INDIANAPOLIS — A 2015 state law targeting Hammond's rental registration and inspection program is unconstitutional, according to a 3-0 ruling issued Tuesday by the Indiana Court of Appeals.
In their 56-page decision, the judges determined that the General Assembly and then-Gov. Mike Pence enacted impermissible "special legislation" by allowing West Lafayette and Bloomington to maintain their longstanding rental registration requirements while specifically prohibiting Hammond from also doing so.
The court found that House Enrolled Act 1165 violated the Indiana Constitution's ban on special or local laws relating to fees or salaries, as well as its direction that where a law can be made generally applicable it should be to ensure uniform operation throughout the state.
As a result, the court said the Indiana Code section enacted by the 2015 law must be struck from the books, and Hammond once again allowed to charge any rental registration fee that it deems suitable.
Hammond Mayor Thomas McDermott Jr. said the ruling confirms his consistent belief that the statute was unconstitutional special legislation.
"I have and still believe that a reasonable fee for landlords to help protect our city through the inspections department is a fair cost to pass along to the landlords of our city," McDermott said.
The lawsuit followed repeated attempts by the Republican-controlled Legislature, at the urging of the Indiana Apartment Association, a landlord trade group, to stop local governments from imposing increasingly higher fees for rental property registration and inspection.
For example, Hammond in 2010 was charging landlords an annual $80 registration fee per unit. Other municipalities assessed annual registration or inspection fees ranging from $10 to $200, according to court records.
A 2011 statute required any such fees collected by a locality be used only for inspection program costs, and permitted the fee to be directly passed on to tenants.
Lawmakers in 2013 then froze all rental registration and inspection fees.
In 2014, the law was changed again to set a maximum $5 annual registration fee, except in those communities that had a rental registration and inspection program in place before July 1, 1984.
While lawmakers believed that only included Bloomington and West Lafayette, Hammond later showed that its program began in 1961, and ultimately prevailed in court over a landlord who claimed Hammond should not be allowed to charge more than the $5 annual registration fee.
The 2015 law at issue before the Court of Appeals tweaked the definition of rental registration program in a way that the court found was designed to exclude Hammond, but to continue allowing Bloomington and West Lafayette to maintain their programs.
The court ultimately determined that the 2015 law would not have been enacted without the exemption for the two college towns, and therefore under the standard set by the Constitution it cannot be allowed to stand.