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CITY. OF SAN BERNClRDINO - REQUEST AR COUNCIL ACTION
From: Rachel Krasney
City Clerk
Su~~: Ordinance increasing interest
rate on abatement assessments
from 7% to 12%
Dept:
Date: June 7, 1991
Synopsis of Previous Council ~ion:
None
Recommended motion:
That the ordinance be laid over for final passage.
'1-/2U./JL, ~~~~
Signatur ~
Con~ penon:
Rachel Krasnev
Phone:
5002
Supporting date attached: Staff reoort & attachments W.rd:
FUNDING REQUIREMENTS:
Amount:
N/'A
Source: (Acct. No.)
(Acct. DescriDtionl
Finance:
Council Notes:
An..ntlA Itl!m No
56
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CITY OF SAN BERNAO>>INO - REQUEST FCO COUNCIL ACTION
STAFF REPORT
City Clerk's Office
June 7, 1991
Ordinance increasing interest rates on abatement assessments from
7% to 12%
At the meeting of the Legislative Review Committee, June 6,
1991, a discussion was held regarding a proposed ordinance which
would increase the current interest rate of 7% to 12% on all
abatement assessments, including building, vehicle and weed
abatements. A precedence for this interest rate has been set by
the City of Long Beach, which is also a charter city. The
Legislative Review Committee recommended that the proposed
ordinance be included on the Council agenda for June 17, 1991,
and recommended approval.
Attached are the following documents which provide background
information regarding the proposed interest rate increase:
copy of a portion of an ordinance of the City of Long Beach
relative to its costs of abatement and interest charges7
Legal Opinion from Senior Assistant City Attorney Barlow
dated Kay 24, 19917
copy of an informal survey of nine Southern California cities.
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1 tial:y the fol:owing form:
1 ~OTICE TO PAY LOT CLEANING LEVY
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3 In accordance with the provisions of Chapter
4 8.56 of the Long Beach Municipal Coae, the Building
5 Official has caused the weeds and/or debris upon
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(address)
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10 to be cleaned at Ci ty expense.
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You are hereby notified that the total cost of ~
. . are now due and payable to the City of
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Lonv'.e.ch. "
Section 8.56.120 of the Long Beach Municipal Code
providos, in part, that the property owner or any
interested person may demand a hearing within fift.en
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17 days of this notice before the Board of Examiners,
IS Appeals and Condemnation on the reasonableness of the
19 charge.. Such demand shall be in writing, filed with
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the Building Official and shall describe the property
involved, the reasons for objecting, the name, addr...
and interest of the appellant.
If no hearing i. demanded, this payment shal~.
becOlllll delinquent thirty days frOlll this notice and a:f
lien for said amount, plus a fee for preparation o~
the lien shall be attached to the affected property
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and there.ft.r be.r interest at the rat. of twelve <Ii
pe~Qent per annum until paid.~ An additional fee will
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be ~~curreo in t~e event that ~avment ~s not received
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before the end of the fiscal year (June 30) and transfer
of collection to the City Treasurer becomes necessary.
8.56.120 Hearing on Charqes
Within fift.en days from the date of the notice
to pay, the property owner, or any interested person,
may demand a hearing as to the reasonableness of such
charges. Such demand shall be in writing and filed
with the Building Official. It shall describe the
property involved, state the reasons for objecting,
Dnd include the address of the applicant for service
of notices in connection with such hearing. The
Building Official shall thereupon set a date for
hearing such protest by the Board of Examiners, Appeals
and Condemnation within a reasonable time. The Build-
ing Official shall send written notice of such hearing
in the manner prOVided in Section 8.56.060. At the
time set for such hearing, the Board shall hear all
evidence pertinent to the reasonableness of such
charges and shall then either confirm or modify the
charges. The decision of the Board shall be final,
and the Building Official shall 9ive notice to the
parties affected in the manner provided in Section
8.56.070.
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8.56.~30 Interese of Charqes
If the amount of ~he charges as determined by the
ooard of Examiners. Appeals and Condemnation has not
been paid within thirty days of its decision. the
payment shall thereupon become delinquent and a lien
against the real property and the amount so determined
shall thereafter bear interest at the rate of twelve
percent per annum until paid. If no hearing is de-
manaed as to the reasonableness of the charges. the
payment shall become delinquent and a lien against
the real property thirty days after the notic~ of the
charge. for abatement is served by the Building Offi-
ciall and such amount Shall thereafter bear interest
at the rate of twelve percent per annum until paid.
