptedbyCounciL Date,!��,
Adoption Cert' d by Coynci] Secretary
By: /d�i� J/l�%/lSOHJ
Approved by IvJ�yo" `r:, Date: � 2 — (7 !p
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By:
Form Ap ro ed by City Attom�
By:
App oved by Mayor For Submission to Council
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An ordinancz amending Chapter 54 to Regulate Rental Application Fees, Page 3 of 3
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet
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Contact Person & Phone:
Couxi�melnher Mad9�Y
266-9
MustBe on Couneil Agenda by (DaFe):
IsMAR-O6
ContractType:
OR�7RDBJANCE
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Green Sheet NO: 3030001
Deoarhnent SentToPerson
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Tolal# of 5 P _(q NI Lo wdons fo r Signature)
Aclion Requested:
An ardinance amending Chapter 54 of the Saint Paut Legislative Code to Regu(ate Rental Application Fees.
itlatia5: Appro�e (A) or R
Planning Commission
CB Committee
CiWI Serice Commission
Psrsonal Service Contracts
1. Has this persoNfirm e�er wrnked under a coMract forthis tlepartmerrt?
Yes No
2. Has this p�soNfirtn e�er been a city employee?
Yes No
3. Does this person/firm possess a skill not nortnalty possessed by any
curre�rt city employee?
Yes No
Explain all yes answers on separate sheetand atlach W green sheet
Initiating Problem, issues, Opportunity (Who, What, When, Where, Why):
Advantages H Approv¢d:
Disadvantages NApproved:
DisadvarKages If Not Approved:
Transaclion:
Funding Sou�ce:
Financ'�al infartnatlan:
(Explain)
CostlRevenue Budgeted:
Activity Number.
March 9, 2006 10:05 AM Page 1
oe-z�s
City of Saint Paul
City Council Researcfi Center
Room 310 City Haii
Saint Paul, MN 55102
651 266-8570
INTER-DEPARTMENTAL MEMORANDUM
DATE: Mazch 29, 2006
TO: Councilmembers
FROM: Mazcia Moermond ��
RE: 5taff Report for Rental Application Fee Ordinance
The purpose of the ordinance changes in front of the City Council for public hearing April 5, 2006 is
to remove the $35 cap on rental application fees. Representatives of the landlord and property
management community have indicated to several Councilmembers that their actual costs to do
tenant screening are far in excess of this limit. It is in the City's interest that thorough tenant
screening be conducted, and a low cap on the rental application fee provides a disincentive to this
being done. If there aze no substantive changes, the ordinance will be effective near May 18.
The existence of the rental application fee ordinance is based on the idea that landlords and property
management companies should not be able to profit from screening tenants to whom they have no
intention of renting — either because the unit is no longer available or because of the background of
the tenant. The ordinance requires the disciosure to the prospective tenant of the criteria upon which
their application will be judged. If a prospective tenant is turned down for housing based on these
criteria, then the landlord or property manager must indicate in writing to the prospective tenant the
reason far the denial. If a prospective tenant is turned dovm for reasons not listed in the criteria, then
the fee must be refunded. An example of this type of situation would be when an apartment is given
to someone who applied the day before the applicant.
What follows are two sections. The first describes changes which have been made to the ordinance,
and when necessary comments are made. The other describes changes that haue been suggested, but
were omitted from the ordinance.
Changes to Ordinance
• 54.01 [page 1, line 11] addition of "and discrimination."
• 54.01 [page 1, line 13� add'ation of "of Saint Paul."
. 54.03 (b) [page l, lines 25-32] text moved to 54.03 (e) [page 2, lines 16-23].
• 54.03 (b) [page 1, line 34 - page 2, line 2] delete $35 cap on application fee. New language
added establishing that the application fee cannot exceed costs incurred. Also added general
description of the types of items checked in tenant screening. Note that the phrase "but is not
limited to" was added in the substitute version introduced on March 22 to accommodate
concerns from landlord associations that the listing was exhaustive and limiting. The
addiuon of this phrase is more by way of insurance, than actually altering the meaning of the
clause, as the phrase "may include" is permissive.
