Code unenforcement: Millions in city fines go unpaid

Let's say you have a bad neighbor. You know the type: someone who leaves her trash out at the curb all week, or lets her lawn get so overgrown that wild animals colonize it.

And let's say you call the city to complain. The city can issue your neighbor a "code violation" ticket, which carries a small fine, meant to give Philadelphians a reason to follow quality-of-life regulations.

But chances are, your neighbor won't pay that fine.

An "It's Our Money" review of city records shows that most code-violation fines go uncollected. From fiscal years 2006 to 2010, the city issued about $36.2 million in fines and about $4.1 million in fees and penalties.

Out of that, it got $10.7 million, or 27 percent.

This isn't a problem only because the city is strapped for cash. Officials see code-enforcement fines as a tool for "behavior modification," says Paula Weiss, executive director of the city's Office of Administrative Review, which oversees the collection process. Is your neighbor going to mow her lawn just because she got a fine she never has to pay?

How fines get collected

Most code-violation tickets come from the Department of Streets or from Licenses and Inspections. But police and inspectors from other agencies, like the Health Department, can issue tickets for violations such as talking on a cell phone while driving or selling cigarettes to minors.

The tickets range from $25 to $250. If alleged violators don't respond within 10 days, either by paying the ticket or requesting an administrative hearing to fight it, they get a warning letter and an additional $15 penalty.

If they still don't respond, they get another letter and a $25 fine.

For most people, that's the end of the story. The city stops trying to collect.

The next step would be to sue violators in Municipal Court. The city can get a $300 judgment for each violation, and $2,000 from businesses that sell tobacco to minors.

But since the court limits the city from filing more than 160 lawsuits a week, Philly can never hope to keep up with the tens of thousands of violations that go unpaid. (The court has offered to increase the limit, but any increases wouldn't make much difference.)

And the lawsuits don't guarantee payment, anyway.

For one thing, some of the judges who hear code-enforcement cases always decide against the city, regardless of the evidence, said Supervising Judge Bradley Moss, who oversees the court's civil division.

Many defendants never show up in court. On a recent Friday, about 60 of the 80 cases slated for adjudication ended in a default judgment for the city because the defendant didn't show. This was typical, according to the trial commissioner overseeing the proceedings.

Those no-shows tend to be no-pays, too. The city has $2.8 million in uncollected default judgments from fiscal year 2009.

The city tends not to try to collect these judgments, because the cost of collection is usually more than the judgments are worth, says Daniel Cantu-Hertzler, chairman of the Law Department's corporate and tax-law group.

It just has to hope that violators come calling when they need to qualify for a loan or make a big purchase and see that the judgments are hurting their credit scores.

Making 'em pay

Philadelphia isn't alone in this problem, says John Mogk, a professor at Wayne State University Law School who specializes in urban-blight issues. It's joined by cities like Detroit, Cleveland and St. Louis, which have also seen their populations decline and poverty increase.

The key to making these fines work, Mogk says, is to enforce their payment.

For that to happen, the city would have to pour more money into code enforcement to increase capacity for filing cases in court. It would also have to play hardball with delinquents.

There are a few tools at its disposal, none of them perfect.

Recently, the courts announced a plan for recovering uncollected bail money and restitution by hiring lawyers to garnish wages and seize property. The city could do something like this, too. But these aggressive tactics cost money, and the cost of collecting the fines might outpace the revenue. (City Council might help tip this balance by increasing the amount of penalties for these violations.)

The city could also increase pressure on residents and businesses, especially trash haulers, by denying them permits and licenses if they have outstanding violations. But this is technically difficult. The departments involved don't have compatible computer systems, so one department doesn't necessarily know when another department issues a violation.

The city could publish lists of businesses and people with open violations against them, shaming them into paying up, said Brian Dries, spokesman for the City Controller's Office, which published a critical audit of the code-violation process in 2009.

Dries said similar lists have increased collections in other contexts, like money owed for police services at sporting events.

Finally, the city could criminalize code violations - meaning violators who ignore tickets would risk jail time. But Eileen O'Brien, head of the Code Enforcement Unit, is concerned that may be too harsh an approach.

It would certainly be costly.

The city's current plan revolves around a collection agency, Gila LLC, that it recently hired to pressure people who don't pay their judgments by pestering them with phone calls and letters - just as credit-card companies do when cardholders stop paying their bills.

And it recently succeeded in netting $200,000 from a settlement to close outstanding judgments with trash-hauling companies.

But generally, if you're facing a fine but haven't been sued? Well, you should pay up and fix the problem. But for now, the city's not going to make you.

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