Suit Calls Pomona Lax on Slumlords

POMONA —  City officials have not enforced a state law intended to pressure landlords who rent substandard housing to upgrade their property, according to a lawsuit filed against the city in Pomona Superior Court.

The suit, filed on behalf of two tenants of a substandard apartment building, alleges that the city has failed to report such landlords to the state Franchise Tax Board. Under state law, owners of substandard rental housing who fail to bring their property into compliance with building codes may not take income tax deductions on it.

“The city has abandoned one of the best tools it has to encourage code enforcement, and that’s to take the profit out of being a slumlord,” said the plaintiffs’ attorney, Christopher A. Brancart.

The plaintiffs, Anna and Ernest Knox, live in the Villa Riviera Apartments on West Laurel Avenue, a complex in which many of the 40 units have been deemed substandard by the city Fire Department, which enforces building and safety codes, Fire Chief Tom Fee said.

Problems Listed

During an inspection in February, code enforcement officers found that the bathroom sink and bedroom window in the Knoxes’ apartment leaked. Other units in the building had broken windows, overflowing toilets, no smoke alarms and trash and debris strewn in and around them.

A few weeks before that inspection, the Villa Riviera Apartments, which had been owned by an Orange County firm, was placed in receivership by a Superior Court judge in Pomona, Fee said. Nijjar Realty of El Monte has since purchased the building and is making repairs, said Pete Nijjar, the firm’s vice president.

However, the primary intent of the suit is not to bring the Villa Riviera up to code, Brancart said, but to bring Pomona into compliance with state law. The Pomona City Code also requires city officials to report recalcitrant landlords to the state tax board. The suit asks that the court order the city to enforce the law.

City Atty. Patrick J. Sampson acknowledged that the city has enforced the law only sporadically, but said enforcement will be more stringent in the future.

“We have no objection to doing it,” Sampson said. “We were going to enforce it prior to the filing of their suit.”

Disputes Claim

Brancart said he would be happy to see the city report more landlords, but disputed Sampson’s assertion that Pomona was enforcing the law in some instances.

“It’s not a question of sporadic enforcement, it’s not a question of selective enforcement,” Brancart said. “Our allegation in the lawsuit is that the City of Pomona has utterly, utterly failed properly to enforce the law.”

Pomona, which celebrated its centennial earlier this year, has old sections with old buildings, which constitute much of the city’s substandard housing, Fee said.

“Substandard housing is prevalent in most of our older areas, and that’s because of the age of the city and just the normal wear and tear that takes place on a property over 50, 60, 70 years,” Fee said. “If you’re looking at it as a percentage, it’s a relatively small percentage of the city.”

Although the city also has newer apartment buildings that have been allowed to deteriorate, Fee said such structures account for only 5% of the 8,500 rental units in Pomona. No more than 15% of the rental property in the city is substandard, he said.

Go Undetected

Still, this means that more than 1,000 rental units are likely to be substandard. Many of them go undetected because code enforcement officers do not routinely inspect all rental properties, Fee said. Instead, he said, inspections occur when code violations are visible from the street or when they are reported to the city.

Each year, code enforcement officers notify about 180 property owners of necessary repairs, Fee said.

Most upgrade their property without further action, Fee said, though about 25 landlords a year receive notices of non-compliance. According to the city code, the Franchise Tax Board must be notified within 10 days after a notice of non-compliance is mailed, unless the property owner requests an appeal.

However, Fee said, the city sends only about 18 letters a year to the tax board, adding that code enforcement officers use some discretion in deciding whether the board should be notified.

‘Least Amount’

“It has not been the desire of the City of Pomona to go out and punish any of our citizens or property owners,” Fee said. “We will normally do the least amount of enforcement to get the job done.”

Even in cases involving severe violations of housing and safety standards, Fee said, notifying the tax board is not one of the first steps taken.

“Probably what would happen first is that we would file criminal charges against that individual regarding a slumlord-type situation, and, if he is convicted of those charges, then that letter would be sent,” he said.

Franchise Tax Board spokesman Jim Reber said the agency has no record of any notices from Pomona, but said reports from Pomona are probably lumped with those from other cities in Los Angeles County.

Audits Prompted

The tax board received more than 1,500 notices about owners of substandard housing last year, Reber said. The notices prompted 428 state income tax audits, causing landlords to pay about $130,000 in additional taxes as the result of disallowed deductions.

Brancart said the fact that only about 18 tax board notifications are mailed each year in Pomona demonstrates that the law is not being adequately enforced.

“If the fire chief’s position is that by sending 18 letters to the Franchise Tax Board, the city is fulfilling its statutory duties, he’s wrong,” Brancart said.

Sampson rejected the suit’s claim that the city is legally bound to report every landlord whose property may be in disrepair.

‘Discretionary Procedure’

“I don’t believe we have a mandatory duty to do this, regardless of what the suit says,” Sampson said. “It’s a discretionary type of procedure. Cities aren’t required every time they see substandard housing to notify the Franchise Tax Board.”

The city has not reported as many landlords as it could, Sampson said, because that strategy has proven less successful than other means of code enforcement at persuading property owners to make improvements.

“We’ve used it in the past and have not found it to be that effective,” Sampson said. “It only affects state income tax. Even for a relatively high income, you don’t have that much state taxes.”

However, Nijjar, whose firm bought the Knoxes’ apartment building three weeks ago, said the law makes it financially foolish for landlords to neglect their property.

“It’s an effective law,” Nijjar said. “It will cost more money to pay the Franchise Tax (Board) than it will to fix up your property. And you get nothing for your money. If you fix up your property, you get something out of it.”

Grace Period

The state law and the city code both allow a six-month grace period after the city’s deadline for making repairs before a landlord is reported to the state. Sampson said that delay also makes the law a meager weapon against landlords.

“The emphasis of our program has been on pro-active code enforcement,” Sampson said. “It has not been on the paper work.”

Brancart said the effectiveness of denying tax breaks to neglectful landlords has no bearing on the issue of whether the city is enforcing the law.

“The efficacy of the law is not a matter for the city to decide,” he said. “Rather, the Legislature, through this statute, has required cities to report these slumlords to the Franchise Tax Board.

“The fact that . . . the City of Pomona does not feel it is the most effective weapon in the battle against substandard housing is irrelevant.”