Receiverships Newest Tool In SB Blight Fight

The city of San Bernardino this week went public with what officials believe might be the most powerful weapon in the city’s urban renewal arsenal: the use of receiverships to take control of and rehabilitate blighted properties.
Once proud San Bernardino, the county seat and the largest municipality in the county population-wise, has been spiraling downward for nearly a generation. After more than two decades of a deteriorating local economy and several budgetary cycles of deficit spending, the city filed for Chapter Nine bankruptcy protection in 2012. Accompanying the financial malaise, many properties have suffered from neglect as neighborhoods have deteriorated. Property owners, lacking the financial means, will or desire or all three to maintain their homes, yards, lots or buildings, have defied or ignored city code enforcement citations.
Even as the city council this week ratcheted up its citation power on errant property owners, an exchange between councilman John Valdivia and city attorney Gary Saenz referenced the city’s receivership program, which has existed in pilot form since last year.
Saenz deferred questions to deputy city attorney Jason Ewert, who said that 16 severely dilapidated properties are currently at some stage of the receivership process.
Ewert said the use of receiverships to redress the city’s blight problem comes as a last resort, after property owners have been contacted, warned and cited repeatedly about redressing conditions on the land and/or structures they own, at which point he said “if conditions warrant it, a receiver is appointed.”
Ewert said the process results in the property being declared blighted and then being entrusted to a receiver, he said, “willing to fix the property. Legal title is usually not transferred to the receiver. Instead, the receiver is granted possession and control of the property to rehabilitate the structure. Legal title is not transferred until the property is sold to a new owner after the rehabilitation process is complete.”
Thereafter, “The receiver then gets compensation for the property,” Ewert said. “Any money left over after the receivership is terminated is returned to the original owner.”
Ewert said the proceeds from the sale of the property will cover the amount spent to rehabilitate the property and a per hour fee charged by the receiver. Ewert said the receivership arrangement is processed in court under the supervision of a Superior Court judge, who will determine whether the receivership is to be granted to begin with and who will then consider the claims of the receiver once the rehabilitation process is completed.
Ewert said that “nine properties once contemplated for being redressed through the receivership process were subsequently determined not to be viable receivership candidates and have been slated for demolition.” Additionally, he said, “Four properties previously slated for receivership were brought into compliance by the property owners after notice of receiver actions was delivered.” He said “Dozens of receiverships are anticipated in the future.”
Ewert said it should typically take five to six months from the time a property enters into receivership until it is purchased by an eventual buyer.
The city council was laudatory about the receivership approach to curtailing blight. Councilwoman Virginia Marquez said she wanted to see “as many as possible. It is frustrating for taxpayers to live next to an empty building where squatters are there.”

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