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ADOPT RESOLUTION OVERRULING PROTESTS, CONFIRMING ASSESSMENTS OF DELINQUENT CODE ENFORCEMENT CHARGES AND DIRECTING THE ASSESSMENTS BE PLACED ON THE COUNTY TAX ROLL
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution overruling protests, confirming the assessments of the delinquent charges listed in the “Delinquent Accounts 2015 Assessment List” (Exhibit 1) stemming from code enforcement actions, and directing the assessments be placed on the San Joaquin County tax roll.
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Summary
The Police Department’s Neighborhood Services Section is tasked with enforcing health and safety codes on properties throughout the City of Stockton. When violations are found, the responsible party (property owner and/or sometimes the tenant) is given an opportunity to fix the problem. While some violations are minor such as excessive garbage in the front yard, others are much more serious and present an immediate safety risk if left unattended, such as loose electrical wire or inoperable plumbing. There may also be program and cost recovery fees such as vacant property monitoring or rental property inspections. In each case, the Code Enforcement Officer is trained to use a progressive compliance model and a variety of tools to resolve the violations, including the imposition of fees and fines. In cases where the responsible property owners do not fix violations in a timely manner, the City may incur the cost to abate health and safety code violations and passes on those costs to the property owner (hereinafter “code enforcement charges”).
In March of each year, Neighborhood Services begins a process to place all outstanding amounts over 30 days past due on the tax bill for the affected property. This process includes notification, an opportunity to appeal placement of the charge on the tax bill, and tonight’s request for Council confirmation assessment amounts and direct placement on the San Joaquin County tax roll for 2015. As of June 30, 2015, there are approximately $1,672,487 in delinquent code enforcement charges that are unpaid and are therefore eligible to be placed on the tax roll. The opportunity to appeal charges to be placed on the property tax roll concluded on May 28, 2015.
DISCUSSION
Background
In 1996, amendments to the Stockton Municipal Code became effective, providing for the issuance of administrative citations for municipal code violations and requiring property owners to reimburse the City for costs of code enforcement actions. An administrative hearing process was also established to hear objections to the charges and to confirm the costs of abatement actions.
Each year, Neighborhood Services undertakes a process to identify delinquent code enforcement charges, notify the responsible parties, and provide an opportunity to make payment and/or appeal the placement of the delinquent amount on the property tax bill through the assessment process at a two-day administrative hearing. At the conclusion of the administrative hearing, if the hearing officer finds for the City, an order is issued directing the delinquent code enforcement charges be submitted to the San Joaquin County Tax Assessor for property tax assessment against the affected properties.
Routine collection efforts, including liens against those properties, remain in place until all amounts owed to the City are paid. In instances where the property is refinanced or sold, the City will collect all monies due, including penalties and interest, at that time. The lien has priority on property sale, foreclosure or transfer of ownership. The lien remains in place against the property until all violations are corrected and amounts owed are paid. Actual amounts recommended for placement on the tax roll vary from year to year based on numerous factors outside the City’s control.
Present Situation
On April 16, 2015, 1,056 property owners owing delinquent code enforcement charges were notified via certified mail. The letter stated that if the amounts were not paid, all delinquent charges would be placed on the tax rolls. The letter also advised the property owner of the scheduled administrative assessment hearing dates of May 26, 2015, and May 28, 2015, at which the property owner could appear before a neutral hearing officer to contest the placement of the charges on the tax bill. The purpose of the assessment hearing is to give the administrative hearing officer the opportunity to review the delinquent charges, hear any objections to the City’s action in placing those amounts on the tax roll, and, if appropriate, confirm the assessments. Attachment A is the Blanket Administrative Order issued by the Hearing Officer, Dennis Hay. The final number of properties confirmed for assessment to the tax roll by the hearing officer was 879 (Exhibit 1).
As of June 30, 2015, there were approximately $1,672,487 in delinquent code enforcement charges and interest penalties that were unpaid resulting from City code enforcement actions in Fiscal Year 2014-15. Ideally, the City will receive these funds from the County as property taxes are paid in Fiscal Year 2015-16; however, many property owners do not pay their property taxes timely, resulting in a delay of the City’s receipt of these funds. Typically, the City receives only 50% of the assessed delinquencies in the first fiscal year following the placement of the assessment. This reduced amount is incorporated into the annual revenue projection and budget for the Neighborhood Services Section.
The Administrative Services Department will be compiling delinquent charges from the appropriate City Departments and sending one file to the County for processing. Once the delinquent code enforcement charges are confirmed, the list will be forwarded to Administrative Services staff to complete the processing and meet the County deadline of August 1, 2015, for receipt of this information.
FINANCIAL SUMMARY
There are approximately $1,672,487 in code enforcement charges and interest that are delinquent. Although the County places 100% of the amount of the assessments on the tax rolls, it is anticipated that only $836,000 will be received during Fiscal Year 2015-2016. That amount has been budgeted in the adopted Fiscal Year 2015-16 General Fund Police Department Neighborhood Services Section Account No. 010-2425-300. The remaining charges that are not paid on time will remain on the property tax bill until paid, generally once the property changes hands or is refinanced.
Attachment A - Administrative Order for 2015 Assessment