Ruling Threatens Inspection Plan for Apartments : Housing: Court says per-unit fee to fund year-old anti-slum program cannot be taken from landlords without voter approval. City officials plan appeal.

Funding for a fledgling 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 apartment units--the linchpin of anti-blight legislation signed by Mayor Richard Riordan last year.

It was designed to pay for an overhaul of an enforcement system that was widely perceived as having failed to eliminate substandard housing conditions before they deteriorated to the slum level.

Three large apartment owner groups--which contended that the fee was an illegal property tax--scored at least a temporary victory Aug. 26 when a state appeals court reversed a Los Angeles judge and ruled that 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, said Garry Pinney, general manager of the city Housing Department.

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 and the Apartment Assn. of San Fernando Valley/Ventura County--and the Howard Jarvis Taxpayers Assn. joined forces to challenge the city in court, claiming that 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,” said 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 funds a proactive plan to check up on all apartments every three years--a first for the city, she said.

Before the random inspections began, 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 in a 1997 report for lax enforcement. That led to the random inspection program and shifted responsibilities to the city Housing Department.

But the appellate ruling sides with property owners who see the new fee as a 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 group, said after Proposition 13 a flurry of assessments and fees were approved by cities. “That’s the way they say it’s not a property tax,” he said.

If the suit is appealed, it will be the first Proposition 218 case to be reviewed by the state Supreme Court, said Jon Coupal, president of the Jarvis association.

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 increase staffing to 53 inspectors, Pinney said.

The random inspection program--paid for entirely by the fees--will need an additional $7.3 million to continue its operations through June, he said.

Program supporters are wondering how it will keep 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 Councilman Mike Feuer. “Mike comes to this problem after years working as a poverty lawyer, so it really strikes a chord with him.”

Apartment owners are jubilant over the prospect of eliminating the fee.

“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 multi-party 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.