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HomeMy WebLinkAboutagenda.council.worksession.20190219 CITY COUNCIL WORK SESSION 4:00 PM I. APCAH Call UP Regarding Enforcement Hearing Officer, Establishing Fines, and Schedule CITY COUNCIL WORK SESSION February 19, 2019 4:00 PM, City Council Chambers MEETING AGENDA APCAH Call UP Regarding Enforcement Hearing Officer, Establishing Fines, and APCAH Call UP Regarding Enforcement Hearing Officer, Establishing Fines, and Setting Fine P1 Strengthening Community Through Workforce Housing 1 NOTICE OF AMENDMENTS TO THE EMPLOYEE HOUSING GUIDELINES TO: Aspen City Council FROM: Mike Kosdrosky, Executive Director MEETING DATE: February 11, 2019 RE: Notice of APCHA Resolution No. 05 (Series of 2018), Adopting Amendments to the Aspen/Pitkin Employee Housing Guidelines Creating a Hearing Officer Position and Adopting a Schedule of Fines (Notice of Callup) PURPOSE OF MEMO AND PROPOSED AMENDMENTS: 1. Under the Fifth Amended and Restated IGA for Aspen/Pitkin County Housing Authority, the APCHA Board is requesting City Council and Board of County Commissioner approval of the attached amendments to the Employee Housing Guidelines; or call-up for further discussion and direction. 2. To establish the position of a third-party Hearing Officer to be appointed by the Board of Directors to hear Enforcement (Notice of Violation or NOV), Special Review, and Grievance cases. 3. To adopt a Schedule of Fines as part of the APCHA’s Employee Housing Guidelines as one of several enforcement options to help increase program compliance and integrity. POLICY ISSUES ADDRESSED: 1. APCHA has three different processes for handling quasi-judicial decisions: APCHA’s Special Review process, Enforcement or NOV process, and its Grievance process. Having three different quasi- judicial processes creates unnecessary program complexity and increases the risk of causing unintended but detrimental program precedents. 2. APCHA’s current NOV process is one of extremes – it is either too lenient or too harsh. Instead of having an “all or nothing” approach, fines are intended to improve program accountability and fairness by extending the overall due process period for alleged violators prior to forced sale or eviction, and by establishing fines that fit the violation, but remain effectively deterrent. BACKGROUND: In the fall of 2018, the APCHA Board adopted Resolution No. 05 (Series of 2018) to establish an independent Hearing Officer to hear special reviews, enforcement hearings, and grievances, and to establish a Schedule of Fines to incentivize program compliance and ensure systemwide accountability. DISCUSSION: APCHA Authority as a political subdivision of the State of Colorado As a separate political subdivision and a public corporation of the state, APCHA has the duties, privileges, immunities, rights, liabilities, and disabilities of a public body politic and corporate (C.R.S. 29-1.204.5, Part 4). As a multi-jurisdictional housing authority, APCHA has the power “to do or perform any acts and things authorized by this section under, through or by means of an agent…” (C.R.S.29-1- 204.5(3)(IV)(m)). APCHA’s powers include the adoption of regulations respecting the exercise of its powers and the carrying out of its purposes (Section 204.5 (3)(k)) and to exercise any other powers essential to the P2 I. Strengthening Community Through Workforce Housing 2 provision of its functions (C.R.S. 29-1.204.5(l)). This includes enforcement that can be delegated to an agent. The Fifth Amended and Restated Intergovernmental Agreement (IGA) authorizes APCHA to enforce all aspects of the affordable housing program, including deed restrictions and Guidelines, (I.G.A. Section III.C.3.i). Section III.C.3.j of the IGA directs the APCHA Board “to establish a system to hear appeals from the interpretation or implementation of the Affordable Housing Guidelines and issue final administrative determinations of such appeals.” Hearing Officer APCHA’s existing processes for conducting special reviews, enforcement hearings, and grievances under the Employee Housing Guidelines are outdated, costly, and administratively burdensome. Each type of case requires a different process using different people. The Board of Directors wants to standardize APCHA’s quasi-judicial reviews using an independent third-party Hearing Officer. The Board’s goals for doing so are: • To increase programmatic accountability, integrity, and public trust; • To increase operational standardization and processes; • To reduce the potential for quasi-judicial errors and the risk of legal liability to the program; • To remove any public misperception that the compliance process can be compromised; and • To increase overall transparency and improve overall decision making associated with APCHA’s compliance and enforcement. The APCHA Board can delegate its enforcement authority to a Hearing Officer in cases where a property’s deed restriction permits it, including evidentiary hearings and initial enforcement decisions. Commonly, Public Housing Authorities (PHAs) use hearing officers for case hearings, including the hearing of investigations. For example, the Jackson/Teton Housing Authority Board occasionally conducts contested case hearings and appeals of decisions of the Authority using an independent, third-party Hearing Officer. Resolution No. 5 (Series 2018) attached includes the proposed amendments to the Guidelines to create a third- party Hearing Officer position. Civil Penalties and Fines APCHA is committed to achieving 100% compliance through increased public education and enforcement. A recent survey of deed restricted homeowners shows that 45% of respondents (246 households in total) said that preventing fraud, abuse, and noncompliance should be one of APCHA’s top two policy concerns. It is said that perception becomes reality and unfortunately the public’s perception is that fraud, abuse, and noncompliance are serious concerns for the APCHA program, which policy makers should address. In August 2018, APCHA hired a full-time Compliance