BLIGHT VIOLATIONS S.B. 35 - 39:
ANALYSIS AS ENACTED
Senate Bills 35 through 39 (as enacted) PUBLIC ACTS 188-192 of 2013
Sponsor: Senator Virgil Smith (S.B. 35)
Senator Bert Johnson (S.B. 36)
Senator Tonya Schuitmaker (S.B. 37)
Senator Rick Jones (S.B. 38)
Senator Tupac A. Hunter (S.B. 39)
House Committee: Local Government
RATIONALE
The Home Rule City Act allows cities that meet certain population criteria to designate particular infractions as blight violations, and establish an administrative hearings bureau to adjudicate the violations and impose sanctions. These provisions and related legislation were enacted in 2003 to give Detroit and other eligible cities a way to expedite the enforcement of zoning and building code violations, and the cleanup of parcels with piles of rubbish, tall weeds, and abandoned cars, for example. Establishing an administrative hearings bureau allows a city to remove these cases from the court system, impose civil fines for blight violations, and obtain a lien against property if a fine is not paid. Reportedly, however, people continue to commit blight violations and fail to pay fines, without consequences. It was suggested that the law should include criminal penalties for these offenders, and cities should be authorized to take additional measures, such as the denial of building permits, in order to improve enforcement.
CONTENT
Senate Bill 35 amends the Home Rule City Act to establish an additional civil fine, and new criminal penalties for a repeat offender, that may be imposed on a person who commits a blight violation and fails to pay a fine and costs of $1,000 or more within 30 days, unless the property involved is the person's principal residence.
The bill also lowers a population threshold in the eligibility criteria for a city to establish an administrative hearings bureau.
Senate Bill 36 amends the Michigan Zoning Enabling Act to allow a city zoning ordinance to provide that a person is ineligible for rezoning, site approval, or other zoning authorization if the person is delinquent in paying a fine or costs for a blight violation.
Senate Bill 37 amends the Single State Construction Code Act to allow a city to provide by ordinance that a person is ineligible for a building permit, a certificate of use and occupancy, or a variance if the person is delinquent in paying a fine or costs for a blight violation.
Senate Bill 38 amends the Revised Judicature Act to allow a city to file a garnishment action, and require the court to issue a writ of garnishment, if a fine or costs are ordered for a blight violation.
Senate Bill 39 amends the Home Rule City Act to allow a lien against property involved in a blight violation to be enforced and discharged by the city in the same manner as provided for liens for delinquent taxes.
The additional sanctions under Senate Bill 35, and a zoning ordinance adopted under Senate Bill 36 or 37, will not apply to any of the following that becomes the owner of property after foreclosure or after taking a deed in lieu of foreclosure: a government-sponsored enterprise, financial institution, mortgage servicer, or credit union service organization.
All of the bills will take effect on March 14, 2014.
Senate Bill 35
Population Criteria
Section 4q of the Home Rule City Act allows a city with a population of 7,500 or more in any county, and a city with a population of 3,300 or more in a county with a population of 2.0 million or more, to establish an administrative hearings bureau to adjudicate and impose sanctions for a blight violation.
The bill refers to a county with a population of 1.5 million or more (i.e., Wayne County), rather than 2.0 million or more.
Additional Sanctions
A city that creates an administrative hearings bureau must establish its jurisdiction for adjudicating blight violations, making determinations of responsibility, and imposing sanctions. Only a violation of any of the following types of ordinances may be designated a blight violation:
-- Zoning.
-- Building or property maintenance.
-- Solid waste and illegal dumping.
-- Disease and sanitation.
-- Noxious weeds.
-- Vehicle abandonment, inoperative vehicles, vehicle impoundment, and municipal vehicle licensing.
-- Right-of-way signage.
-- An ordinance that is substantially the same as Sections 138 to 142 of the Housing Law (which make it illegal to maintain a dwelling as a dangerous building).
A hearing officer has the authority to impose reasonable and proportionate sanctions consistent with applicable ordinance provisions and assess costs against a person found responsible for a violation. A hearing officer may not order a civil fine of more than $10,000 and may not impose incarceration. In addition to ordering fines and costs, the hearing officer must impose a justice system assessment of $10 for each blight violation determination. A person may appeal the decision and order of a hearing officer to the circuit court within 28 days after entry of the decision and order.
Under the bill, if the civil fine and costs imposed against a person are $1,000 or more and the person does not pay them within 30 days after a final decision and order of the hearing officer or (upon appeal) of the circuit court, the person will be subject to the following:
-- For a first violation, the person will be responsible for a State civil infraction and may be ordered to pay a maximum civil fine of $500.
-- For a second violation, the person will be guilty of a misdemeanor punishable by imprisonment for up to 93 days or a maximum fine of $500, or both.
-- For a third or subsequent violation, the person will be guilty of a misdemeanor punishable by imprisonment for up to one year and a mandatory fine of $500.
