Apartment Inspections in Jeopardy : Housing: Court says fee to fund year-old anti-slum program cannot be taken from landlords without voter approval.

Funding for a new anti-slum program of random inspections of Los Angeles’ 750,000 apartments is in jeopardy after apartment owners won a recent court challenge to a new city law.

The inspections are funded by a $1-a-month fee on apartments--the linchpin of anti-blight legislation signed by Mayor Richard Riordan last year.

It was designed to overhaul an enforcement system that was widely perceived as having failed to eliminate substandard housing conditions before they deteriorated into slums.

Three large apartment-owner groups scored at least a temporary victory Aug. 26 when a state appeals court reversed a Los Angeles Superior Court judge’s decision and ruled the fee cannot be collected unless endorsed by voters.

“We’d like to think this isn’t just a victory for landlords, but also for tenants,” said Charles Isham, executive vice president of the Apartment Assn. of Greater Los Angeles. Its 25,000 members make up the nation’s largest such owners’ group.

In the first year of operation, 105,867 apartment units were inspected using only a partial staff. City officials could not provide comparable figures for the prior year.

Those checks led to 159 orders to fix code violations and conform to habitability requirements, said Garry Pinney, city Housing Department general manager.

But apartment owners bitterly oppose the fees that fund those efforts.

A coalition of apartment groups--including Isham’s group, the Apartment Assn. of California Southern Cities, the Apartment Assn. of San Fernando Valley/Ventura County--and the Howard Jarvis Taxpayers Assn. challenged the city in court, claiming the fees must be approved by voters.

The fees hurt mom-and-pop apartment owners “for the sins of slumlords,” Isham said.

“Owners are hit with property taxes, business licenses and this is just one more thing on top of it,” added Shari Rosen, executive director of the 4,000-member Apartment Assn. of San Fernando Valley/Ventura County.

The city plans to appeal. In the meantime, the fees will be collected and the inspections will continue.

“The intent of the fee was to ensure the basic quality of housing for all residents,” said Deputy Mayor Jennifer Roth. The fee permanently funds a plan to check up on all apartments once every three years--a first for the city, she said.

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Before the random inspections, residential buildings were investigated only after a complaint was made, Roth said.

The city Department of Building and Safety, which handled those complaints, was sharply rebuked for lax enforcement in a 1997 Blue Ribbon report. That led to the newly approved random inspection program and shifted responsibility to the city Housing Department.

But the Aug. 26 state Court of Appeal ruling sides with property owners, who see the new fee as a clear violation of Proposition 218. That state measure--approved in November 1996--requires voter approval for fees or assessments levied on property owners.

Proposition 218 was designed to close loopholes not covered by Proposition 13, which requires voter approval for special taxes.

Trevor Grimm, general counsel for the Howard Jarvis Taxpayers Assn., said that, after Proposition 13, cities approved a flurry of assessments and fees. “That’s the way they say it’s not a property tax,” he said.

Grimm said apartment owners are ready for the legal battle. “They’re irate at this,” he said.

The fees hit many property owners in the Valley, home to about 300,000 apartment units, or nearly half the city’s total, Rosen estimated.

If the suit moves to the high court, it will be the first Proposition 218 case to be reviewed by the state Supreme Court, said Jon Coupal, president of the Howard Jarvis Taxpayers Assn.

However, city officials aren’t about to let the program wither.

“It’s our position that this kind of fee does not have to comply with Proposition 218, because it’s not based on property ownership, it’s based on a business enterprise,” said Deputy City Atty. Richard Bobb.

In its first year, the inspection fee program collected $5.1 million, which the Housing Department used to augment its ranks to 53 inspectors, Pinney said. The new random inspection program--paid for entirely by the fees and no General Fund money--will need $7.3 million more to continue operations through June 2000, he said.

With that budget, an additional 200,000 to 250,000 inspections can be completed, Pinney said.

But supporters of the inspection program are already worried about they will keep the program running if the fees are deemed illegal.

“If the court’s ruling is upheld, we’ll have to find another way to pay for it,” said Daniel Hinerfeld, spokesman for 5th District Los Angeles City Councilman Mike Feuer. “Mike comes to this problem after years working as a poverty lawyer, so it really strikes a chord with him.”

Others are outright jubilant.

“Finally, there is some justice for people who provide housing. Finally--because we have been abused,” said Carol Knapp, founder of the Van Nuys-based Apartment Owners Assn. of Southern California. The organization is not a plaintiff in the suit against the city.

Although it rankles Knapp that taxpayer money will be used in the city’s appeal, the Silver Lake resident said she is savoring the Court of Appeal ruling.

“It’s the first time we’ve gotten justice,” she said.