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Re�tai Application Fee Ordinance StaR Report, Page 2 of 4
54.03 (b) [page 2, lines 2-3] addition of requirement tl�at written information on the acival
cost of the screening process be provided on request. This is intended to operate as a"check"
on the ordinance, ensuring that the fee chazged does not exceed cost.
54.03 (b) [page 2, lines 3-Sj addition of requirement that the afore-mentioned written
material indicate that complaints about rental application fees exceeding actual cost should be
d'uected to the City's Citizen Services O�ce at 266-8989, rather than specifying the
Certificate of Occupancy Program and the Rental Registration Program, as the ordinance did
before the substitute was introduced on Mazch 22.
• 54.03 (b) [page 2, lines 6-7] have been amended to indicate complaints should be directed to
the City of Saint Paul Citizen Service Office at (651)266-8989, rather than specifying.
• 54.03 (c) [page 2, lines 8] has been amended to indicate the beginning of the 14 day time
period for the return of the application fee to rejected applicants. It now reads "within 14
days of the issuance of the rejection." This change was included in the substitute ordinance
introduced on March 22.
54,04 [page 2, lines 34-37] has been modified to include the following reference to the
enforcement agencies, as the reference to them in 54.03 (b) was deleted: "Alleged violations
of this ordinance shall be investigated by the Fire Department for those properties which are
required to have a certificate of occupancy, and by the Department of Neighborhood Housing
and Property Improvement for those properties required to have a rental registration
certificate."
Suggested Changes Omitted from Ordinance
What follows is a list of changes which were suggested to the author of the ardinance, but were not
included. Reasons for their omission are provided by way of background for the public hearing.
54.03 (b) There was a suggestion that the fee be capped at $75. Although there is some merit
in this suggestion and this rate likely approximates what some aze charging in the screening
process, a good azgument can be made about the high cost of doing criminal background
checks for people moving in from out-of-state. Therefore, no specified dollar amount for
the cap is listed, rather only that the fee charged cannot exceed the actuai cost.
54.03 (b) 'There was a suggestion in previous drafts of this changed ordinance that a list of the
information sources used be provided to prospective or actual tenants asking for that
information. This type of statement reinforces the requirement that landlords or property
managers must disclose the criteria they use in evaluating applications in writing at the time
of application. Tt also reinforces the "check" on the implementation of the ordinance, making
sure costs can be verified.
However, representatives of the landlord and properry management community have
indicated they are concerned providing a list of information sources may have a chilling
effect on the willingness of former landlords to be forthcoming about their experiences.
Although it should be noted that the language provided only for the list of resources, not the
o�� z�ts
Rentai Application Fee Ordinance Staff Report, Page 3 of 4
actual statements of the people contacted. Because there is a marginal added value for this
information which in some ways duplicates requirements already in the ordinance, it is not
included. Notably, state law already provides that in cases where prospective tenants aze
turned down, they may have access to the screening report.
Former 54.03(d), now 54.03(c). The ordinance currently requires that when an applicant is
rejected, the application fee needs to be retumed within 2 weeks. There was a proposal from
landlords to make this time 3 weeks, to make the requirement more consistent with state law
governing return of security deposits. However, there is a substantive difference between the
two, in that prior to returning a security deposit, a complete review of the housing unit needs
to be conducted, and if there aze problems, those need to be documented. There is no parallel
with the return of the appiication fee. Therefore, the change has not been made.