Manager. However, without adequate enforcement measures or penalties in place to guarantee compliance, APCHA is severely limited in obtaining voluntary compliance from the various program participants (owners, renters, landlords, property managers, and businesses). P3 I. Strengthening Community Through Workforce Housing 3 The current NOV system is either too lenient or too draconian. It is too lenient in dealing with compliance cases after the fact where APCHA has evidence or proof of rule violations or clear-cut rule breaking. Because the violation is technically “cured,” it is virtually impossible for APCHA to remedy a past violation, no matter how egregious. In many cases, APCHA learns about a violation after the fact. By the time a complaint comes in and APCHA has time to investigate it and issue a NOV, that violation has passed and is by default “cured.” This frequently occurs in cases where deed restricted homeowners or tenants illegally rent out their units to non-qualified workers. A NOV to “cure” a past violation is virtually meaningless and serves only as a warning from APCHA not to commit that specific violation again. But if someone understands the limitations of the NOV process, they can repeatedly violate program rules (as well as their deed restriction terms) without consequence, in effect creating “do nothing” or “unenforceable” compliance situations. Such unintended leniency not only serves to embolden repeat rule breakers but weakens public trust in protecting program accountability. The opposite of a NOV process that is too lenient is one that is too harsh. The Employee Housing Guidelines are not only too lenient in many cases, but too severe in others. Not every violation, particularly minor violations, should lead to the immediate forced sale or eviction of a homeowner, but that is exactly what happens today. Instead of an “all or nothing” enforcement approach, the APCHA Board recommends a process that allows more time and opportunities for alleged violators to come back into compliance by paying a fine instead of losing their home. The Board provided the following criteria to create a fine system (Schedule of Fines). Fines should be simple, consistent, logical, graded by severity, punitive when necessary, and deter further or repeat noncompliance. A system of fines must be simple enough to communicate to the public and promote public education and voluntary compliance. State law requires specificity as to the range of penalties applicable for any type of violation (i.e. fines must not be discretionary). Such specificity gives notice to the public of what the penalty is for a violation and helps prevent unequal treatment of violators. The Schedule of Fines adopted by the APCHA Board covers all violations stated in the Employee Housing Guidelines and for most deed restrictions in place today. Fines are meant to deter owners, renters, and landlords (including property managers and businesses serving as landlords) from intentionally or unintentionally breaking the affordable housing rules. Through public education and outreach, APCHA will clearly communicate expectations for program compliance. The Board has created five stages of violations and fines. The more severe the violation, the steeper the fine. The fines range from $250 for a Stage 1 violation up to $5,000 for a Stage 5 violation. Stage 1 violations cover the least severe compliance violations while Stage 5 violations cover the most severe compliance violations impacting the housing program. Each violation stage allows for a 15-day cure period from the time of Notice P4 I. Strengthening Community Through Workforce Housing 4 of Violation (NOV)1, which can carry over into all five levels of the Schedule of Fines, giving alleged violators (in all but the most severe cases or when a severe past violation cannot be cured) more time to cure and/or appeal an alleged violation prior to potentially losing their home. Although fines are progressive, they are not cumulative. It is important to note that fines collected will not be used to pay for APCHA’s ongoing operations but will be used to pay for the cost of a hearing officer and for public education and engagement. Today, alleged compliance violators are allowed only 15 days to cure a NOV. Failure to cure or appeal a NOV within 15 days is grounds for losing one’s affordable home or rental unit. But under the APCHA Board’s proposed NOV and Schedule of Fines process, an alleged violator who fails to requalify (a Stage 1 violation in this case) would receive up to 90 days to cure or appeal a NOV before ever facing the penalty of losing their home.2 This extends the current due process period substantially – by up to five or six times longer – than the current cure period. Resolution No. 5 (Series 2018) includes the proposed Schedule of Fines. FISCAL IMPACT: Adoption of Resolution No. 05 (Series of 2018) will likely require additional funds to be budgeted in 2019 through the Budget Supplemental process to pay the services of a hearing officer. Fines collected by APCHA will be used to offset the cost of a hearing officer in future years and will be used to provide educational materials and public outreach concerning the APCHA program. RECOMMENDATION: Approve Resolution No. 05 (Series of 2018), Adopting Amendments to the Aspen/Pitkin Employee Housing Guidelines Creating a Hearing Officer Position and Adopting a Schedule of Fines. Attachments: Resolution No. 05 (Series of 2015) 1 Prior to issuing the first NOV, APCHA will issue a Notice of Investigation at its discretion, to determine whether a violation has occurred. This would allow most alleged violators up to an additional 15 days to cure or appeal their alleged violation. 2 This policy would not prevent private and public landlords, like APCHA, from exercising their contractual rights under a lease agreement and/or under Colorado law to demand compliance within a shorter t imeframe prior to a Notice of Eviction. P5 I. P6I. P7I. P8I. P9I. P10I. P11I. P12I. P13I. P14I. P15I. P16I. P17I. P18I. P19I. P20I. P21I. P22I. P23I.