Op Ed: Erie's Residential Rental Inspection Program

Contributed

Former City of Erie planning director David Forrest takes a closer look at Erie's Rental Inspection program, based on information compiled over months of research into the matter, and how this programs' inefficiencies are contributing to property blight and deteriorating living conditions in Erie's neighborhoods.

Take a walk in some Erie neighborhoods or just drive around and you'll see the result of years of neglect and decline. Homes, in some cases, literally rotting away. Missing siding, broken and missing windows, and peeling paint. Some homes are abandoned, but others are still occupied.  Some of these properties are owner-occupied, but a large number are owned and rented by landlords. 

The Erie City Government has known for years about the problem. In 2006, City Council adopted a residential rental inspection program to address what they identified at the time as "a growing concern in the community with the general decline in the physical condition of residential rental units." But why is it that, despite the commitment of the city government in 2006 and financial investments to inspect every rental unit in the city since then, we continue to see so many tenants living in substandard housing? When answers are requested from the city code enforcement department, they remain unanswered.

The problem of substandard rental property in Erie is vast, and it is only one piece of the city's larger problem with blight. An official city-wide examination of how we got to this point is needed, but no city government leader is currently calling for this kind of effort. So in 2024, I teamed up with the East Avenue/Hess Avenue Neighborhood Watch to take a deeper look into this small section of the city to better understand why, despite an active inspection program in place for 18 years, rental properties in the neighborhood continue to deteriorate. 

The following is a summary of what we found. It is based in part on information obtained from the city and county through the Pennsylvania Right-to-Know Law. But it is also based on weeks of visiting properties in the neighborhood and talking to residents. Admittedly, the findings are based on a small sample, but it is the best that can be done as private citizens with limited time, resources, and cooperation from the city. 

Erie's Rental Registration and License Program

Erie's residential rental inspection program provides that "it shall be unlawful for any person to operate, let, or rent to another for occupancy any residential rental unit in the City of Erie, unless a rental license has been issued by the code official." Erie landlords must first register their properties with the city and then obtain a license to operate, provided their rental units successfully pass an inspection. Landlords whose properties do not meet minimum quality standards following the inspection (and a reasonable period of time to correct the violations) are prohibited from obtaining a license to rent their properties. Landlords whose properties were previously licenced, but then fall into disrepair, likewise are prohibited from renting their units until the violations are corrected. The ordinance generally requires an inspection of each rental unit in Erie every two years. 

The rental inspections are performed by personnel employed by a private contractor, Building Inspection Underwriters (BIU). Through early 2024, the city has paid BIU approximately $4.3 million to perform the inspections, according to city records. While the city first engaged BIU in 2007, it was not until 2017 that a formal contract for services was approved by the city. A renewal contract was then approved in 2019, but that agreement expired in 2021. Since that time the city has approved simple month-to-month or annual extensions of the contract. There has been no review by elected or appointed city officials to evaluate the overall effectiveness of the rental inspection program. 

In response to a Right-to-Know request, the city provided a sample of BIU inspection reports for properties in the East Avenue/Hess Avenue Neighborhood. According to this sample:

• Though the rental inspection program has been in place since 2006, the vast majority of the 22 properties we reviewed had not been inspected until 2020 and some as late as 2024. 
• The city identified an additional nine rental properties that were never inspected.
• The city misidentified another five properties as owner-occupied homes, but, based on county records, which could be erroneous, they appear to be rental units.
• The ordinance requires city officials to send landlords a letter informing them of deficiencies at their properties and orders for correction. Despite deficiencies, the city has no record of any follow-up letters sent to landlords.
• The city has no record of any follow-up inspections made at properties identified as deficient. 
• Though required by ordinance, the city could provide no record of either a registration or license for any of the properties. 
• The city did not provide any information on whether violation notices or citations were issued to landlords for properties in violation of city ordinance. 

It should be noted that the rental inspection program requires that any landlord who "fails to remedy the violation or violations within the time frames specified within the code or codes, then the license shall be revoked and occupancy in the unit shall not exceed 120 days from the date of revocation." Enforcement of this provision of the ordinance does not seem to be in effect.

In January 2025, we made another Right-to-Know request for inspection reports for additional properties within the neighborhood. City officials initially approved this request, but within 72 hours reversed course and refused to provide these public records, including the very same reports we reviewed in December. Nevertheless, the city did provide some important information in their initial approval:

• Among the inspection reports we requested to review, 10 properties had never been inspected.
• Another three properties were misidentified by the city as owner-occupied, but county records, which could be erroneous, stated they are rental units. 

After 18 years of rental inspections, the city does not keep any BIU inspection reports at City Hall. In response to our December 2024 Right-to-Know request, city officials obtained the reports from BIU's offices. No reports were on file at City Hall. City officials confirmed that BIU has never delivered the reports to the code enforcement department, despite the fact that the 2019 contract between BIU and the city requires BIU to provide the reports to the city the same day they are completed.  

With so many visibly dilapidated rental properties throughout Erie, one has to wonder if any of the reports prepared by BIU over the course of 18 years and at a cost of over $4 million were ever reviewed and acted on by city officials. 

The results of our review suggest that the city's rental inspection program is, at the very least, seriously flawed. 

Follow the Money 

Each year Erie landlords are required to register their rental properties and pay a corresponding fee. In response to a Right-to-Know request, the city reported that total rental registration fees paid from 2014 to 2024 totalled approximately $6.5 million.