As used in these provisions, the bill defines "person" as an individual, partnership, corporation, limited liability company, association, or other legal entity, including the partners or members of a firm, partnership, or association, and the officers of a corporation.
Exclusions
The additional sanctions that may be imposed under the bill will not apply to the owner of property if, at the time the civil fine and costs are imposed against the owner, he or she had filed a principal residence exemption affidavit as provided under the General Property Tax Act, certifying that the property is owned and occupied as a principal residence by that owner.
The additional sanctions also will not apply to any of the following that becomes the owner of property after foreclosure or after taking a deed in lieu of foreclosure:
-- A government-sponsored enterprise.
-- A financial institution.
-- A mortgage servicer that is subject to the Mortgage Brokers, Lenders, and Servicers Licensing Act.
-- A credit union service organization that is organized under the laws of Michigan or the United States.
An exempt entity, however, must adhere to all ordinances relating to vacant property or blight violations adopted by the city that established an administrative hearings bureau.
The bill defines "government-sponsored enterprise" as that term is defined in Federal law (2 USC 622(8)) or the Michigan State Housing Development Authority. (The definition in 2 USC 622(8) refers to a corporate entity created by U.S. law that has a Federal charter; is privately owned; is under the direction of a board of directors, a majority of which is elected by private owners; and is a financial institution with the power to make loans or loan guarantees for limited purposes.)
The bill defines "financial institution" as mean that term is defined in the Michigan Strategic Fund Act (i.e., a State or nationally chartered bank or a State or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the U.S. government and that maintains a principal office or branch office in Michigan under the laws of this State or the United States).
Senate Bill 36
Under the bill, a city's zoning ordinance may provide that a person is not eligible to apply for a rezoning, site plan approval, special land use approval, planned unit development approval, variance, or other zoning authorization if the person is delinquent in paying a civil fine, costs, or a justice system assessment imposed by an administrative hearings bureau established in that city under Section 4q of the Home Rule City Act.
This will not apply to a zoning authorization if it will partly or entirely correct the blight violation that was the subject of the delinquent payment.
The ordinance provision also will not apply to an applicant for a zoning authorization if the applicant became the owner of the property by foreclosure or by taking a deed in lieu of foreclosure and the applicant is one of the following: a government-sponsored enterprise; a financial institution; a mortgage servicer subject to the Mortgage Brokers, Lenders, and Servicers Licensing Act; or a credit union service organization organized under the laws of Michigan or the United states. ("Government-sponsored enterprise" and "financial institution" have the same definitions as provided by Senate Bill 35.)
Senate Bill 37
The Single State Construction Code Act authorizes a governmental subdivision, by ordinance, to assume responsibility for administering and enforcing the Code and the Act within its political boundary.
Under the bill, a city that has assumed this responsibility may, by ordinance, provide that a person is not eligible to apply for a building permit, a certificate of use and occupancy, or a variance to a requirement of the Code, if the person or the owner of the affected or proposed building or structure is delinquent in paying a civil fine, costs, or justice system assessment imposed by an administrative hearings bureau established in that city under Section 4q of the Home Rule City Act.
This will not apply to an application for a building permit if the work authorized under the permit will partly or entirely correct the blight violation that was the subject of the delinquent payment.
An ordinance adopted under this provision also will not apply to an applicant that became the owner of the property by foreclosure or by taking a deed in lieu of foreclosure, if the applicant is one of the following: a government-sponsored enterprise; a financial institution; a mortgage servicer subject to the Mortgage Brokers, Lenders, and Servicers Licensing Act; or a credit union service organization organized under the laws of Michigan or the United states. ("Government-sponsored enterprise" and "financial institution" have the same definitions as provided in Senate Bill 35.)
Senate Bill 38
The bill adds Section 4027 to the Revised Judicature Act to allow a city to file an action for a writ of garnishment in the appropriate court, if a hearing officer orders the payment of a civil fine or costs under Section 4q of the Home Rule City Act, and the defendant does not appeal the order within the time allowed, and if the city has not obtained a lien under Section 4r of the Home Rule City Act (the section that Senate Bill 39 amends). The initial papers filed must include a properly authenticated copy of the applicable order.
Immediately after the action is filed, the court must issue a writ of garnishment, which will serve in lieu of a summons and complaint in the action. The time for the defendant and an initial garnishee defendant to respond will be the same as for a response under statutes and court rules applicable to other garnishments. (A garnishee defendant is a person, such as an employer or bank, ordered to withhold funds or payments due to the defendant.)
The action may name more than one initial garnishee defendant. After an initial writ of garnishment is issued, the city may obtain subsequent writs of garnishment against the same or additional garnishee defendants, without leave of the court.
A defendant or garnishee defendant may not raise in the action any issue that could have been appealed under Section 4q of the Home Rule City Act.
Except as provided in Section 4027 and in any rules adopted by the Supreme Court to apply to an action under the section, the action must proceed according to the statutes and court rules applicable to other garnishment actions.
