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City's new venue for war on landlords: Superior Court

Byline1

Get ready for the “till tap,” Fresno’s latest weapon in its war against bad rental housing.

The big question: Does City Hall have the guts to use it against Mom and Pop Landlord as well as those dastardly slumlords?

That’s because it appears there are a lot more of the former than the latter, despite what certain local news outlets would have you believe. And you know how it is with Mom and Pop in the world of politics – they’re sympathetic figures in the eyes of voters.

The hard news in this tale occurred Monday. That’s when Assistant City Manager Renena Smith sent a two-page letter to Independent Administrative Hearing Officer Ed Johnson.

“The City of Fresno is withdrawing its request for assessment hearings, without prejudice, for the following cases,” Smith wrote. “It is considering collections pursuant to Fresno Municipal Code Section 1-510. Please immediately remove these cases from your October hearing schedule.”

Smith listed the addresses of 20 properties. Johnson complied with Smith’s request.

Here’s the backstory.

We all know about Mayor Ashley Swearengin’s efforts to revitalize inner-city Fresno. This multi-pronged campaign includes the use of City Hall’s regulatory authority and police powers to ensure high-quality rental housing.

Rentals are often concentrated in low-income neighborhoods. All too often these units are in abysmal condition. That housing policy in all its complexity is now a priority at City Hall is due in large part to the hard work of community activists.

The Code Enforcement Division is pivotal to a successful housing policy. The City Council passes laws – our municipal code – mandating certain standards for housing and surrounding area (front yard, for example). Landlords who don’t obey are cited by code enforcement officers. Landlords who don’t fix things pronto are subject to fines. They also have to repay the city if city employees are forced to step in and fix the problem (called abatement costs).

Fines/abatement costs can run into tens of thousands of dollars for a single problem property. The reasons for this are many, and recalcitrant landlords are only one of them. Another is the dramatic change in how fines are computed.

City Hall has an appeal process for any landlord disputing a citation or assessment (fines and/or abatement costs). This is where Smith’s letter comes into the picture.

About every six months Johnson devotes a couple of days to bulk assessment hearings. He gets six or seven pages identifying hundreds of code enforcement cases. These cases involve all sorts of code infractions.

Each case has a dollar amount (the assessment) owed to the city. This bill has gone unpaid. The landlord in each case can show up and give Johnson his side of the story as to why the bill remains unpaid. Some show up, but most don’t. That’s why Johnson can dispose of everything in a day or two.

Ultimately, Johnson confirms the assessments en masse. City Hall can then take steps to collect the unpaid fines/abatements costs.

Johnson in early September confirmed cases totaling more than $2 million in assessments. That’s an eye-opening amount even at a City Hall with a $1 billion annual budget.

Johnson has been handling these semi-annual bulk assessment hearings for three years. But he did something unusual at the end of September’s hearing. He decided to yank 25 cases and give each its own hearing, even though the property-owners hadn’t requested such treatment.

Each of the 25 cases involved the Blighted Vacant Building Ordinance and had big-dollar assessments. Johnson’s concern wasn’t with the abatement costs. He said the city had every right to collect that money. His concern was with the fines. Were they excessive to a degree that made them unconstitutional?

Johnson and Michael Flores, the other independent administrative hearing officer, have been wrestling with this question for months. The potentially unconstitutional fines generally involve blighted vacant buildings. It’s enough here to note that municipal code permits City Hall to fine uncooperative landlords $250 per day per violation, retroactively.

A landlord with four violations – tall weeds, peeling paint, crumbling window coverings, lack of outdoor address numbers, for example – could be looking at a $30,000 fine if he didn’t move fast enough. And that fine in certain instances could be doubled.

Johnson and Flores planned to divide the 25 cases between themselves and give each a thorough hearing with the U.S. Constitution as backdrop. They said it was time for the Swearengin Administration and the City Attorney’s Office to argue forcefully in a public setting for a fine formula that has operated for too long in legal shadows.

Johnson about 10 days ago told me about these events during one of my periodic visits to his office (I always drop in on Flores, as well; his office is across the hall from Johnson’s).

It was during this visit that Johnson in an aside said he sometimes wonders why city officials bother to bring these big-dollar assessment cases to him and Flores – to the city’s courtroom, in essence.

The best the city can get is a lien on the property. Yes, that means the city is in line to get its money when the property is sold (maybe years in the future). But a blighted property with a five- or six-figure City of Fresno lien most likely also has a host of financial liabilities with other government jurisdictions, Johnson said. City Hall typically wouldn’t be first in line to get proceeds from the blighted property’s sale. Bottom line – the lien isn’t City Hall’s best shot at getting 100 cents on the dollar.

But a personal judgment from Superior Court – ah, that’s a different matter, Johnson said. The city with such a judgment could immediately attach the landlord’s wages or take a bite out of his savings account.

The city also could take proceeds from a business operated by the landlord – what’s called a “till tap,” Flores told me on Thursday.

Now, Section 1-510 of the municipal code has always given city officials authority to use judicial action to collect unpaid assessments. But that section was given even more teeth in October 2015 when the City Council passed an amendment.