8.56.140 Transfer of Collection
The Building Official shall certify a list of all
delinquent charges for lot cleaning or nuisance abate-
ment to the City Treasurer who shall submit the list
to the City Council for confirmation. Each parcel of
property shall be described sufficiently to identify
it in accordance with the records of the County tax
collector. The amount of the charge. including such
interest as has accrued after the delinquent date to
July 1st of the year shall be set forth opposite the
description by the ~ity Treasurer.
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3.56.:50 Method of Collec~ion
Upon receipt of the list, t~e County tax collector shall
enter the charges shown thereon for each parcel of
property upon the current tax roll and shall proceed
to collect the charges in the same manner as ad valorem
taxes, and penalties and interest for nonpayment
thereafter shall attach as though the amounts were ad
valorem taxes1 provided, however, that no receipt for
payment of ad valorem taxes appearing upon the tax
roll as against a particular parcel shall be issued
unlQss all such Charges for collection for lot clean-
ing, correction of substandard conditions or nuisance
abatement, ~nd penalties thereon, entered upon that
tax roll against the lot are first paid in full.
8.56.160 Tax - Sold Property
Upon the sale of any lot to the State for nonpay-
ment of taxes, all charges for lot cleaning, correction
of substandard conditions or nuisance abatement for
the parcel appearing upon the tax roll, together with
the penalties thereon, shall be added to and become a
part of the same delinquent tax record.
8.56.170 ~ax - Sold Property - Redemptions
NO certificate of redemption from sale for
delinquent taxes ~hall be issued until all charges
for lut cleaning, correctiun of substandard condition.
and nuisance abatement, and penalties entered on the
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EXHIBIT C
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CITY OF SAN BERNARDINO
OFFICE OF THE CITY ATTORNEY '91 r::,'( 24 P 2 :59
JAMES F. PENMAN
City Attorney
May 24, 1991
Opinion No. 91-19
TO: Rachel Krasney, City Clerk
RE: Increasing Interest Rate Charged on Abatement Liens
ISSUE
The question has been raised whether the City may increase
the interest rate on liens for building, weed and vehicle
assessments from the 7% currently charged to 10%.
CONCLUSION
Since there is no constitutional or statutory prohibition to
such interest rate, the City may do so.
ANALYSIS
The City currently has several ordinances that provide for
the abatement of various kinds of nuisances and for the placement
of a lien on the affected parcel for the cost of such abatement.
These include San Bernardino Municipal Code Chapter 8.18,
"Accumulation of combustible and Noncombustible Materials" (see
specifically Section 8.18.060), Chapter 8.27, "Nuisances" (see
specifically Section 8.27.100), Chapter 8.30, "Public Nuisances"
(see specifically Sections 8.30.090 and 8.30.140), Chapter 8.33,
"Property Nuisances" (see specifically Sections 8.33.050 C and E
and 8.33.070), and Chapter 8.36, "Abandoned Vehicles" (see
specifically Section 8.36.150). With the exception of Chapter
8.36 (Abandoned Vehicles) all of the abatements are done pursuant
to San Bernardino Municipal Code Chapter 3.68.
DAB/ses/Liens-2.opn 1
CITY HALL
300 NORTH '0' STREET' SAN BERNARDINO. CALIFORNIA 92418
(714) 384-5355
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TO: Rache~ Itrasney, City C~erk
RE: Incre_1.ng Interest Rate Charged on Abatement Liens
Page 2
Section 3.68.010 C provides in part:
"...The Board [of the Building Commissioners]
may determine that assessments in excess of
five hundred dollars shall be payable in
semi-annual installments of five hundred
dollars, bearing interest at the rate of
seven percent. "
As part of the question you present, you ask whether this
provision prohibits the imposition of any interest unless the
payments are allowed in semi-annual installments. Disposing of
this issue first, when the assessments are placed on the tax roll
and collected by the County with the real property taxes, they
are collected in semi-annual installments, thereby subject to the
interest provision. We agree, however, that this section should
be clarified to reflect the long-standing practice of charging
interest on all such exactions which are not paid when due.
