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June 30, 2009

City faces two suits over rental fees

By John K. Manna

Two lawsuits have been filed against the city of New Castle, challenging an ordinance dealing with registration of rental properties.

One suit was filed by the Apartment Association of Lawrence County and the other by Vista South, which has a 99-unit building on the city�s South Side. Both suits were filed in Lawrence County Common Pleas Court.

The ordinance, adopted by city council in 1998, requires owners of rental properties to register the units and obtain a permit to lease them. Registration fees on each unit are required and units must pass an inspection.

A press release issued by the association contends that city code enforcement officers are given �unlimited power to grant or deny permits� and that property owners are �being subjected to arbitrary determinations regarding their inspections as well as the severity of the violations.�

The association, represented by attorney Bradley Dornish of Pittsburgh, is asking the court to require an accounting of city overhead costs and fee collections, and grant reimbursement to the property owners for the amount in excess of the overhead costs.

It says in its suit that there is no evidence that the fees are necessary to support the provisions of the ordinance. It adds that if the license fee generates more than the cost to administer the license, the fee would become a tax revenue. The lawsuit alleges that if it is a tax revenue, then it is a violation of state law because the power of taxation lies solely with the Legislature.

The lawsuit also is seeking the ordinance to be declared unconstitutional and to permanently prohibit the city from enforcing the ordinance.

The press release noted the association�s attorneys have filed similar lawsuits challenging the constitutionality of landlord registration ordinances in Pittsburgh, Uniontown and Connellsville.

Attorney James Manolis, who represents Vista South, drew up the ordinance when he was city solicitor. However, his lawsuit, filed Monday, disputes the fee increase approved by council a few years ago when he was no longer solicitor.

Under the original ordinance, the city charged an inspection fee of $30 for up to three units and $10 for each additional unit in an apartment building, payable every two years. Council amended it a few years ago, increasing the fee to $100 per unit, also payable every two years.

With the original fee schedule, Vista South�s total cost was $990. Under the amended ordinance, the fee would be $9,900, Manolis said.

�It�s our position that that�s an unlawful fee,� he said. �The charges are way above what they need to run the program.�

The lawsuit wants the court to prevent the city from collecting the fee.

It also contends that the city is in violation of the equal protection clause of the Pennsylvania and U.S. constitutions. Manolis said the city only inspects certain types of units and is selective in its enforcement. Units owned by non-profit agencies, he said, are not inspected.

He said the ordinance makes no distinction.

City solicitor Michael Bonner declined to comment Friday.

He said he had not yet seen the apartment association�s lawsuit, which was filed Thursday.

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