The Duluth City Council has amended an ordinance in an attempt to jump-start repairs to abandoned housing throughout the community.

Duluth Fire Chief Shawn Krizaj said the city has about 140 residences that have been condemned for human habitation, and many of them could be fixed up and turned into rental housing. But the city of Duluth charges property owners a $1,500 fee to convert an owner-occupied home into rental housing, and that fee all too often deters the investment needed to return a residence to productive use.

An ordinance revision approved Monday would enable the city to waive that $1,500 rental conversion fee for residences that had been deemed uninhabitable, so long as the landlord retains ownership for at least two years after necessary improvements are made. Krizaj explained that the time provision is intended to encourage continued stewardship and discourage house-flipping — the practice of making quick and sometimes superficial repairs to a distressed property in hopes of quickly bringing about a profitable sale.

The ordinance change received unanimous council support, with 2nd District Councilor Joel Sipress predicting it's "going to make it easier to take homes that are condemned for human habitation and bring them back and rehab them and get them back in use for people in our community who are desperately looking for a place to live.

"Every little thing we can do to help on the affordable housing front deserves to be celebrated. So I want to thank city administration and our fire department for working on this and bringing it forward," he said.

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Krizaj said homes are condemned for habitation for a number of reasons, such as fire or flood damage, deferred maintenance, lapsed utility service or even probate delays following a death.

Shawn Krizaj
Shawn Krizaj

"One of the things that we want to try to do, of course, is get those properties back on the tax rolls. But probably even more importantly, if they're sitting vacant and condemned, they often become a public safety hazard. Sometimes people will squat in them, vandalize property or it will attract drug use. An empty place can just kind of be a magnet for trouble," he said.

By removing the rental conversion fee from the picture, Krizaj said: "We're hoping that will help entice a contractor or a property owner to purchase a condemned house and then turn it into a rental unit."

Krijaz said he's optimistic the prospect of a fee waiver will promote new investment.

"We frequently hear there's a shortage of affordable housing, and I think a lot of these houses could help address that need, especially for rental units. So, I think there are management companies out there and landlords who own several properties that would be able to take advantage of this," he said.

Krizaj acknowledged the city likely will experience a relatively small upfront financial loss as a result of the new policy.

"Having that property licensed for rental and back on the city tax rolls provides such a long-term benefit both for the community, in terms of increased housing, and for the city, in terms of long-term revenues that would outweigh anything we lose in the short term," he noted.