Proposed 54.03(g) -(h). Additionallanguage was proposed which would have provided for
the transfer of screening information from one potential landlord to another. Ostensibly, this
would be both a time and money-saving mechanism. (Tt is premised on prospective tenants
being required to sign a waiver of their privacy - discussed below.) There are 2 areas of
concern about this. First, landlords may believe they are in some way liable for the
information they forwazd, when they themselves were the recipients, not the creators of the
information. Secondly, this provision wouid require the storage of application and screening
information by prospective landlords, and add a layer of administrative activity to their work
processes. Therefore, this change was not added.
Proposed 54.03(i). This addifionallanguage would xequire that prospective tenants waive
their privacy rights with respect to information contained in their rental application and the
results of its screening. Requiring a waiver of this type for a person to be eligible to live in
Yenant-screened rental housing in Saint Paul is problematic from two perspectives. First,
although the information would be released only to people or businesses they (the prospective
tenants) select, tenants would likely be giving up a certain level of security of this
information. This is because the information storage and maintenance requirements which
apply to the providers of the original anformation (for example the BCA or credit reporting
agencies) do not necessarily apply to the recipients. Additionally, this type of Information is
subject to frequent change, and once a prospective tenant has been screened and a rental
decision made, there is no incentive for the prospective landlord to maintain this data. The
second problematic issue is that this decreased level of securiry would apply only to a
particulaz class ofpeople: those who wish to rent in Saint Paul. Therefore, this change was
notincorporated into the ordinance.
Proposed 54.03(j). Finally, additionallanguage was proposed which would require that
landlards track race, ethnicity and cultural background of prospective tenants, with their
applications and the decision on their application. Maintenance of this type of information
could provide meaningful data on decision-making patterns, if its analysis is coupied with
results of the criminal background, credit and rental history information. It has the potential
to then lead to positive, self-directed change on the part of landlords and property managers if
pattems of disparate treatment are identified. However, there aze also several concems here.
First, it is not cleaz that someone can be required to disclose race, ethnicity or cultural
backa ound information. Second, as with racial profiling information maintained by the
police, the key question is not how someone self-identifies, but rather how they aze
perceived, in this case by the landlord or property manager. Third, it is implied that this
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Rental Apptication Fee Ordinance Staff Report, Page 4 of 4
information could be "summoned" by someone huved down in the screening process, and
potentially lead to a lawsuit or be used as supporting material for a lawsuit. It's difficult to
have accurately maintained information where there is little perceived interest in doing so,
and where there is potential liability. Therefore, this change was not incorporated into the
ordinance.
COPY: Gouncil Meeting Packet Recipients
Q�-z�
City of Saint Paul
City Council Research Center
Room 310 City Hall
Saint Paul, MN 55102
651 266-8570
INTER-DEPARTMETITAL MEMORANDUM
DATE: Mazch 22, 2006
TO: Councilmember Debbie Montgomery
FROM: Marcia Moermond /�f/�
/�t
RE: Substitute Rental Application Fee Ordinance (this rveek',s agenrfa itenr #27)
Please find attached a substitute rental application fee ordinance. The following changes have been
made, per your request:
• 54.03 (b) [page l, line 35] has been modified by the addition of the phrase "but is not limited
to" to accommodate concerns from landlord associations that the listing was exhaustive and
limiting. Please note the addition of this phrase is more by way of insurance, than actually
altering the meaning of the clause, as the phrase "may include" is permissive.
• 54.03 (b) (page 2, lines 6-7] have been amended to indicate complaints should be directed to
the City of Saint Paul Citizen Service Office at (651)266-8989, rather than specifying the
Certificate of Occupancy Program and the Rental Registration Program.
• 54.�3 (c) [page 2, lines 8-9) has been amended to indicate the beginning of the 14 day time
period for the return of the application fee to rejected applicants. It now reads "within 14
days of the issuance of the rejection."
• 54.04 [page 2, lines 34-37] has been modified to include the following reference to the
enforcement agencies, as the reference to them in 54.03 (b) was deleted: "Alleged violations
of this ordinance shall be investigated by the Fire Department for those properties which are
required to haue a certificate of occupancy, and by the Departrnent of Neighborhood Housing
and Properiy Improvement far those properties required to have a rental registration
certificate."