“The City Attorney shall (italics mine) take action to obtain a personal judgment, in addition to any liens, for unpaid penalties, fines and any other form of damages due to the City when the amounts owed exceed $1,000, the amounts reasonably appear to be collectible, and it will be cost effective to pursue judgment and collection,” the amendment read.

Code enforcement over the past two years has become highly political. Here was a high-profile declaration that City Hall was serious about more than merely issuing fines to slumlords. City officials were vowing to their constituents that slumlords, one way or another, would also pay those fines.

The amended ordinance went live on Nov. 19, 2015. That’s nearly a year ago. I chewed on Johnson’s comments for a couple of days. On Monday, Oct. 10, I submitted a Public Records Act request with City Attorney Doug Sloan.

My request: Let me see the list of all the code enforcement/personal judgment cases the city has taken to Superior Court, or plans to take to court, since the amended ordinance became effective.

I have yet to hear back from Sloan. I didn’t learn of Assistant City Manager Smith’s Oct. 10 letter until the next day. Johnson tells me that my PRA request and Smith’s letter coming on the same day is coincidence. Johnson said he and the City Attorney’s Office had already been battling via email on whether he had authority to pull the 25 cases from the bulk assessment hearing.

Smith’s letter rendered the Johnson-Sloan dispute irrelevant.

Smith’s letter identifies 20 cases, not 25. Five had been whittled from Johnson’s list for various reasons. And Smith didn’t say the city most definitely will pursue personal judgments in all 20 cases. She says the city is “considering” collection options outlined in Section 1-510.

Two questions are important here.

First, does the city have the backbone to seek personal judgments on so-called slumlords of every stripe?

Second, several city officials told me they think the answer to my PRA request will be zero – the record will show that the city has yet to seek in Superior Court a personal judgment on a single slumlord. When is City Hall going to get its act together on code enforcement?

A key concept to keep in mind for the first question comes from Jonah Goldberg, a writer for National Review magazine. When it comes to the modern progressive state, Goldberg said, “complexity is subsidy.”

Progressives rule the roost in American government. Progressives believe society can be perfected by the application of their disinterested expertise. Progressives enforce their vision through the coercive power of government. Society is complicated because people are complicated. Finally, nothing is more important in America than equality.

Therefore, government-run social engineering in America is stunningly complex. This is especially true in anything dealing with government regulation of economic affairs. Housing is at the top of this list. Therefore, government-created and enforced regulatory complexity serves the interests of concentrated private capital that can afford to buy the expertise necessary to successfully (and profitably) navigate this ever-shifting maze of mandates. On the other hand, this complexity crushes the little guy.

Big Business says to the progressives: Thanks for what is, in essence, an invaluable subsidy.

This is certainly the case with code enforcement in Fresno.

How come JD Home Rentals, which owns thousands of rental units in Fresno and is constantly touted by community activists and local media as the worst of the slumlords, hardly ever makes a ripple in the code enforcement cases coming across the desks of Johnson and Flores? And why does it seem like most of the appeals come from the likes of Maria Contreras, Yank Vang Khamdee, Lazeuz Ou and Angela Booth (to take four names from the list of cases identified in Assistant City Manager Smith’s Oct. 10 letter)?

The answer is simple: Goldberg’s “complexity is subsidy.”

Johnson gave me an example in our chat on Thursday. Johnson said at one time he planned to spend an entire day on code issues involving housing units owned by JD Home Rentals. At the last minute, Johnson said, all the cases were withdrawn by the city. JD Home Rentals had settled everything in one fell swoop. On the other hand, Johnson said, he recently heard an appeal involving a single troubled property owned by a Latina serving in the military. The code fine was so big, the woman testified, that she couldn’t pay it. She said she’d have to file for bankruptcy protection.

Complexity is a subsidy.

There were dozens of cases in the September hearings with unpaid assessments exceeding $1,000. Sure, some of the property-owners were corporate real estate entities or huge banks. But to my unprofessional eye, it appears most of the properties belonged to Mom and Pop-type landlords.

City Hall has amended ordinance 1-510 in hand. Let’s see if it’s ready to attach paychecks and conduct “till taps” across the board in the name of housing justice.

Which brings us to my second question: When will City Hall bring some sanity to code enforcement? Anyone who has followed the legislative and administrative machinations over the past few years knows code enforcement is going a million directions at once. It’s a mess – and a high-profile one, at that.

Swearengin is termed out in two-and-a-half months. The reorganization of code enforcement will fall to the new mayor – Council Member Lee Brand or Fresno County Supervisor (and former District 7 Council Member) Henry R. Perea.

I spoke with both by phone about Smith’s Oct. 10 letter and code enforcement in general. The issues – no surprise here – proved too complex to resolve in a 10-minute chat. To summarize, both candidates say common sense and equality before the law should prevail in code enforcement.

Each said he’ll fix things once in office.

George Hostetter is The Sun’s Fresno Civic contributor – covering the City of Fresno, County of Fresno, and Fresno Council of Governments.

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