Uncollected code fines total $36M for top 40 offenders; Lee calls lack of effort 'embarrassing'

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More than $36 million in escalating city code compliance fines, some going back as far as May 2005, have been racked up by just the top 40 offending properties.

And nothing is being done to collect the fines.

“This is embarrassing,” said City Council member Denise Lee, chair of the Special Ad Hoc Committee on Neighborhood Blight, on Wednesday.

Unoccupied, abandoned and poorly maintained properties have been identified by the committee as a significant source of blight in the city.

Lee previously had instructed Kimberly Scott, director of the city Regulatory Compliance Department, to provide the committee an analysis of the properties and fines along with the names of the property owners.

Scott said Wednesday she had prepared a list of the property owners at home Tuesday evening — because property owners’ names were not part of the department’s standard records — but was unable to send the data because her email at home is not compatible with the city’s system.

Lee questioned why the name of each property owner was not automatically included along with the case number, date of the first violation, date the fines began, total fines to date and balance due — standard information on each property available to Scott.

“How did it get this way? The issue is that this is negligence,” Lee said.

“If the staff in code compliance can’t provide the information, then fire them,” she said. “Code compliance has got to change the way they do business.”

No. 1 on the list, 1930 Hubbard St. in Springfield, amassed as of Monday $854,000 in fines, which are being levied at the rate of $250 per day. The two-story home with four bedrooms and four bathrooms is listed for sale for $24,900 on realtor.com.

The property at the bottom of the top 40 is at 817 E. Third St., also in Springfield. It’s a 962-square-foot, two-bedroom, one-bathroom wood frame single-family house that has accrued fines totaling $640,761 as of Monday. The fines are increasing by $250 per day.

Asked by the Daily Record how many properties there are with administrative fines, Scott replied via email, “There is no ‘administrative fines list’ per se” and that the list of the top 40 fines was created at Lee’s request.

Council member Robin Lumb said the city has no assumption it will ever collect the fines levied so far on the top 40 properties, or on any of the hundreds – perhaps thousands – of properties facing similar city liens.

He’s working with code compliance and the Office of General Counsel to change the policies regarding liens for code compliance violations.

“The city doesn’t carry the liens as debt. It’s not a receivable,” Lumb said. “It’s strictly punitive.”

The proposed changes would affect three areas of the current policy.

Fines would be reduced to a “fairly manageable amount,” perhaps as little as 5 percent of the original amount; the city could maintain the lien, but take a subordinate position, which could make it easier for homeowners to borrow money to pay for repairs; and in the case of owners of more than one property with a lien, the city could set aside the lien on one property, which could then be sold to raise money to repair the others, said Lumb.

The changes in policy would only work for property owners who want to alleviate the code violations and restore their property to a livable condition.

As for property owners who do not wish to bring their property up to code, Lumb said the city should begin foreclosure proceedings based on the unpaid fines.

That could create another challenge if the city took possession of dozens, or even hundreds, of foreclosed properties.

“Many times, properties are owned by people who are unable or unwilling to make repairs,” said city Assistant General Counsel Jason Teal, who is drafting the proposed policy changes.

“We’re hesitant to foreclose. If nobody bids, the city would own the problem property,” he said.

Realizing the city is not set up to market the number of properties that it might take possession of through foreclosure, Lumb is proposing that the foreclosed properties be turned over to nonprofits or qualified for-profit entities that would repair the homes and then either sell them or rent them.

“The idea is to restore the property to its intended use by a responsible property owner,” he said. “The city wants healthy neighborhoods, but we haven’t been working toward that goal.”

Teal agreed.

“From the city’s perspective, we are not interested in collecting the fines. We’re interested in maintaining properties and neighborhoods,” he said. “We want someone to live there, keep up the property and pay property taxes.”

Teal said when the policy changes are finalized, they can go into effect when Scott and Mayor Alvin Brown or his representative sign off on the changes.

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