Please let me know if you need any further changes to this ordinance.
COPY: City Councilmembers
Jerry Hendrickson and Judy Hanson, City Attorney's Office
Tntdy Moloney, City Council Operations
Attachment
Council File # . '�
Crreen Sheet # 3030001
ORDINANCE
CITY OF SAINT PAUL, MINNESOTA
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Presented by
An ordinance amending Chapter 54 Regulate Rental Application Fees
of the Saint Paul Legislative Code
THE COUNCIL OF THE CITY OF SAINT PAUL DOES ORDAIN:
Section 1
54.01 Purpose
l0 It is the considered judgment of the city council that rental application fees should be regulated to protect
11 applicants from unnecessary and predatory collection of fees and discrimination. The purpose and intent of
12 this chapter is to establish rules and regulations far the collection and return of rental appiication fees in the
13 City of Saint Paul.
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54.02 Aefinitions.
Rental Application Fee: A fee paid by the potential tenant to a rental properiy owner, in order that the owner
can screen the background of the potential tenant before signing the lease.
54.03 Rental Application Fee Requirements.
(a) Before taking a rental application fee, a rental property owner must disclose to the applicant, in
writing, the criteria on which the application will be judged.
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(s} � Application fees for rental properties sha11 not exceed *'���'-� �°° a�"°-° �Q' c nm ..,.....a..�+
a�iea�t the cost of the screenine process, which mav include criminal background checks in
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1 Minnesota, and other states if necessarv, credit lustory and rental historv of the prospective tenant(sl.
2 Written information on the actual cost of the screeningprocess shall be made available to the
3 prospecrive tenant or actual tenant on request. This written informafion shall include the followin�
4 statement: complaint that the rental application fee exceeded the actual cost of screenine should be
5 directed to the Citv of Saint Paul Certificate of Occupancv Pro�ram or the Rental Registration
6 proeram, with appropriate contact information 9ncluded.
s �-} � Ifthe applicant was charged an applicafion fee and the rental properry owner rejects the applicant,
4 then the owner must, within fourteen (14) days, notify the tenant in writing of the reasons for
lo rejection, including any criteria that the applicant failed to meet, and the name, address, and phone
I 1 number of any tenant screening agency or other credit reporting agency used in considering the
t2 application.
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14 {ej � The landlord must refund the application fee if a tenant is rejected for any reason not listed in the
15 written criteria.
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17 � Application forms must allow the applicant to choose which of the following methods will be used
18 for return of the application fee.
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(1) mailinp it to the applicant's chosen address as stated on the application form:
(2 destroyine it; or
(3) holdine the fee for retrieval bv the tenant upon one business-day's notice.
(fl Nothing in this section sha11 prohibit a rental properry owner from collecting and holding an
application fee so long as the rental properry owner provides a written receipt for the fee and the fee
is not cashed, deposited, or negotiated in any way untii all prior rental applicants either have been
screened and rejected for the unit, or have been offered the unit and have declined to Take it. If a
prior rental appiicant is offered the unit and accepts it, the rental property owner shall return a11
applicarion fees in the manner selected by the applicant, pursuant to section (b).
54.04. Violation; penalty.
. Notwithstanding the lack
of_a specific reference thereto, a violation of, or failure to com�lv with, any section, provision or reguirement
in this chapter shall be a misdemeanor and shall be subject to sections 1.05 and 1.06 of the Le�islative Code,
and to th�rovisions of applicable state statutes. This cha�ter is a part of the c� health safetv housing
building, fir�revention and housing maintenance codes.
An ordinance amending Chapter 54 to Regulate Rental Application Fees, Page 2
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Section 2
This ordinance shall take effect and be in force thirty (30) days following its passage, approval and
publicarion.
