Shaker’s point-of-sale housing inspection policy comes due for review

SHAKER HEIGHTS, Ohio — Expect some changes in Shaker’s point-of-sale housing inspection process as the program approaches the 50-year mark in city code.

The last substantial revisions occurred in 2000, when escrow accounts were added. That’s also an area where officials now look toward making some adjustments.

“I think we can all agree that there are certain things in this community that get people pretty excited from time to time,” Mayor David Weiss said.

“And point-of-sale is one of them.”

It’s also something that Weiss has been discussing with department directors since taking office in 2018.

“This has not been an easy topic, and people have strong feelings — including the staff,” Weiss told council at the outset of a Sept. 9 work session.

Weiss sees some room for improvement over time, especially with technology advancing.

As with other programs and policies in the city, point-of-sale inspections is receiving a look through the lens of diversity, equity and inclusion (DEI), as well as local focus groups, including Realtors.

“When Colleen (Jackson, the city’s chief DEI officer since June 2021) arrived here, we had some community conversations, and one of the issues that came up right from the beginning was point-of-sale,” Weiss said.

He cited potential “disparate impact” on those who would otherwise like to move into Shaker Heights.

In the ensuing discussions, Jackson said that while responses “ranged from both directions” on point-of-sale inspections, “one of the biggest arguments was that it was a barrier to entry.”

Another was the 150 percent escrow fund set up by the city, with the funds held while building code violations are fixed.

“As you can imagine, a lot of Shaker residents were ‘pro-(point-of-sale)’ and didn’t want it to go, but thought it needed to be adjusted,” Jackson said.

She noted that others were against it all together.

“They said it was antiquated and specifically kept out communities of color or lower socio-economic individuals trying to move into the city,” Jackson told council, adding that she was excited about some of the proposed changes.

Historical perspective

Building and Housing Director Kyle Krewson provided further background, going back to 1976.

The point-of-sale program was established “at a time of shifting population dynamics,” Krewson said, explaining that the goal was to ensure that property values were maintained to create a stable housing market.

“Housing is the city’s industry — we’re a bedroom community and we want to make sure that our housing is in good shape.

“A lot of the character, architectural appeal and charm of these homes is what brought people to Shaker in the first place.”

Officials reasoned at the time that when a house or apartment building changes hands, “there is money coming into the property, so it’s a good time to take a look at it and bring it back up to code,” Krewson said.

“So that’s what we’re trying to carry on today,” Krewson added.

“We want to make sure that for generations to come, these houses are maintained in a way that preserves that character and that architectural integrity.”

As for the establishment of the escrow accounts in 2000, Krewson’s research showed there was frustration in the local courts at the time about prosecuting homeowners who had assumed violations but did not have the financial means to address them.

The idea then was to provide incentive to the seller to correct the violations prior to transfer.

If the owner or seller is unable to correct all violations prior to transfer, the buyer has an opportunity to procure the property while the funds are held in escrow to make sure that it is brought up to code after they take ownership.

“It also encourages buyers to call us for inspections to address the violations corrections,” Krewson added.

The layout

The question now is how to “right-size and fine-tune” any proposed changes to continue to support these city goals.

Council approval will be required for seven out of eight preliminary recommendations.

“We don’t get a lot of complaints from the Realtor community on the 400 to 600 (point of sale) transactions we average each year,” Krewson said.

“But there are pain points for the Realtors, as well as the buyers and sellers.”

Some of the proposed changes include:

— Increasing the number of partial disbursements, addressing issues related to DEI and customer service.

For example, if a homeowner pays $4,000 to a contractor for porch repairs but has $5,000 in escrow, the money can’t be released by the city until the remaining $1,000 is spent.

“By increasing the number of partial disbursements, it would lower that threshold,” Krewson said.

— Changing the point-of-sale expiration date on the certificate of compliance to 18 or 24 months from initial inspection, rather than the current 12 months (although extensions can be filed).

This benefits both Realtor and resident concerns, through “better customer service and being consistent with the way we execute the program.”

— Having the city generate escrow estimates for violations, rather than a private contractor. This could expedite the sale when neither the buyer nor the seller need to find a registered contractor or pay for estimates.

On the Realtor’s end, there’s also the potential for less back-and-forth with the city.

It would likely require a “heavier lift” from the city, possibly keeping a certified contractor on retainer, as well as overhauling CitizenServe online access.

— Reducing the escrow hold amount from 150 percent to 100 percent, likely leading to a larger pool of buyers.

— Eliminating the $15 disbursement check fee, another DEI recommendation that allows 100 percent of the buyer’s escrow funds to be used to correct violations.

— Adding point-of-sale escrow maintenance and penalty fees for unresolved code violations and open escrow accounts.

— Requiring all escrow accounts to be established in the name of the buyer, which can eliminate conflict where the seller cannot access escrow dollars “due to inaction of the buyer.”

While this could eliminate a “pain point” for buyer, seller and city, it could make negotiations more challenging for the Realtor.

— Expanding inspection hours for earlier and later appointments, making it less likely that buyers and sellers would have to take time off from work.

Krewson said he believed the building and housing department had the staff to handle the proposed changes, other than retaining a registered contractor, if need be.

There are currently six staff members who do housing inspections and also some permits, along with a building inspector and a permit inspector.

Krewson said the department was still making up “a lot of lost ground where we weren’t going out into people’s homes, particularly apartment buildings” during the pandemic.

At the same time, 46 percent of all apartment buildings in Shaker have transferred in the last three years — up from 37 percent nearly a year ago.

That has led to a lot of multi-family inspections, with the need to shift back to single- and two-family homes in the coming year, Krewson noted.

“We are at a stage where we would like to present some proposals to you,” Weiss said. “We are not looking for any action from council, just some feedback.

“Then we can tweak some things and start the ball rolling on some formal action,” Weiss added.

“But this is a good and exciting first step.”

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