AS to whether or not the City may increase its interest rate
on such assessments, some question might be raised as to the
effect of the Usury Law. California Constitution Article XV
Section 1, provides that "[t]he rate of interest upon the loan or
forbearance of any money, goods, or things in action, or on
account after demand, shall be 7 percent per annum..." However
the parties may agree in writing, in certain circumstances, that
the interest rate would be up to 10 percent. The provision then
outlines exceptions including building and loans, loan
companies, credit unions, pawn brokers, real estate brokers, and
banks. Similarly statutes of 1919, pg. 83, initiative measure
approved November 5, 1918: Amended by Statutes of 1970, Chapter
784, approved November 3, 1970 (published by Deering's at
Uncodified Measures, 1919-1), provides for a 7 percent interest
rate but allows the parties to contract for up to 12 percent. At
53 Ops. Ca1. Atty. Gen. 4 (1970) the California Attorney General
concluded that the Usury Law does not apply to the State of
California or an agency thereof (see also Mei1ink v UnemplOyment
Commtn (1941) 314 U.S. 564, 86 LEd 458, in which the United
States Supreme Court held that the State could charge a higher
interest rate than allowed under the Usury Law). The same
analysis applies to cities.
Therefore the City is not limited by the Usury Law in
establishing the interest rate on such nuisance type assessments.
We have found no other constitutional or statutory provision that
would purport to limit such rate.
DAB/ses/Liens-2.opn
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TO:
HE:
Page
Rachel. Krasney, C.11:y Clerk
Incre...1ng Interest Rate Charged on Abatement L.1ens
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By separate cover we w.1ll provide you with a draft ordinance
to make the change suggested.
Respectfully submitted,
~AJ
DE IS A. LOW,
Sr. Asst. C.1ty Attorney
Concur:
JAMES F. PENMAN
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cc: W.R. Holcomb, Mayor
Council Members
Cra.1g Graves, City Treasurer
Shauna Edwins, C.1ty Adm.1nistrator
All Department Heads
DAB/ses/Liens-2.opn
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Sw:veyed Cities - Active Lien programs/Interest Rates
Azusa:
Highly active program six to eight percent
interest charqed on liens.
Fontana:
Low to moderate active program - seven percent
interest charged on liens.
Moderately active program - no interest charged on
liens.
La Verne:
Long Beach:
Highly active program - twelve percent interest
charqed on liens.
Ontario:
Active program does not exist
implementation.
no plans for
Pasadena:
Active program does not exist at this time - in
the process of implementing a program.
Rialto:
no interest
Riverside:
Low to moderate active program
charged on liens.
Moderately active program - seven percent interest
charqed pursuant to Sect. 16088 of the Unifo%:1ll
Housing Code.
Active program does not exist at this time - in
the process of implementing a program.
It is my understanding that this matter will be discussed in the
near future at a ways and Means Committee meeting. Therefore, I
would appreciate your advice and assistance in this matter.
Upland:
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF SAN BERNARDINO AMENDING SAN
BERNARDINO MUNICIPAL CODE SECTION 3.68.010.C RELATING TO INTEREST
ON CITY ABATEMENTS.
THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DO
ORDAIN AS FOLLOWS:
SECTION 1.
Subsection C of Section 3.68.010 of the San
Bernardino Municipal Code is hereby amended to read as follows:
"C. At the hearing, based upon the evidence presented, the
Board shall determine the amount to be assessed against
any parcel and the time of payment.
Any payment not
paid when due or paid in installments as may be allowed
by the Board shall bear interest at the rate of Twelve
percent (12%) per annum.
The decision of the Board
shall be final, subject to appeal to the Mayor and
Common Council in accordance with Chapter 2.64."
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AN ORDINANCE. . . RELATING TO INTEREST ON CITY ABATEMENTS.
I HEREBY CERTIFY that the foregoing ordinance was duly
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adopted by the Mayor and Common Council of the City of San
4 Bernardino at a
5 the day of
6 wit:
7 Council Members:
8 ESTRADA
9 REILLY
10 HERNANDEZ
11 MAUDSLEY
12 MINOR
13 POPE-LUDLAM
14 MILLER
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18 of
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City Clerk
The foregoing ordinance is hereby approved this
, 1991.
meeting thereof, held on
, 1991, by the following vote, to
AIE.S.
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ABSTAIN
day
w. R. Holcomb, Mayor
City of San Bernardino
Approved as to form
22 and legal content:
23
JAMES F. PENMAN,
24 City Attorney
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