Yeas � Nays � Absent
Benan
Boshom
Harris
Helgen
Lantry
Montgomery
Thune
Requested by Deparknent of:
By:
Form Ap • ved by City Attomey
B
Approved by Mayor for Submission to Council
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Adopted by Council: Date
Adoption Certified by Council Secretary
By:
Approved by Mayor: Date:
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An ordinance amending Chaptet 54 to Regulate Rental Applicatio� Fees, Page 3
Substitufe
ORDINANCE
CfTY OF SAINT PAUL, MINNESOTA
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Presented
THE COUNCIL OF
54.01 Purpose
Council File # Ob-275
Crreen Sheet # 3030001
An ordinance amending Chapter 54 to Regulate Rental Application Fees
CITY OF SAINT PAUL DOES ORDAIN:
It is the considered judgment ofthe
applicants from unnecessary and pr�
this chapter is to establish rules and
City of Saint Paul.
54.02 DeTinitions.
Section 1
that rental application fees should be regulated to protect
:ction of fees and discrimination. The purpose and intent of
for the collection and return of rental application fees in the
Rental Application Fee: A fee paid by the potential te t to a rental property owner, in order that the
owner can screen the background of the potential tenant ore signing the lease.
54.03 Rental Application Fee Requirements.
(a) Before taking a rental application fee, a rental properiy own
writing, the criteria on which the application will be judged.
r
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disclose to the applicant, in
(�} �b� Application fees for rental properties shall not exceed
in Minnesota. and other states if necessarv credit historv and tental history of the orospective�
An ordinance amending Chapter 54 W Regulate Rentai Appliption Fas, 1 of3
0� � Z�1S
t tenant(sl. Written information on the actual cost of the screeniug process shall bE made available to
2 the prospective tenant or actual tenant on reauest This written information shall include the
3 following statement• complaint that the rentai apnlication fee exceeded the actual cost of screening
a should be directed to the Citv of Saint Paul Citizen Service Office at t651)266-8989
s
6 �} � the applicant was charged an application fee and the renta] property owner rejects the applicant,
7 the owner must, within fourteen (14) days of the issuance of the reiection, notify the tenant in
8 ' g of the reasons for rejection, mcluding any criteria that the applicant faIled to meet, and the
9 name, ddress, and phone number of any tenant screening agency or other credit reporting agency
to used in nsidering the application.
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12 {e� � The landlor ust refund the application fee if a tenant is rejected for any reason not listed in the
13 written criteria.
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15 � A lication forms m t allow the a licant to choose which of the followin methods will be use
16 retum of the a licatio fee.
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i 8 1 ma.ilin it to the a' ant's chosen address as stated on the a lication form•
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2o j2) destrovin ig t; or
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( fl Nothing in this section shall prohibit a r al property owner from collecting and holding an
application fee so long as the rental prope owner provides a written receipt for the fee and the fee is
not cashed, deposited, or negotiated in any y until all prior rental applicarns either haue been
screened and rejected for the unit, or have bee offered the unit and have declined to take it. If a priar
rental applicant is offered the unit and accepts it, rental property owner shall retum all application
fees in the mauner selected by the applicant, purs t to section (b).
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those properties required to have a rental reQistration certificate
health safety housin� building fire prevention and housine maintenance codes
Alleped violations of this
An ordinsnce amending CAapter 54 m Regulate Re�tal Applip2ion Fees,
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Section 2
ordinance shall take effect and be in force thirty (30) days following its passage, approval and
Yeas � Nays � Absent
B e nan av
Bosuom
Harris
Helgen
Lantry
Montgom
Thune
Adopted by Council: Date
Adoption Certified by Cour�cil Secretary
By:
Approved by Mayor: Date:
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Requested by Departrnent of:
by City
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Approved by Ma r for Submission to Council
By:
An ordinance amending Chapter 54 to Regulate Renisl Application Fees,�age 3 of 3