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RESOLUTION OVERRULING PROTESTS, CONFIRMING ASSESSMENTS OF DELINQUENT CODE ENFORCEMENT CHARGES, AND DIRECTING THE ASSESSMENTS BE PLACED ON THE SAN JOAQUIN COUNTY TAX ROLL
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RECOMMENDATION
It is recommended that the City Council approve a resolution overruling protests, confirming assessment of the delinquent charges listed in the “Delinquent Accounts 2016 Assessment List” stemming from code enforcement actions, and directing that the assessments be placed on the San Joaquin County tax roll.
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Summary
The Police Department’s Neighborhood Services Section (NSS) 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 correct the violation. 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. A violation may generate 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 correct violations in a timely manner, the City may incur the cost to abate health and safety code violations and pass on those costs to the property owner (hereinafter “code enforcement charges”).
In April of each year, the NSS begins a process to place all outstanding code enforcement charges over 30 days past due on the tax bill for the affected property. This process includes notification and opportunity to appeal placement of the charge on the tax bill, and then Council is requested to confirm assessment amounts and direct placement on the San Joaquin County tax roll; which Staff is presently requesting for the 2016 tax roll. As of June 30, 2016, there is approximately $1,727,981 in delinquent code enforcement charges that are eligible to be placed on the tax roll; the opportunity to appeal these charges concluded on May 26, 2016.
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 confirm the costs of abatement actions.
Each year, the NSS undertakes a process to identify delinquent code enforcement charges, notify the responsible parties, and provide an opportunity to make payment and/or appeal 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 that 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 full. Instances wherein 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 in full. 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 14, 2016, 995 property owners owing delinquent code enforcement charges were notified via certified mail. The letter stated that if the amounts were not paid then 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 25, 2016, and May 26, 2016, 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 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 - Blanket Administrative Order, issued by Hearing Officer Dennis Hay). The final number of properties confirmed for assessment to the tax roll by the Hearing Officer was 783 (Attachment A, Exhibit 1).
As of June 30, 2016, there were approximately $1,727,981 in delinquent code enforcement charges and interest penalties resulting from City code enforcement actions in Fiscal Year 2015-16. Ideally, the City will receive these funds from the County as property taxes are paid in Fiscal Year 2016-17; 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 45 percent 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 NSS Department
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 the Administrative Services Department staff to complete the processing and meet the County deadline of August 10, 2016, for receipt of this information.
FINANCIAL SUMMARY
There are approximately $1,727,981 in code enforcement charges and interest that are delinquent. Although the County places 100 percent of the amount of the assessments on the tax rolls, it is anticipated that only $777,591 will be received during Fiscal Year 2016-2017; that amount has been budgeted in the adopted Fiscal Year 2016-17 General Fund Police Department Neighborhood Services Section Account No. 010-2425-300. The remaining charges that are not paid on file will remain on the property tax bill until paid, generally once the property changes hands or is refinanced.
Attachment A - Blanket Administrative Order and Exhibit