Senate Bill 39
The Home Rule City Act allows a city to obtain a lien against the land, building, or structure involved in a blight violation if the defendant does not pay a civil fine or costs or an installment payment ordered by a hearing officer within 30 days after the date the payment is due. The city must record a copy of the final decision and order with the register of deeds for the county where the land, building, or structure is located. The city also must send a written notice of the lien to the owner of the land, building, or structure.
The city may enforce and discharge the lien in the manner prescribed by its charter, by the General Property Tax Act, or by an ordinance passed by the city's governing body. Under the bill, the city also may enforce and discharge the lien in the same manner as liens for delinquent taxes are enforced and discharged under the General Property Tax Act.
Currently, property is not subject to forfeiture, foreclosure, and sale under the General Property Tax Act for nonpayment of a civil fine or costs or an installment ordered under Section 4q of the Home Rule City Act unless the property is also subject to forfeiture, foreclosure, and sale under the General Property Tax Act for delinquent property taxes. Under the bill, this provision will apply only to property that is exempt as a principal residence under that Act.
The bill prohibits a city from commencing an action to enforce a lien if the city has begun an action for a writ of garnishment with respect to the unpaid fine, costs, or payment under Section 4027 of the Revised Judicial Act.
Senate Bill 39 is tie-barred to Senate Bill 38.
125.3406 (S.B. 36)
125.1509c (S.B. 37)
600.4027 (S.B. 38)
117.4r (S.B. 39)
ARGUMENTS
(Please note: The arguments contained in this analysis originate from sources outside the Senate Fiscal Agency. The Senate Fiscal Agency neither supports nor opposes legislation.)
Supporting Argument
Despite the legislation enacted 2003, Detroit and other cities still are struggling to clean up their communities. In many places, parcels are full of junked cars, rubbish, hazardous waste, or tall, noxious weeds, houses and other structures are dilapidated, snow and ice are allowed to accumulate on sidewalks, and building uses are changed without the proper permits. These conditions can pose health and safety hazards to individuals and wildlife, lower property values, provide venues for criminal activity, and discourage families and businesses from locating in the area.
The original blight violation legislation was designed to provide a fair, expeditious, and cost-effective method to adjudicate these infractions outside of the court system. A decade later, however, more aggressive measures are needed to hold scofflaw property owners accountable. Evidently, many violators simply ignore blight assessments without consequences, and property owners continue to disregard their obligations to maintain their structures and land.
This new package of legislation will provide strong enforcement mechanisms to compel compliance by those who refuse to abide by the law. Specifically, the bills will streamline the lien process to assure the payment of judgments against noncompliant owners; enable cities to easily use the garnishment process to collect unpaid fines; authorize cities to deny zoning requests and building permits for owners responsible for blight; and, for violators with at least $1,000 in unpaid fines and costs, make repeat violations a misdemeanor punishable by imprisonment. Together, these measures will address significant weaknesses in the original blight enforcement process.
Opposing Argument
Governmental agencies, financial institutions, and mortgage servicers should not be exempt from the sanctions added by Senate Bills 35, 36, and 37. Many blight problems are the result of banks' failure to maintain foreclosed, empty homes. These entities should be subject to the same rules and penalties that apply to private property owners.
Opposing Argument
The Civil Procedure & Courts Committee of the State Bar of Michigan raised concerns about Senate Bill 38. This bill will allow a city to seek a writ of garnishment, and will compel a court to issue the writ, based on the order of an administrative hearing officer. Other statutory approaches to garnishment rely on court procedures and judgments, which offer due process protections.
Response: Section 4q of the Home Rule City Act allows a party to appeal a hearing officer's order to the circuit court. The new garnishment provisions will apply only if the defendant does not appeal the order within the time allowed.
Legislative Analyst: Suzanne Lowe
FISCAL IMPACT
Senate Bill 35
The bill will have an indeterminate fiscal impact on State and local government. Cities could see increased revenue from the collection of fines and costs for blight violations, and the State could see increased revenue resulting from the $10-per-citation justice system assessment. Although there are no data to indicate how many offenders will be charged with the new misdemeanors, those convicted may be incarcerated and/or placed under community supervision, increasing costs for local units. Increased civil infraction and penal fine revenue associated with the new State civil infraction and the new misdemeanors will benefit public libraries.
Senate Bills 36, 37, and 39
The bills will have no impact on State revenue and a likely negligible effect on local unit revenue. Cities' revenue may be increased slightly under the assumption that the changes will either make it more likely that certain fines or costs will be paid, or paid in a timely manner, or provide alternative options for cities to more effectively or efficiently collect a payment relating to a lien.
Senate Bill 38
The bill will have a negligible fiscal impact on the local court system. Courts could see a marginal increase in caseload associated with enforcing garnishments against those who neglect to pay civil fines and costs ordered for blight violations. Cities will receive increased revenue from the collection of the fines and costs.
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.