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January 19th, 2005 Janine Robben | News Stories
 

The Lien King

Why is Commissioner Randy Leonard cutting deals with deadbeat property owners?

     
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RANDY LEONARD
Paul Raynor thinks Randy Leonard is a prince.

Eight years ago, a city inspector found a dozen code violations at a then-vacant home that Raynor, now 76, owns on Southeast 18th Avenue. Improper wiring, cracked foundation, overgrown shrubbery: The place was such a mess the inspector thought it might be abandoned.

The city gave Raynor a six-month grace period to fix everything. But city records show it took him more than six years to correct the last of the violations.

As a result, the city placed a lien on the property, and Raynor's penalties and fees began piling up. By the time the property passed final inspection in February 2003, he had spent almost $10,000 to get the city off his back and the lien off the house.

Raynor thought that was a bit much. City Commissioner Randy Leonard agreed. So, in April 2003, the city gave Raynor his money back. Raynor was so pleased that, a year later, he appeared in a TV commercial endorsing Leonard's re-election bid, praising the commissioner for taking care of his problem.

A prince? No. When it comes to cutting deals on city fines, Leonard is the lien king. In the two years that Leonard has been in charge of the Bureau of Development Services and the Office of Neighborhood Involvement, the city has reduced or canceled more than $3 million owed for code violations.

The commissioner's forgiving nature has won him applause from property owners and city administrators, who say the old system was too inflexible and inefficient.

But not everyone is happy.

At least one homeowner, who couldn't get Leonard to reduce the liens that came with his house, says the system is arbitrary. And a longtime city employee whose job is to collect debts says Leonard is selectively giving away the store at a time when the city faces a $14 million budget shortfall.

"I wouldn't argue that you keep a problematic policy in place just because other people have endured its excesses in the past," says Frank Dufay, a city collections supervisor. "But make sure you treat people the same. It's a public agency, not a private charity."

Challenging an elected official is always risky for public employees. And, as Dufay found out, in Leonard's case, his bite was as good as his roar.

Here's how it's supposed to work: Let your shrubbery get out of control or your garbage pile up? If you fix the violation in a timely manner, that's the end of it. If you don't, the city puts a lien against the property to ensure that its various costs and fees will be paid when you sell or refinance.

The problem is that property owners with no plans to sell learned to simply ignore the city.

For example, Jack and Georgia Hoffman, whose no-tell motel on Northeast Sandy Boulevard was the subject of WW's April 14, 2004, cover story, "Home Sweet Home," let the penalties-and the violations-pile up while they collected $150,000 a year in rent on what even Georgia Hoffman agreed was the "worst motel around."

By November 2002, the city had thousands of such liens, totaling almost $8 million, including penalties assessed for continuing violations. That's when city auditor Gary Blackmer announced plans to review long-delinquent liens as a first step toward resuming foreclosures-a dramatic step the city hadn't taken in more than 30 years.

But on March 15, 2004, Leonard's chief of staff, Ty Kovatch, asked Blackmer to halt his plans.

Taking away someone's house for code violations seems grossly unfair, Kovatch says. He cites the case of landlord Steven Dimit, who eventually accumulated more than $12,000 in assessments for toting a tenant's garbage himself instead of using a commercial hauler as required by city code.

"Most violent crimes and property crimes don't have penalties this high," says Kovatch. " The punishment does not fit the crime."

Under Leonard, the Bureau of Development Services and the Office of Neighborhood Involvement created internal committees to review liens for potential reduction. If they are unable to reach agreement with the property owner, the case then goes through two more panels before the City Council get

s involved, authorizing or denying foreclosure proceedings.

According to many in city government, including auditor's ombudsman Michael Mills and BDS customer-service manager Jackie Phillips, the new process is an unqualified success, reducing complaints from property owners while resolving code violations and, in many cases, collecting at least a portion of the money owned to the city.

Dufay, who's been working on city liens for more than 25 years, doesn't dispute that the old system was in some ways unfair. But, he argues, the new system has its own problems.

Dufay's boss, Blackmer, agrees that in his view, the city should be recouping at least its out-of-pocket costs incurred in dealing with code violations. Yet, in some cases, including Raynor's, Leonard's bureaus are not only waiving or reducing interest and penalties, they're throwing in the city's actual expenses, as well.

For example, in 2003, after meeting with Leonard's staff, ONI officials agreed to settle a lien against Dmitry Tveretinov's Northeast Portland property for $800, even though the city had paid almost $14,000 to have a contractor remove 47 tires, 55-gallon drums and scrap metal from the property after Tveretinov failed to do so.

In June 2004, the city waived its entire $55,000 lien against George Hovorka, a North Portland business owner who never got a permit for a storage container that had prompted complaints from neighbors more than six years earlier. The waiver included the costs of 13 city inspections, an administrative review and collections efforts.

Kovatch-who personally talked Hovorka into dismantling the container-calls the resolution of the case a success. "The costs of that case were a small fraction of what past practice had driven the penalty to," he says.

Blackmer, while not commenting on specific cases, says that the bureaus' practice of waiving actual expenses is not the way to city fiscal health. "We've brought that to their attention and expressed our concern," he says.

At the same time that Leonard's bureaus are, in Dufay's view, bending over backward for people like Raynor, Tveretinov and Hovorka, he questions whether all property owners are receiving the same treatment.

Take the case of Marc Jepsen.

In 2003, Jepsen bought a derelict, 90-year-old house in Northwest Portland with almost $50,000 in pre-existing liens. ONI offered to forgive $13,000 worth of them.

In June 2004, Jepsen met with Leonard, Kovatch and Leonard aide Aaron Johnson to discuss his bill. It didn't go well.

Jepsen says he walked away stunned after Leonard accused him of playing "games." Shortly after the meeting he received a letter, from Johnson, canceling the reduction offer he'd previously received from ONI. Jepsen later settled for a smaller reduction to his bill.

"We should never have gone to Randy Leonard," says Jepsen.

No one knows better than Dufay the cost of tangling with the commissioner, whom Kovatch called a "lion" in a famously misdirected email.

Last May, Dufay, who was one of Portland's City Employees of the Year in 1998, provided information on several liens cases to one of Leonard's spring-primary opponents. Although Dufay insists he was simply complying with a public-records request, Leonard complained to Blackmer. Dufay subsequently was suspended for two weeks without pay for workplace political activity.

Dufay says he doesn't have anything personally against Paul Raynor, the star of Leonard's commercial, who has suffered from leukemia. But, he told Blackmer, "The hard truth is that property ownership entails responsibilities to the community at large. What of the property owners living next door to a derelict property for years, with their own homes-and lives-at risk from 'improper wiring' or other code violations? We have a housing code precisely to protect the community."

In addition, Dufay said, "I can't help but feel there's a strong political component to the accusation that I have done something wrong, and that we in the bureaucracy who give out information need to cringe in fear…watching what we say. The facts are what the facts are."

Whether cases like Jepsen's get another look-and the system gets the review Dufay is calling for-may now be up to the new mayor. Earlier this month, Tom Potter took the city's bureaus back from the commissioners to whom they'd been assigned, making himself, at least for now, king of the liens.


LIEN ON ME?

In the past two years the city has canceled almost as many debts as it has collected.

Collections: $3,701,428

Reductions: $3,135,796

 
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