City staff report wide funding gap for rental-inspection program; council backs per-unit fee model

Arcata City Council — City building officials briefed the Arcata City Council on May 20 on the residential rental inspection program and presented options to close an estimated 73% funding shortfall.

Joe Bishop, the city’s building official, said the program — launched in phase 1 on July 3, 2023 — “is really about life safety,” and credited the inspections with sharply reducing tenant complaints. He told the council the current fee structure generates about $31,000 a year in revenue while the program’s annual cost is approximately $115,000.

“That’s where we’re at,” Bishop said, describing staff recommendations to change unit registration and inspection fees from per-parcel to per-unit and to modestly raise fees so the program becomes self-sustaining. Bishop proposed four scenarios for council consideration and recommended a streamlined option that would fold the inspection charge into a single annual per-unit fee.

Why it matters: Council members said they want the program to continue without heavy reliance on the general fund and to be straightforward for landlords and staff. Several members noted the program’s impact on public-safety complaints and the need to keep enforcement consistent across small landlords and larger multifamily owners.

What staff proposed: Bishop and staff outlined a set of measures intended to reduce administrative overhead and increase revenue: change fees to a per-unit basis (staff estimate: 1,850 units across 1,190 parcels), offer an optional self-certification track with periodic audits (roughly 20% audit sampling discussed), consolidate payment and registration with business licensing, and use GIS to publish property inspection status publicly.

On numbers, staff said moving to per-unit fees and modest adjustments could raise projected annual revenue substantially: the presentation showed a range of outcomes under four scenarios, with the recommended simplified scenario (‘‘scenario 4’’) roughly matching anticipated annual costs when combined with business-license collection.

Staff follow-up and council direction: The council did not take a formal ordinance vote. Instead, by consensus the council asked staff to draft an updated ordinance based on the simplified per-unit approach and to return with the ordinance in July accompanied by a public engagement plan and details on fee mechanics, including options for bringing multifamily units into the program and potential contracting with the fire district for inspection support.

Quotes: “It’s really important to recognize that fundamentally, it’s life safety,” Bishop said. Victor Garcia, a city permit technician, clarified budget assumptions: “We assumed 75% of the 1,850 units are going to go into self-cert.” Acting City Manager David Loya told the council staff would return with an engagement strategy so affected owners and operators are included before the ordinance is finalized.

Next steps: Staff will draft an ordinance incorporating council direction, run community engagement, model the precise fee and revenue impacts, and return to council for review and formal introduction. Council discussion suggested broad support for per-unit charging and a simpler fee structure but left precise rate-setting and multifamily inclusion for the next round of outreach and ordinance drafting.

Ending: Council did not set a final fee at the May 20 meeting; staff expects to present a draft ordinance in July with options and an engagement schedule.