City hall has voted down a controversial new law that would have seen landlords pay $100 per apartment to license their units, opting instead to focus more on an existing program that cracks down on derelict units.

The planning committee voted Tuesday not to license rental housing units in buildings with six or fewer apartments, which accounts for about one-third of Hamilton apartments. Instead, the city will beef up an existing proactive enforcement program and hire four full-time staff to investigate local properties.

The move, which was the committee's Plan B, is an effort to crack down on landlords renting substandard housing, particularly in the McMaster University and Mohawk College areas.

“It’s a serious issue,” said Coun. Terry Whitehead of Ward 8, who mentioned small homes with 10 students crammed inside.

“We find individuals living under stairways with no access out,” he said. “We find people living in basements with no concrete, just a ground floor. There are many, many cases of people living in really bad situations.”

The proposed law has drawn intense interest from local landlords and realtors, as well as Hamilton housing advocates.

If passed, it could have displaced as many as 10,000 residents, said Renee Wetsalaar from the Social Planning and Research Council, who was pleased by the committee’s vote.

“(Licensing) is the wrong tool at the wrong time,” she told councillors.

The city will establish a subcommittee of politicians, landlords and other interested stakeholders to look at beefing up proactive enforcement.

The current proactive enforcement program includes about five part-time staff visiting properties to check on property standards and maintenance issues, said Marty Hazell, senior director of parking and bylaw enforcement.

The program was approved in 2010 as a pilot project and has been funded from the city’s parking reserve, which can’t handle it anymore, Hazell said.

Tuesday’s vote means the city will assign four permanent staff to the project, which will cost taxpayers $275,000 per year. The overall program costs $455,000 but earns back about $180,000 in fines.

The committee heard about 20 speakers opposed to a rental licensing bylaw, which would have come into effect in 2017.

The vote also means that the city will spend $160,000 from a reserve account to buy four vehicles.

City council will ratify the decision on Sept. 25.