BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Martha M. Escutia, Chair
2001-2002 Regular Session
AB 1467 A
Assembly Member Kehoe B
As Amended July 5, 2001
Hearing Date: August 21, 2001 1
Health and Safety Code 4
CJW:cjt 6
7
SUBJECT
Housing
DESCRIPTION
This bill would allow a court to appoint a non-profit
organization or community development corporation as a
receiver for a substandard building, and would allow a
receiver, with court approval, to record a lien against the
property to recover the costs of any services performed as
a receiver.
This bill also would extend the application of current law
allowing the City of Los Angeles to abate nuisances in
vacant single-family dwellings, and to set a preference for
repair only for homes with a less than 50 percent need for
repair, to apply to all vacant dwellings in the Cities of
Los Angeles and San Diego.
BACKGROUND
According to a recent article in the California Land Use
Law & Policy Reporter, vacant and substandard housing is a
significant problem for many California communities.
Houses and apartments that fall into disrepair eventually
become vacant, get vandalized and damaged, and become
occupied by vagrants and gangs. These properties then
become virtually unmarketable.
With home prices high and housing stock woefully inadequate
in many communities, the existence of these unusable and
(more)
AB 1467 (Kehoe)
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unsafe houses is especially frustrating. The appointment
of a receiver to oversee their management, repair, and
rehabilitation - including the recruitment of rent-paying
tenants -- is viewed by many experts as a crucial tool in
the rescue of these properties.
Generally, receivers are appointed when the property
generates income sufficient to finance repairs and pay the
receivers' other expenses - a prerequisite that discourages
receiverships for vacant and severely deteriorated
properties. By allowing nonprofit and community
foundations, which are authorized to apply for and receive
grant monies, to act as receivers, this bill would expand
communities' available options to rehabilitate their vacant
housing stock.
Further, this bill would allow the City of San Diego to
avail itself of legislation that currently allows the City
of Los Angeles to demolish houses that need repairs to over
50 percent of the structure. The bill also would shorten
the required notice period to owners of vacant substandard
dwellings in these cities from 30 to 15 days.
CHANGES TO EXISTING LAW
1. Existing law provides that a housing code enforcement
agency, tenant, or tenant organization may seek, and the
court may order, the appointment of a receiver for any
substandard building, where the owner of the building was
served with a notice or order for abatement of
substandard conditions and failed to comply within a
reasonable period. [Health and Safety Code Sec.
17980.7.]
Existing law further provides that the court shall not
appoint any person as a receiver unless the person has
demonstrated to the court his or her capacity and
expertise to develop and supervise a viable financial and
construction plan for the satisfactory rehabilitation of
the building. [ Id .]
This bill would provide that a court may appoint as a
receiver a nonprofit organization or community
development corporation.
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This bill further would provide that, in addition to the
duties and powers that may be granted pursuant to this
section, a nonprofit organization or community
development corporation appointed as a receiver may also
apply for grants to assist in the rehabilitation of the
building.
2. Existing law provides that a receiver appointed
pursuant to this section may borrow funds to pay for
necessary repairs and relocation benefits authorized
pursuant to this section and, with court approval, may
secure that debt with a lien on the real property on
which the substandard building is located. [ Id .]
This bill further would provide that a receiver appointed
pursuant to this section may, with court approval, secure
any debt for moneys owed to the receiver for services
performed pursuant to this section with a lien on the
real property on which the substandard building is
located.
3. Existing law provides that if any building is
constructed, altered or maintained in violation of any
provision of the state housing law or its associated
regulations, or if a nuisance exists on the property, an
enforcement agency shall, after giving the owner 30 days'
notice to abate the violation or nuisance, institute any
appropriate action to prevent, restrain, correct, or
abate the violation or nuisance. [Health and Safety Code
Sec. 17980.]
Existing law further provides that the owner of a
building in violation under this part shall be given the
choice to repair or demolish the building. If the owner
fails to timely repair the building, the agency may take
appropriate action to bring the building into compliance,
including repair or demolition, but shall give preference
to repair when no more than 75 percent of the building is
in need of repair. [ Id .]
