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APPROVE RESOLUTION OVERRULING PROTESTS, CONFIRMING ASSESSMENT OF DELINQUENT CODE ENFORCEMENT CHARGES, AND DIRECTING THE ASSESSMENTS BE PLACED ON THE SAN JOAQUIN COUNTY TAX ASSESSOR’S ROLL
recommended action
RECOMMENDATION
It is recommended that the City Council approve a Resolution overruling protests and confirming the assessment of the delinquent charges listed in the “Delinquent Accounts 2018 Assessment List” stemming from code enforcement actions against the affected properties, and directing the assessments be placed on the San Joaquin County Tax Assessor’s Roll.
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of the resolution.
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Summary
The Stockton Police Department’s (SPD) Neighborhood Services Section (NSS) is tasked with enforcing health and safety codes on properties throughout the City. When municipal code violations are found, the responsible party (the property owner or sometimes the tenant) is given an opportunity to correct the violation through notices issued by the City. While some violations are minor, such as excessive garbage in the front yard, others are much more serious and present an immediate health and safety risk if left unaddressed, such as piles of garbage, junk, and debris; loose electrical wiring; or inoperable plumbing in an occupied structure. In addition to enforcement of the municipal code, the NSS also administers programs such as hotel/motel permits, vacant property monitoring, and rental property inspections.
To recover City costs, in April of each year, the NSS begins a process to place all outstanding amounts over 30 days past due on the tax bill for the affected property. This process includes written notification mailed to the property owner of record, an opportunity to appeal placement of the charge on the tax bill, and a hearing before the City Council for a confirmation of the proposed assessment amounts and request to forward the assessments to the San Joaquin County Assessor for direct placement on the property tax roll for 2018.
As of June 29, 2018, there are approximately $2,023,962.13 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 17, 2018.
DISCUSSION
Background
In 1996, amendments to the SMC 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 provide due process to the affected property owners and to hear objections to the charges and confirm the costs of the applicable abatement actions taken by the City. In each enforcement matter, the NSS uses 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 make the determination that it must move forward to abate the violations using a variety of mechanisms to protect the health, safety, and welfare of the public. In such instances, the City exercises its authority provided under the SMC and incurs the cost to abate the outstanding health and safety code violations and passes on those costs to the property owner (hereinafter “code enforcement charges”).
Although fees and fines are billed on a regular basis, many accounts fall delinquent. To recover City costs, in April of each year, the NSS begins a process to place all outstanding amounts over 30 days past due on the tax bill for the affected property. This process includes written notification mailed to the property owner of record and an opportunity to appeal placement of the charge on the tax bill at an administrative hearing. At the conclusion of the administrative hearing, if the Administrative 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. The City Council is then asked for a confirmation of the proposed assessment amounts and agreement to forward the assessments to the San Joaquin County Assessor for direct placement on the property tax roll for the upcoming year.
Routine collection efforts, including code enforcement assessments against the affected 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, through the sale or refinancing process. The code enforcement assessment carries the same priority as tax assessments and is paid on the property sale, foreclosure or transfer of ownership. Actual amounts recommended for placement on the tax roll vary from year to year.
Present Situation
On April 6, 2018, a total of 984 property owners owing delinquent code enforcement charges were notified via certified mail. The letter indicated that failure to pay by the date provided would result in all delinquent code enforcement charges being submitted to City Council for approval and forwarding to the San Joaquin County Assessor’s Office for placement on the property tax rolls. The letter also advised the property owner of the scheduled administrative assessment hearing which was held on May 16, 2018, and May 17, 2018, at which time the property owner was given the opportunity to appear before the Administrative Hearing Officer to contest the proposed charges and placement of the charges on the tax bill. Approximately 181 accounts were brought current between the initial notice of proposed assessment and the Administrative Hearing.
During the hearing, the Administrative Hearing Officer has the opportunity to review the City’s code enforcement costs, including delinquent charges, hear any objections to the amount and appropriateness of the charges and the City’s proposed action to place those amounts on the tax roll. This Administrative Hearing is not an opportunity for the property owner to contest the charges billed. That opportunity occurs during actual enforcement as specific actions are taken, and the SMC provides for an appeal process. A total of nine property owners appeared at the Administrative Hearing. At the conclusion of the hearing, the Administrative Hearing Officer issued an Administrative Order confirming the placement of costs on the tax roll. Attachment A is a copy of that Administrative Order and includes the final number of properties confirmed for assessment to the tax roll by the Administrative Hearing Officer at 803.
As of June 29, 2018, there were approximately $2,023,962.13 in delinquent code enforcement charges and interest penalties that were unpaid resulting from City code enforcement actions in Fiscal Year (FY) 2017-18. Ideally, the City will receive these funds from the County as property taxes are paid in FY 2018-19; however, many property owners do not pay their property taxes timely resulting in a delay of the City’s receipt of these funds. On average, the City receives 46% of the assessed delinquencies in the first fiscal year following the placement of the assessment.
The Administrative Services Department will compile delinquent charges from the appropriate City departments and send 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 10, 2018, for receipt of this information.
FINANCIAL SUMMARY
There are approximately $2,023,962.13 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 $931,000.00, or approximately 46% will be received during FY 2018-19. That amount has been budgeted in the adopted FY 2018-19 General Fund Police Department Neighborhood Services Section Revenue 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 2018 Assessment