When the city refused to provide copies of citations issued by code enforcement officers for rental properties in our neighborhood in violation of city ordinance, we submitted a similar Right-to-Know request to the county, specifically the courts of the two district judges that serve our neighborhood: Suzanne Mack and Edward Wilson. In response, we received a portion of the total citations filed in each court. These records stated:

• A total of 267 citations were filed by the city in the two courts from 2022 through the middle of 2024.
• Of that total, 16 citations were filed by city code enforcement officers for property maintenance violations like missing siding and windows and fence repairs.
• On the other hand, 74 citations were issued during the same period to landlords who failed to pay the annual registration fee—four times the number of citations issued for property maintenance violations. 

Each of the 74 citations for failure to pay the rental registration fee was signed by the same city code enforcement officer, who has since been pulled to focus full-time on revenue collection.

There is an unconsidered cost to lax enforcement. Erie County officials would not provide us copies of the remainder of the 267 citations filed with Judge Mack and Judge Wilson, however, they confirmed that the balance, 177 total citations, were filed for properties in such poor condition that they were condemned by the city as uninhabitable. 

How is it that more than 66 percent of the citations filed in these two courts are for condemned properties? What happened? Based on the numbers, there appears to be a connection between lax enforcement, the emphasis on collecting rental registration revenues, and blighted properties. Moreover, the city's approach is to ramp up enforcement only after properties are too far gone to be salvaged.

In this sense City Hall's well-publicized effort to acquire and demolish blighted properties is more an effort to address deteriorating properties that should have been inspected and remediated earlier. Erie's struggle with blight did not necessarily have to become the enormous problem it is today. 

And the cost of blighted properties is borne by taxpayers. Taxpayers pay the acquisition, legal, and administrative costs. Taxpayers pay the cost of demolition and maintaining the resulting vacant lots. Through code enforcement, the city could hold the owners of dilapidated Erie properties accountable. It all begins with enforcing the property maintenance laws already on the books, including the rental inspection program. 

How to Make Money in Real Estate "Erie-Style"

Most homeowners think of their properties as an investment over the long haul. As your single biggest asset, you want the value to appreciate. But in certain sections of Erie, including the East Avenue/Hess Avenue Neighborhood, it doesn't work that way. 

Years of disinvestment because of lax code enforcement have resulted in flat or declining property values and there is little incentive to invest in restoring and rehabbing properties in this neighborhood. The business model of too many landlords is to extract as much value from the property as possible through rental income while investing little or nothing in upkeep. 

The situation can be turned around, but it will take a commitment by Erie City Government to incentivize landlords through code enforcement to invest more in their properties. And an analysis we did suggests they have the money to invest.

Using the U.S. Department of Housing and Urban Development 2024 fair market rent (FMR) figures for Erie as a proxy for actual rental rates, we were able to get a reasonable (speculative) picture of how much rental income landlords collect from forty properties in our neighborhood. We took a conservative approach, applying HUD's rate of $757/month for a one-bedroom unit to every rental unit, with the exception of single-family rental homes. For these properties we applied the FMR for a two-bedroom unit, $983/month. Here's what we found:

• For 2024, we estimated the annual rental income for all forty properties totalled approximately $711,000. 
• At the same time, according to county records, the 2024 local tax bill for the same forty properties totalled just $54,000. 

Landlords do have expenses beyond paying local taxes. Nevertheless, the difference between total tax liability and total rental revenues for the forty properties in our sample suggests landlords could invest significantly more in their rental units and still walk away with a nice profit — enforcement is the issue. 

Why You Should Care

For people living in other parts of Erie, the East Avenue/Hess Avenue Neighborhood's problems may seem distant. But what happens in our neighborhood affects everyone in Erie. The city's finances have been in the red for years, mostly because property tax revenues have not grown. Block after block of decaying neighborhoods could signal to potential residents and businesses that the City of Erie is an unsafe place to invest. Little or no investment growth means no tax revenue growth which means inevitable tax increases.

The biggest tax increases will be where property values are the highest, but most taxpayers will likely see a jump, with one exception: landlords who own and make money off substandard, dilapidated rental units will continue to do well for themselves. That's because their properties, after years of neglect, have relatively little value left to tax. Based on county records, the average assessed value of the rental properties we examined in our neighborhood was just $34,000, and one property had an assessed value of only $5,800. When city taxes go up, responsible property owners in Erie will literally be paying the price of the city's failure to take on absentee landlords. 

Where Do We Go From Here

The city will never prosper if it allows its neighborhoods to collapse under the weight of substandard housing and blight. But that is what's happening. Sadly, we're not saying anything new. Erie's 2016 comprehensive plan, Erie Refocused, documented the problem and urged aggressive, proactive code enforcement. 

Erie Refocused also made "the observation that the city and its residents have avoided facing reality for a long time — a habit that can no longer be tolerated if the community's actions are to correspond sufficiently to the nature of its challenges." Nine years after Erie Refocused, we need our city leaders to "face reality" and enforce the city's property maintenance laws, including the rental inspection program. This will take leadership and courage from our elected leaders.

David Forrest is the former Erie planning director and former municipal manager in Lansdowne, Norristown, Pottstown Pennsylvania. He can be reached at dforrest29@gmail.com