AATC vs Bedford Settlement

by Michael Payne, Allmark Properties, AATC's Treasurer

On September 24, the Bedford City Council approved a new ordinance and fee structure 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 settlement cuts the fees in half and gives property owners an opportunity to correct problems. This agreement cuts current inspection fees in half and provides property owners an opportunity to correct problems and avoid falling into a more expensive inspection classification. It also eliminates surprise inspections and ties fee increases for two years to no more than the CPI.

Terms outlined in the settlement, and incorporated into a new ordinance and fee schedule, include:

  • Removing the $13.20 per unit per year license fee;
  • Increasing the inspection fee from $10 to $15 per unit per year; and
  • 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, one additional subsequent mandatory inspection rather than three;
  • For tier-3 properties, 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 $220,000);
  • Accepted the tier-system for classifying properties based on past inspections; and
  • 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.

AATC extends thanks to:

  • 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

Michael Payne is Vice President of Texas Operations for Allmark Properties and Treasurer 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.