A 2003 Study on the Effectiveness of Rental Licensing and Inspection

Recommendation
The City of Milwaukee should not create a rental unit licensing program because
it would not be an effective regulatory or revenue mechanism. We take this position
based on the projected high administrative costs, political opposition, possible effects on
low-income housing, and uncertain benefits.

Experience in other cities indicates that rental unit licensing programs have
difficulty covering program costs with revenues. The ability to forecast costs accurately
and adjust revenue has been problematic in these cities. Even if the administrative cost
and political feasibility concerns could be adequately addressed, serious questions remain
about how effective a licensing program would be in Milwaukee. Effective licensing
program traits in smaller rental markets would be difficult to implement in Milwaukee.
Milwaukee is likely too large to negotiate code violation repairs with flexibility on a
case-by-case basis.

A rental unit licensing program in Milwaukee could also have negative effects on
rents and the availability of affordable housing in the city. Mandated repairs would likely
lead to rent increases and constrain the supply of affordable housing. While experience in
other cities does indicate that licensing programs do lead to increased rental unit
maintenance, the magnitude of these benefits in Milwaukee would be uncertain.

Strong opposition to a licensing program in Milwaukee would suggest that any
proposal for one would be unlikely to pass a city council vote. While licensing systems
have vocal supporters in Milwaukee, they do not seem to have the cohesion and political
clout that opponents have.

We also recommend two important actions that should be taken with the status
quo. Any citizen complaint program can be successful only if citizens are well informed.
The DNS currently employs a number of mechanisms, including brochures and
neighborhood groups, to inform renters about the complaint system. We recommend that
the DNS survey renters in Milwaukee to determine the level of awareness of the
complaint system, and then devise a strategy to increase the level of awareness. More
awareness would likely lead to more filed complaints and an increase in the effectiveness
of the current system.

DNS, like its peer departments in other cities, appears to lacks precise knowledge
of the cost of its inspections. Undertaking a thorough analysis that results in a cost-perinspection
figure would greatly bolster the department’s current regulatory system. It
would help to justify the current fee structure and would be very useful if some more
comprehensive form of inspection were adopted in the future.

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