Existing law further provides that, notwithstanding
Section 17980, when the building at issue is a vacant
single-family dwelling located within the City of Los
Angeles, the enforcement agency need only give preference
to repair when no more than 50 percent of the building is
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in need of repair. [Health and Safety Code Sec.
17980.9.]
This bill would extend the application of Section 17980.9
to the City of San Diego, would reduce the required
notice period before an enforcement agency shall take
action to correct or abate a violation or nuisance to 15
days' notice, and would delete "single-family," making
the section applicable to all vacant dwellings in the
Cities of Los Angeles and San Diego.
COMMENT
1. Stated need for legislation
The City of San Diego, sponsor of this bill, states that
the vacant structures common to big cities are breeding
grounds for vandalism, trespassing, drug-dealing and
other crimes. In San Diego alone, there are 175 vacant
substandard single-family dwellings, and 50 more that are
suspected of being substandard.
This bill seeks to alleviate these problems by allowing
nonprofit corporations or community development
organizations to become receivers of substandard
buildings, and by allowing for earlier intervention for
repair or demolition of vacant dwellings in the Cities of
San Diego and Los Angeles.
The sponsor notes that, while the bill makes no
substantive change to the law of receiverships, it
increases the options available to communities to repair
buildings with little or no cash flow. By allowing
nonprofit and community development organizations to
become receivers, this bill would recognize a new source
of highly motivated receivers with the ability to obtain
grants, attract volunteer labor, and accept in-kind
donations to help restore substandard properties. The
bill also makes explicit that a receiver may recover the
costs of any services performed through a lien on the
property.
Presumably, a successful rehabilitation could result in a
property sale at a price exceeding the lien for repairs
and receivership costs, leading to the ironic result that
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a slumlord could end up making a profit off of a
neglected property ordered into receivership. The
sponsor believes that this would be a small price to pay,
however, in exchange for rescuing a substandard building
from a neglectful owner and making it an enhancement
instead of a detriment to the surrounding community.
2. Sponsor says reduction of waiting period won't limit
due process
This bill also would reduce from 30 to 15 days the
waiting period for San Diego and Los Angeles to commence
enforcement actions for a nuisance or violation at a
vacant residence. The sponsor states that the usual
notice process in these cases is that the notice is
issued and ignored; this provision would allow the city
to commence repairs more quickly.
In response to concerns that the reduced waiting period
might lead to the bulldozing of properties 15 days after
the initial posting of a violation notice, when an owner
might have been out of town, the sponsor indicates that
whether the city proceeds administratively or through the
criminal process, the expiration of the initial notice
period does not lead straight to abatement. First, the
city sends the owner a notice and order to show cause as
to why abatement should not occur, which leads to either
an administrative hearing or a court appearance at which
the city makes its case for abatement and the owner has
the opportunity to respond.
Finally, the bill would make it easier for these cities
to require demolition of a substandard dwelling instead
of repair. According to the sponsor, demolition is a
remedy of last resort, but the current standard of
preference for repair when 75 percent of the building
requires repair is uneconomical. This provision would
give the city more flexibility to make decisions about
substandard housing on a case-by-case basis.
3. Suggested amendment: Section 17980.9
On page 8, line 34 of the bill, the author may wish to
delete the term "single-family" for consistency with the
rest of the amendments to this section.
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Support: California Rural Legal Assistance Foundation;
City of San Diego; San Diego Advocates for Social
Justice; Western Center on Law and Poverty
Opposition: None Known
HISTORY
Source: City of San Diego
Related Pending Legislation: AB 472 (Cedillo), 2001-2002
(would require receivers to notify
courts of needed repairs, and would
require owners to pay relocation
benefits for tenants evicted for
repairs) (pending in Senate Judiciary
Committee)
Prior Legislation: None Known
Prior Vote: Assembly Committee on Housing and Community
Development 9-0
Assembly Floor 72-2
Senate Committee on Housing and Community
Development 5-1
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